2. Significant accounting policies
This note provides a list of the significant accounting policies adopted in the preparation
of these financial statements. These policies have been consistently applied to all the
years presented, unless otherwise stated.
a) Basis of preparation
i. Compliance with Ind AS
The financial statements comply in all material aspects with Indian Accounting
Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act)
[Companies (Indian Accounting Standards) Rules, 2015] and other relevant
provisions of the Act.
ii. Historical cost convention
The financial statements have been prepared on a historical cost basis, except for the
following:
- Non-Current Investment that are measured at fair value;
Historical cost is generally based on the fair value of the consideration given in
exchange for goods and services.
Fair value measurement
The company measures financial instruments, such as investment in Equity share
etc, 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 the asset or liability, or
• In the absence of a principal market, in the most advantageous market for the
asset or liability
All assets and liabilities for which fair value is measured or disclosed in the financial
statements are categorised 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-
• Level 1 — Quoted (unadjusted) prices in active markets for identical assets or
liabilities
• Level 2 — Valuation techniques for which the lowest level input that is significant
to the fair value measurement is directly or indirectly observable
• Level 3 — Valuation techniques for which the lowest level input that is significant
to the fair value measurement is unobservable
At each reporting date, management analyses the movements in the values of assets
and liabilities which are required to be remeasured or re-assessed as per the
company's accounting policies. For this analysis, management regularly reviews
significant unobservable inputs applied in the valuation by agreeing the information
in the valuation computation to contracts and other relevant documents.
b) Use of Estimates
The preparation of financial statements in conformity with Ind AS requires the
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenue, costs, expenses and other comprehensive income that are
reported and disclosed in the financial statements and accompanying notes. These
estimates are based on the management 's best knowledge of current events, historical
experience, actions that the Company may undertake in the future and on various other
assumptions that are believed to be reasonable under the circumstances. Significant
estimates and assumptions are used, but not limited to accounting for costs expected to
be incurred to complete performance under IT service arrangements, allowance for
uncollectible accounts receivables and unbilled revenue, accrual of warranty costs,
income taxes, valuation of share-based compensation, future obligations under
employee benefit plans, the useful lives of property, equipment and intangible assets,
impairment of property, equipment, intangibles and goodwill, valuation allowances for
deferred tax assets, and other contingencies and commitments. Changes in estimates
are reflected in the financial statements in the period in which the changes are made.
Actual results could differ from those estimates.
c) Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash
equivalents include cash in hand, deposits held at call with financial institutions, other
short-term highly liquid investments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
d) Cash flow statement
Cash flows are reported using indirect method, whereby Profit before tax reported under
the statement of profit/ (loss) is adjusted for the effects of transactions of non-cash
nature and any deferrals or accruals of past or future cash receipts or payments. The
cash flows from operating, investing and financing activities of the company are
segregated based on available information.
e) Property, plant and equipment
All other items of property, plant and equipment are stated at historical cost less
depreciation. Historical cost includes expenditure that is directly attributable to the
acquisition of the items. Subsequent costs are included in the asset 's carrying amount
or recognized as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Company and the cost of the
item can be measured reliably. The carrying amount of any component accounted for as
a separate asset is derecognized when replaced. All other repairs and maintenance are
charged to profit or loss during the reporting period in which they are incurred.
Depreciation methods, estimated useful lives and residual value
Depreciation is provided on a pro-rata basis on the straight-line method over the
estimated useful lives of the assets. The estimates of useful lives of the assets are as
follows:
Asset Useful life
Computers and peripherals 3 years
Office Equipment 5 years
The useful lives have been determined based on Schedule II to the Companies Act;
2013. The residual values are not more than 5% of the original cost of the asset.
The asset's residual values and useful life are reviewed, and adjusted if appropriate, at
the end of each reporting period.
