2. SIGNIFICANT ACCOUNTING
POLICIES
a) Statement of compliance
These financial statements have been
prepared in accordance with Ind AS as
notified under the Companies (Indian
Accounting Standards)Rules, 2015 read
with Section 133 of the Companies Act, 2013
read with rule 3 of companies (Indian
accounting standards)Rules/2015("the
from time to time).
b) Basis of preparation
These financial statements have been
prepared on the historical cost basis, except
for certain financial instruments which are
measured at fair values at the end of each
reporting period, as explained in the
accounting policies below. Historical cost is
generally based on the fair value of the
consideration given in exchange for goods
and services. Fair value is the price that
would be received to sell an asset or paid to
transfer a liability in an orderly transaction
between market participants at the
measurement date.
c) Use of estimates and judgements
The preparation of these financial
statements in conformity with the
recognition and measurement principles of
Ind AS requires the management of the
Company to make estimates and
assumptions that affect the reported
balances of assets and liabilities, disclosures
relating to contingent liabilities as at the
date of the financial statements and the
reported amounts of income and expense
for the periods presented.
Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the
period in which the estimates are revised
and future periods are affected.
Key sources of estimation of uncertainty at
the date of the financial statements, which
may cause a material adjustment to the
carrying amounts of assets and liabilities
within the next financial year, is in respect
of impairment of investments, useful lives
of property, plant and equipment, valuation
of deferred tax assets, provisions and
contingent liabilities.
Impairment of investments
The Company reviews its carrying value of
investments carried at amortized cost
annually, or more frequently when there is
indication for impairment. If the
recoverable amount is less than its carrying
amount, the impairment loss is accounted
for.
Useful lives of property,
plant and equipment
The Company reviews the useful life of
property, plant and equipment at the end of
each reporting period. This reassessment
may result in change in depreciation
expense in future periods.
Valuation of deferred tax assets
The Company reviews the carrying amount
of deferred tax assets at the end of each
reporting period.
Contingencies
Management judgement is required for
estimating the possible inflow/outflow of
resources, if any, in respect of
contingencies/ claims/litigations against
the Company/by the Company as it is not i.
possible to predict the outcome of pending
matters with accuracy.
ii.
Defined Benefit Plans
iii.
The present value of the gratuity obligation
is determined using actuarial valuation. Aniv.
actuarial valuation involves making various
assumptions that may differ from actual
developments in the future. These include
the determination of the discount rate, rate
of increment in salaries and mortality rates.
Due to complexities involved in the
valuation and its long-term nature, a
defined benefit obligation is highly sensitive
to changes in these assumptions. All the
assumptions are reviewed at each reporting
date.
Fair Value measurement of
financial instruments
When the fair values of financial assets and
financial liabilities on reporting date cannot
be measured based on quoted prices in
active markets, their fair value is measured
using valuation techniques i.e., the DCF
model. The inputs to these models are taken
from observable markets.
Intangibles
Internal technical or user team assess the
useful lives of Intangible assets.
Management believes that assigned useful
lives are reasonable.
d) Current Vs Non-current classifications
The Company presents assets and liabilities
in the balance sheet based on current / non¬
current classification.
An asset is treated as current when it
satisfies the below mentioned criteria:
Expected to be realised or intended to be
sold or consumed in normal operating
cycle;
ii. Held primarily for the purpose of
trading;
Expected to be realised within twelve
months after the reporting period, or
iv. Cash or cash equivalent unless restricted
from being exchanged or used to settle a
liability for at least twelve months after the
reporting period. All other assets are
classified as non-current assets.
A liability is classified as
current when it satisfies the below
mentioned criteria:
Expected to settle the liability in normal
operating cycle;
Held primarily for the purpose of trading;
Due to be settled within twelve months
after the reporting period, or
There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period.
All other liabilities are classified as
noncurrent.
Deferred tax assets and liabilities are
classified as non-current assets and
liabilities.
The operating cycle is the time between the
acquisition of assets for processing and their
realisation in cash and cash equivalents.
e) Dividends
Annual dividend distribution to the
shareholders is recognized as a liability in
the period in which the dividend is
approved by the shareholders. Any interim
dividend paid is recognized on approval by
Board of Directors. Dividend payable and
corresponding tax on dividend distribution
is recognized directly in equity.
f) Revenue recognition
1) Digital Marketing Services:
i) The Contracts between the Company and
its Customers are either time or material
contracts or fixed price contracts.
ii) Revenue from fixed price contracts is
recognized according to the milestones
achieved as specified in the contracts on the
proportionate-completion method based on
the work completed. Any anticipated losses
expected upon the contract completion are
recognized immediately. Changes in job
performance, conditions and estimated
profitability may result in revisions and
corresponding revenues and costs are
recognized in the period in which such
changes are identified. Deferred revenue
represents amounts billed in excess of
revenue earned for which related services
are expected to be performed in the next
operating cycle.
iii) In respect of time and material contract,
revenue is recognized in the period in
which the services are provided and related
costs are incurred.
iv) Revenue from product sale and licensing
arrangements are recognized on delivery
and installation.
v) Revenue is reported net of discounts,
indirect and service taxes.
2) Software Development
i) Income from software development is
accounted for on the basis of Software
developed and billed to clients on
acceptance and/or on the basis of man
days/man hours as per the terms of
contract.
ii) Revenue from professional services
consist primarily of revenue earned from
services performed on a 'time and material'
basis.
The related revenue is recognized as and
when the services are performed and
related costs are incurred.
iii) Revenue from software development
services includes revenue from time and
material and fixed price contracts are
recognized as related services are
performed
Revenue from fixed price contracts is
recognized according to the milestones
achieved as specified in the contracts on the
proportionate-completion method based on
the work completed. Any anticipated losses
expected upon the contract completion are
recognized immediately. Changes in job
performance, conditions and estimated
profitability may result in revisions and
corresponding revenues and costs are
recognized in the period in which such
changes are identified. Deferred revenue
represents amounts billed in excess of
revenue earned for which related services
are expected to be performed in the next
operating cycle.
iv) Revenue is not recognized on the grounds
of prudence, until realized in respect of
liquidated damages, delayed payments
as recovery of the amounts are not certain.
v) Revenue is reported net of discounts,
indirect and service taxes.
g) Dividend income is recorded when the right
to receive payment is established.
Interest income is recorded using the
effective interest method.
h) Leases
The Company's lease asset classes primarily
consist of leases for land and buildings. The
Company assesses whether a contract
contains a lease, at inception of a contract. A
contract is, or contains, a lease if the
contract conveys the right to control the use
of an identified asset for a period of time in
exchange for consideration. To assess
whether a contract conveys the right to
control the use of an identified asset, the
Company assesses whether: (i) the contract
involves the use of an identified asset(ii) the
Company has substantially all of the
economic benefits from use of the asset
through the period of the lease and (iii)the
Company has the right to direct the use of
the asset. At the date of commencement of
the lease, the Company recognizes a right-
of-use (ROU) asset and a corresponding
lease liability for all lease arrangements in
which it is a lessee, except for leases with a
term of 12 months or less(short-term leases)
and low value leases. For these short-term
and low-value leases, the Company
recognizes the lease payments as an
operating expense on a straight-line basis
over the term of the lease.
Certain lease arrangements includes the
options to extend or terminate the lease
before the end of the lease term. ROU assets
and lease liabilities includes these options
when it is reasonably certain that they will
be exercised. The ROU assets are initially
recognized at cost, which comprises the
initial amount of the lease liability adjusted
for any lease payments made at or prior to
the commencement date of the lease plus
any initial direct costs less any lease
incentives. They are subsequently measured
at cost less accumulated depreciation and
impairment losses. ROU assets are
depreciated from the commencement date
on a straight-line basis over the shorter of
the lease term and useful life of the
underlying asset.