The asset's carrying amount is written down immediately to it's recoverable amount if
the asset's carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying
amount. These are included in profit or loss within other gains/(losses).
f) Intangible assets
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost
less accumulated amortisation and accumulated impairment losses. Amortisation is
recognised on a straight-line basis over their estimated useful lives. The estimated useful
life and amortisation method are reviewed at the end of each reporting period, with the
effect of any changes in estimate being accounted for on a prospective basis. Intangible
assets with indefinite useful lives that are acquired separately are carried at cost less
accumulated impairment losses.
Intangible assets acquired in business combinations are stated at fair value as
determined by the management of the Company on the basis of valuation by expert
valuers, less accumulated amortisation. The estimated useful life of the intangible assets
and the amortisation period are reviewed at the end of each financial year and the
amortisation period is revised to reflect the changed pattern, if any.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are
expected from use. Gains or losses arising from derecognition of an intangible asset,
measured as the difference between the net disposal proceeds and the carrying amount
of the asset, are recognised in profit or loss when the asset is derecognised.
g) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to
amortization and are tested annually for impairment, or more frequently if events or
changes in circumstances indicate that they might be impaired. Other assets are tested
for impairment annually, or more frequently if events or changes in circumstances
indicate that they might be impaired whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is
recognized for the amount by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is higher of an asset's fair value less cost of disposal or
value in use. For the purpose of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or a group of assets (cash-generating
units). Non-financial assets, other than goodwill, that suffer an impairment are reviewed
for possible reversal of the impairment at the end of each reporting period. However, at
present the company doesn't have any goodwill or Intangible asset.
h) Revenue recognition
Revenue is recognized on accrual basis. Sale/purchase of securities is recognized on the
basis of actual deliveries of securities. Profit/loss on sale of investments is arrived at
considering cost of investments. Interest income is not recognized using the effective
interest method as the terms of repayment of the loans given are not specified. The
company is recognising the interest income on loans on simple interest calculation
method.
Rendering of services
Service revenue comprises, advertisement revenue, Broadcasting Revenue and other
related services. Income from services is recognised upon completion of services as per
the terms of contracts with the customers. Period based services are accrued and
recognised pro-rata over the contractual period.
Sale of goods
Revenue from the sale of goods is recognised when the goods are delivered and titles
have passed, at which time all the following conditions are satisfied:
• The company has transferred to the buyer the significant risks and rewards of
ownership of the goods;
• The company retains neither continuing managerial involvement to the degree
usually associated with ownership nor effective control over the goods sold;
• The amount of revenue can be measured reliably
• It is probable that the economic benefits associated with the transaction will flow to
the Company; and
• The costs incurred or to be incurred in respect of the transaction can be measured
reliably.
i) Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on
a trade date basis. Regular way purchases or sales are purchases or sales of financial
assets that require delivery of assets within the time frame established by regulation or
convention in the marketplace. All recognised financial assets are subsequently
measured in their entirety at either amortised cost or fair value, depending on the
classification of the financial assets.
Classification of financial assets
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive
income, or through profit or loss), and
- those measured at amortized cost.
The classification depends on the group's business model for managing the financial
assets and the contractual terms of the cash flows.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt
instrument and of allocating interest income over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash receipts (including
all fees and points paid or received that form an integral part of the effective interest
rate, transaction costs and other premiums or discounts) through the expected life of the
debt instrument, or, where appropriate, a shorter period, to the net carrying amount on
initial recognition.
However, The Company is not following the effective interest method and Interest
income is recognised on a simple interest basis for debt instruments other than those
financial assets classified as at Fair Value Through Profit and Loss (FVTPL). Interest
income is recognised in profit or loss and is included in the "Other income" line item.
Investments in equity instruments at FVTOCI
On initial recognition, the Company can make an irrevocable election (on an instrument-
by-instrument basis) to present the subsequent changes in fair value in other
comprehensive income pertaining to investments in equity instruments. This election is
not permitted if the equity investment is held for trading. These elected investments are
initially measured at fair value plus transaction costs. Subsequently, they are measured
at fair value with gains and losses arising from changes in fair value recognised in other
comprehensive income and accumulated in the 'Reserve for equity instruments through
other comprehensive income'. The cumulative gain or loss is not reclassified to profit or
loss on disposal of the investments.