The lease liability is initially measured at
amortized cost at the present value of the
future lease payments. The lease payments
are discounted using the interest rate
implicit in the lease or, if not readily
determinable, using the incremental
borrowing rates in the country of domicile
of these leases. Lease liabilities are re¬
measured with a corresponding adjustment
to the related ROU asset if the Company
changes its assessment of whether it will
exercise an extension or a termination
option
i) Cost recognition
Costs and expenses are recognized as and
when incurred and have been classified
according to their nature.
The costs of the Company are broadly
categorized in employee benefit expenses,
depreciation and amortization and other
operating expenses. Employee benefit
expenses include employee compensation,
allowances paid, contribution to various
funds and staff welfare expenses. Other
operating expenses mainly include fees to
external consultants, cost of running its
facilities, travel expenses, cost of equipment
and software licenses, communication costs,
allowances for delinquent receivables and
advances and other expenses. Other
expenses are an aggregation of costs which
are individually not material such as
commission and brokerage, recruitment and
training, entertainment etc.
j) Foreign currency transactions
i. Functional and Presentation Currency:
The Company's functional and presentation
currency is Indian National Rupee.
ii. Initial Recognition:
Foreign currency transactions are recorded
in the presentation currency, by applying to
the foreign currency amounts the exchange
rate between the Presentation currency and
the foreign currency at the date of the
transaction.
iii. Conversion on reporting date:
Foreign currency monetary items are
reported using the closing rate. Non¬
monetary items that are measured in terms
of historical cost in a foreign currency are
translated using the exchange rates at the
dates of the initial transactions.
iv. Exchange Differences:
Exchange difference arising on the
settlement of monetary items or on
Presenting monetary items of Company at
rates different from those at which they
were initially recorded during the year or
presented in previous financial statements
are recognized as income or as expenses in
the year in which they arise.
k) Income taxes
Income tax expense comprises current tax
expense and the net change in the deferred
tax asset or liability during the year.
Current and deferred tax are recognized in
statement of profit and loss, except when
they relate to items that are recognized in
other comprehensive income or directly in
equity, in which case, the current and
deferred tax are also recognized in other
comprehensive income or directly in equity,
respectively.
Current income taxes
The current income tax expense includes
income taxes payable by the Company, its
branches in India and overseas. The current
tax payable by the Company in India is
Indian income tax payable on worldwide
income.
The Current income tax payable by overseas
branches of the Company is computed in
accordance with the tax laws applicable in
the jurisdiction in which the respective
branch operates. The taxes paid are
generally available for set off against the
Indian income tax liability of the
Company's worldwide income.
Advance taxes and provisions for current
income taxes are presented in the Balance
sheet after off-setting advance tax paid and
income tax provision arising in the same tax
jurisdiction and where the relevant tax
paying units intends to settle the asset and
liability on a net basis.
Deferred income taxes
Deferred income tax is recognized using the
Balance sheet approach. Deferred income
tax assets and liabilities are recognized for
deductible and taxable temporary
differences arising between the tax base of
assets and liabilities and their carrying
amount, except when the deferred income
tax arises from the initial recognition of
goodwill or an asset or liability in a
transaction that is not a business
combination and affects neither accounting
nor taxable profit or loss at the time of the
transaction.
Deferred income tax asset are recognized to
the extent that it is probable that taxable
profit will be available against which the
deductible temporary differences and the
carry forward of unused tax credits and
unused tax losses can be utilised.
The carrying amount of deferred income tax
assets is reviewed at each reporting date
and reduced to the extent that it is no longer
probable that sufficient taxable profit will
be available to allow all or part of the
deferred income tax asset to be utilised.
Deferred tax assets and liabilities are
measured using substantively enacted tax
rates expected to apply to taxable income in
the years in which the temporary
differences are expected to be received or
settled.
Deferred tax assets and liabilities are offset
when they relate to income taxes levied by
the same taxation authority and the relevant
entity intends to settle its current tax assets
and liabilities on a net basis.
Deferred tax assets include Minimum
Alternative Tax (MAT) paid in accordance
with the tax laws in India, which is likely to
give future economic benefits in the form of
availability of set off against future income
tax liability. Accordingly, MAT is
recognized as deferred tax asset in the
Balance sheet when the asset can be
measured reliably and it is probable that the
future economic benefit associated with the
asset will be realised.
l) Financial instruments
A financial instrument is any contract that
gives rise to a financial asset of one entity
and a financial liability or equity instrument
of another entity.
1. Financial Assets.
i) Initial recognition and measurement:
All financial assets are recognized initially
at fair value plus, in the case of financial
assets not recorded at fair value through
profit or loss, transaction costs that are
attributable to the acquisition of the
financial asset. Transaction costs of financial
assets carried at fair value through profit or
loss are expensed in statement of profit or
loss. Purchases or sales of financial assets
that require delivery of assets within a time
frame established by regulation or
convention in the market place (regular way
trades) are recognized on the trade date, i.e.,
the date that the Company commits to
purchase or sell the asset.
ii) Subsequent measurement:
Financial assets at amortised
cost
Financial assets are subsequently measured
at amortised cost if these financial assets are
held within a business whose objective is to
hold these assets to collect contractual cash
flows and the contractual terms of the
financial assets give rise on specified dates
to cash flows that are solely payments of
principal and interest on the principal
amount outstanding.
Financial assets
at fair value through other
comprehensive income
Financial assets are measured at fair value
through other comprehensive income if
these financial assets are held within a
business whose objective is achieved by
both collecting contractual cash flows on
specified dates that are solely payments of
principal and interest on the principal
amount outstanding and selling financial
assets.
Financial assets
at fair value through profit or loss
Financial assets are measured at fair
value through profit or loss unless it is
measured at amortised cost or at fair
value through other comprehensive
income on initial recognition. The
transaction costs directly attributable to the
acquisition of financial assets and liabilities
at fair value through profit or loss are
immediately recognised in profit or loss.
iii. Derecognition:
A financial asset or where applicable, a part
of a financial asset is primarily
derecognised when: a. The rights to receive
cash flows from the asset have expired, or b.
The Company has transferred its rights to
receive cash flows from the asset or has
assumed an obligation to pay the received
cash flows in full without material delay to
a third party under a 'pass-
arrangement; and either (a) the Company
has transferred substantially all the risks
and rewards of the asset, or (b) the
Company has neither transferred nor
retained substantially all the risks and
rewards of the asset, but has transferred
control of the asset.
When the Company has transferred its
rights to receive cash flows from an asset or
has entered into a pass-through
arrangement, it evaluates if and to what
extent it has retained the risks and rewards
of ownership. When it has neither
transferred nor retained substantially all of
the risks and rewards of the asset, nor
transferred control of the asset, the
Company continues to recognise the
transferred asset to the extent of the
Company's continuing involvement.
iv. Impairment of financial assets:
In accordance with Ind AS 109, the
Company applies expected credit loss (ECL)
model for measurement and recognition of
impairment loss on the debt instruments,
that are measured at amortised cost e.g.,
loans, debt securities, deposits and trade
receivables.
Expected credit loss is the difference
between all contractual cash flows that are
due to the Company in accordance with the
contract and all the cash flows that the
entity expects to receive.
The management uses a provision matrix to
determine the impairment loss on the
portfolio of trade and other receivables.
Provision matrix is based on its historically
observed expected credit loss rates over the
expected life of the trade receivables and is
adjusted for forward looking estimates.
Expected credit loss allowance or reversal
recognised during the period is recognised
as income or expense, as the case may be, in
the statement of profit and loss. In case of
balance sheet, it is shown as reduction from
the specific financial asset.
2.Financial liabilities
Financial liabilities are measured at
amortised cost using the effective interest
method.
Equity instruments
An equity instrument is a contract that
evidences residual interest in the assets of
the company after deducting all of its
liabilities. Equity instruments recognised by
the Company are recognised at the
proceeds received net off direct issue cost.
i) Initial recognition and measurement:
At initial recognition, all financial liabilities
are recognised at fair value and in the case
of loans, borrowings and payables, net of
directly attributable transaction costs.
ii) Subsequent measurement:
a. Financial liabilities at fair value through
profit or loss:
Financial liabilities at fair value through
profit or loss include financial liabilities
held for trading and financial liabilities
designated upon initial recognition as at fair
value through profit or loss. Gain or losses
on liabilities held for trading are recognised
in the profit or loss.
b. Financial liabilities at amortised cost:
Amortised cost, in case of financial
liabilities with maturity more than one year,
is calculated by discounting the future cash
flows with effective interest rate.
The effective interest rate amortisation is
included as finance costs in the Statement of
Profit and Loss.
Financial liability with maturity of less than
one year is shown at transaction value.
iii. Derecognition:
A financial liability is derecognised when
the obligation under the liability is
discharged or cancelled or expires. The
difference between the carrying amount of a
financial liability that has been extinguished
or transferred to another party and the
consideration paid, including any non-cash
assets transferred or liabilities assumed, is
recognised in profit or loss as other income
or finance costs.
m) Cash and cash equivalents
The Company considers all highly liquid
financial instruments, which are readily
convertible into known amounts of cash
that are subject to an insignificant risk of
change in value and having original
maturities of three months or less from the
date of purchase, to be cash equivalents.
Cash and cash equivalents consist of
balances with banks which are unrestricted
for withdrawal and usage.
n) Financial Guarantee Contracts:
A financial guarantee contract is a contract
that requires the issuer to make specified
payments to reimburse the holder for a loss
it incurs because a specified debtor fails to
make payment when due in accordance
with original or modified terms of a debt
instrument.
The Company measures any financial
guarantee on initial recognition at their fair
value.
Subsequently these contracts are measured
at the higher of:
a. the amount of the loss allowance
determined as per impairment
requirements of Ind AS 109, and
b. the amount initially recognised, less
where appropriate, cumulative amount of
income recognized in accordance with the
principles of Ind AS 18.
o) Fair V alue Measurement:
The Company measures financial
instruments at fair value at each balance
sheet date.
Fair value is the price that would be
received to sell an asset or paid to transfer a
liability in an orderly transaction between
market participants at the measurement
date. The fair value measurement is based
on the presumption that the transaction to
sell the asset or transfer the liability takes
place either in the principal market for such
asset or liability, or in the absence of a
principal market, in the most advantageous
market which is accessible to the Company.
The fair value of an asset or a liability is
measured using the assumptions that
market participants would use when
pricing the asset or liability, assuming that
market participants act in their economic
best interest.
A fair value measurement of a non-financial
asset takes into account a market
participant's ability to generate economic
benefits by using the asset in its highest and
best use or by selling it to another market
participant that would use the asset in its
highest and best use.
The Company uses valuation techniques
that are appropriate in the circumstances
and for which sufficient data are available
to measure fair value, maximizing the use
of relevant observable inputs and
minimizing the use of unobservable inputs.
All assets and liabilities for which fair value
is measured or disclosed in the financial
statements are categorized within the fair
value hierarchy, described as follows, based
on the lowest level input that is significant
to the fair value measurement as a whole:
a. Level 1 - Quoted (unadjusted market
prices) in active markets for identical assets
or liabilities.
b. Level 2 - Valuation techniques for which
the lowest level input that is significant to
the fair value measurements is directly or
indirectly observable.
c. Level 3 - Valuation techniques for which
the lowest level input that is significant to
the fair value measurement is unobservable.
p) Investment in subsidiaries
Investment in subsidiaries are measured at
cost less impairment.
q) Property, plant and equipment
Property, plant and equipment are stated at
cost net of input tax credits, less
accumulated depreciation and accumulated
impairment losses, if any. Cost comprises
the purchase price and all attributable cost,
to bring the asset to its working condition
for its intended use. Borrowing costs
relating to acquisition of property, plant
and equipment which take substantial
period of time to get ready for its intended
use are also included to the extent they
relate to the period till such assets are ready
to put to use.
The Company adopted cost model as its
accounting policy, in recognition of the
property, plant and equipment and
recognises transaction value as the cost.
An item of Property, Plant and Equipment
is derecognised upon disposal or when no
future economic benefits are expected from
its use. Any gain or loss arising on
derecognition of the asset (calculated as the
difference between the net disposal
proceeds and the carrying amount of the
asset) is recognised in the Statement of
Profit and Loss. Property, Plant and
Equipment which are found to be not
usable or retired from active use or when no ]
further benefits are expected from their use
are removed from property, plant and
equipment and the carrying amount net of
scrap value, if any is charged to Statement
of Profit and Loss.
The improvements/modifications carried
on the lease hold land/property are
recognised as lease hold improvements and
are written off over the primary lease
period or the life of such improvement
whichever is lower.
r) Intangible assets
Intangible assets purchased are measured at
cost as of the date of acquisition, as
applicable, less accumulated amortisation
and accumulated impairment, if any.
Intangible assets consist of rights under
licensing agreement and software licences
which are amortised over license period
which equates the useful life ranging
between 5-6 years on a straight line basis.
s) Impairment of Non-financial assets
The carrying amounts of assets are
reviewed at each balance sheet date if there
is any indication of impairment based on
internal/ external factors. An impairment
loss is recognized wherever the carrying
amount of an asset exceeds its recoverable
amount. The recoverable amount is the
greater of the asset's net selling price and
value in use. In assessing value in use, the
estimated future cash flows are discounted
to their present value at the weighted
average cost of capital. After impairment,
depreciation is provided on the revised
carrying amount of the asset over its
remaining useful life.
Reversal of impairment losses recognised in
prior years is recorded when there is an
indication that the impairment losses
recognised for the asset are no longer
existing or have decreased.
) Employee benefits
Defined benefit plans
For defined benefit plans, the cost of
providing benefits is determined using the
Projected Unit Credit Method, with
actuarial valuations being carried out at
each Balance sheet date. Actuarial gains and
losses are recognised in full in the other
comprehensive income for the period in
which they occur. Past service cost both
vested and unvested is recognised as an
expense at the earlier of (a) when the plan
amendment or curtailment occurs; and (b)
when the entity recognises related
restructuring costs or termination benefits.
The retirement benefit obligations
recognised in the Balance sheet
represents the present value of the
defined benefit obligations reduced by the
fair value of scheme assets. Any asset
resulting from this calculation is limited to
the present value of available refunds and
deductions in future contributions to the
scheme.
ii. Defined contribution plans
Employer's contribution to provident fund/
employee state insurance which is in the
nature of defined contribution scheme is
expensed off when the contributions to the
respective funds are due. There are no other
obligations other than the contribution
payable to the fund.
iii. Compensated absences
Compensated absences which are not
expected to occur within twelve months
after the end of the period in which the
employee renders the related services are
recognised as an actuarially determined
liability at the present value of the defined
benefit obligation at the Balance sheet date.
u) Earnings per share
Basic earnings per share are computed
by dividing profit or loss attributable to
equity shareholders of the Company by
the weighted average number of equity
shares outstanding during the year. The
Company did not have any potentially
dilutive securities in any of the
years' presented.
v) Borrowing Costs:
Borrowing costs directly attributable to the
acquisition, construction or production of
an asset that necessarily takes a substantial
period of time to get ready for its intended
use or sale are capitalised as part of the cost
of the asset. All other borrowing costs are
expensed in the period in which they occur.
Borrowing costs consist of interest and
other costs that an entity incurs in
connection with the borrowing of funds.
Borrowing cost also includes exchange
differences to the extent regarded as an
adjustment to the borrowing costs.
w) Segment Reporting:
Operating segments are reported in a
manner consistent with the internal
reporting provided to the Chief operating
decision maker ("CODM").
The board of directors of the company has
identified the Chairman and Managing
Director as the CODM.
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