A financial asset is held for trading if:
• it has been acquired principally for the purpose of selling it in the near term; or
• on initial recognition it is part of a portfolio of identified financial instruments that the
Company manages together and has a recent actual pattern of short-term profit-taking;
or
• it is a derivative that is not designated and effective as a hedging instrument or a
financial guarantee.
Financial assets at Fair Value through Profit or Loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company
irrevocably elects on initial recognition to present subsequent changes in fair value in
other comprehensive income for investments in equity instruments which are not held
for trading.
Debt instruments that do not meet the amortised cost criteria or FVTOCI criteria (see
above) are measured at FVTPL. In addition, debt instruments that meet the amortised
cost criteria or the FVTOCI criteria but are designated as at FVTPL are measured at
FVTPL.
A financial asset that meets the amortised cost criteria or debt instruments that meet
the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such
designation eliminates or significantly reduces a measurement or recognition
inconsistency that would arise from measuring assets or liabilities or recognising the
gains and losses on them on different bases. The Company has not designated any debt
instrument as at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period,
with any gains or losses arising on re-measurement recognised in profit or loss. The net
gain or loss recognised in profit or loss incorporates any dividend or interest earned on
the financial asset and is included in the 'Other income' line item.
Impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on
financial assets measured at amortised cost, debt instruments at FVTOCI, lease
receivables, trade receivables, other contractual rights to receive cash or other financial
asset, and financial guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective
risks of default occurring as the weights. 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 Company expects to receive (i.e. all cash shortfalls),
discounted at the original effective interest rate (or credit-adjusted effective interest rate
for purchased or originated credit-impaired financial assets). The Company estimates
cash flows by considering all contractual terms of the financial instrument (for example,
prepayment, extension, call and similar options) through the expected life of that
financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal
to the cost at which such instrument was booked.
If the Company measured loss allowance for a financial instrument at lifetime expected
credit loss model in the previous period, but determines at the end of a reporting period
that the credit risk has not increased significantly since initial recognition due to
improvement in credit quality as compared to the previous period, the Company again
measures the loss allowance based on 12-month expected credit losses.
When making the assessment of whether there has been a significant increase in credit
risk since initial recognition, the Company uses the change in the risk of a default
occurring over the expected life of the financial instrument instead of the change in the
amount of expected credit losses. To make that assessment, the Company compares the
risk of a default occurring on the financial instrument as at the reporting date with the
risk of a default occurring on the financial instrument as at the date of initial recognition
and considers reasonable and supportable information, that is available without undue
cost or effort, that is indicative of significant increases in credit risk since initial
recognition.
For trade receivables or any contractual right to receive cash or another financial asset
that result from transactions that are within the scope of Ind AS 11 and Ind AS 18, the
Company always measures the loss allowance at an amount equal to lifetime expected
credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade
receivables, the Company has used a practical expedient as permitted under Ind AS 109.
This expected credit loss allowance is computed based on a provision matrix which takes
into account historical credit loss experience and adjusted for forward-looking
information.
The impairment requirements for the recognition and measurement of a loss allowance
are equally applied to debt instruments at FVTOCI except that the loss allowance is
recognised in other comprehensive income and is not reduced from the carrying amount
in the balance sheet.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash
flows from the asset expire, or when it transfers the financial asset and substantially all
the risks and rewards of ownership of the asset to another party. If the Company neither
transfers nor retains substantially all the risks and rewards of ownership and continues
to control the transferred asset, the Company recognises its retained interest in the
asset and an associated liability for amounts it may have to pay. If the Company retains
substantially all the risks and rewards of ownership of a transferred financial asset, the
Company continues to recognise the financial asset and also recognises a collateralised
borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset's
carrying amount and the sum of the consideration received and receivable and the
cumulative gain or loss that had been recognised in other comprehensive income and
accumulated in equity is recognised in profit or loss if such gain or loss would have
otherwise been recognised in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company
retains an option to repurchase part of a transferred asset), the Company allocates the
previous carrying amount of the financial asset between the part it continues to
recognise under continuing involvement, and the part it no longer recognises on the
basis of the relative fair values of those parts on the date of the transfer. The difference
between the carrying amount allocated to the part that is no longer recognised and the
sum of the consideration received for the part no longer recognised and any cumulative
gain or loss allocated to it that had been recognised in other comprehensive income is
recognised in profit or loss if such gain or loss would have otherwise been recognised in
profit or loss on disposal of that financial asset. A cumulative gain or loss that had been
recognised in other comprehensive income is allocated between the part that continues
to be recognised and the part that is no longer recognised on the basis of the relative
fair values of those parts.
j) Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by a Company are classified as either financial
liabilities or as equity in accordance with the substance of the contractual arrangements
and the definitions of a financial liability and an equity instrument.
Equity instruments
All equity Instruments are classified at Fair Value through Other Comprehensive Income
(FVTOCI). An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments issued by a
Company are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company's own equity instruments is recognised and deducted
directly in equity.
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective
interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not
qualify for derecognition or when the continuing involvement approach applies, financial
guarantee contracts issued by the Company, and commitments issued by the Company
to provide a loan at below-market interest rate are measured in accordance with the
specific accounting policies set out below.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either
contingent consideration recognised by the Company as an acquirer in a business
combination to which Ind AS 103 applies or is held for trading or it is designated as at
FVTPL.
A financial liability is classified as held for trading if:
• it has been incurred principally for the purpose of repurchasing it in the near term; or
• on initial recognition it is part of a portfolio of identified financial instruments that the
Company manages together and has a recent actual pattern of short-term profit-taking;
or
• it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading or contingent
consideration recognised by the Company as an acquirer in a business combination to
which Ind AS 103 applies, may be designated as at FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise;
• the financial liability forms part of a Company's financial assets or financial liabilities or
both, which is managed and its performance is evaluated on a fair value basis, in
accordance with the Company's documented risk management or investment strategy,
and information about the Company is provided internally on that basis; or
• it forms part of a contract containing one or more embedded derivatives, and Ind AS
109 permits the entire combined contract to be designated as at FVTPL in accordance
with Ind AS 109.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on
remeasurement recognised in profit or loss. The net gain or loss recognised in profit or
loss incorporates any interest paid on the financial liability and is included in the 'Other
income' line item.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL,
the amount of change in the fair value of the financial liability that is attributable to
changes in the credit risk of that liability is recognised in other comprehensive income,
unless the recognition of the effects of changes in the liability's credit risk in other
comprehensive income would create or enlarge an accounting mismatch in profit or loss,
in which case these effects of changes in credit risk are recognised in profit or loss. The
remaining amount of change in the fair value of liability is always recognised in profit or
loss. Changes in fair value attributable to a financial liability's credit risk that are
recognised in other comprehensive income are reflected immediately in retained
earnings and are not subsequently reclassified to profit or loss.
Gains or losses on financial guarantee contracts and loan commitments issued by the
Company that are designated by the Company as at fair value through profit or loss are
recognised in profit or loss.
Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are
measured at amortised cost at the end of subsequent accounting periods. The carrying
amounts of financial liabilities that are subsequently measured at amortised cost are
determined based on the effective interest method. Interest expense that is not
capitalised as part of costs of an asset is included in the 'Finance costs' line item.
The effective interest method is a method of calculating the amortised cost of a financial
liability and of allocating interest expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash payments (including all fees
and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the expected life of the
financial liability, or (where appropriate) a shorter period, to the net carrying amount on
initial recognition.
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 payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by a Company are initially measured at their fair
values and, if not designated as at FVTPL, are subsequently measured at the higher of:
• the amount of loss allowance determined in accordance with impairment requirements
of Ind AS 109; and
• the amount initially recognised less, when appropriate, the cumulative amount of
income recognised in accordance with the principles of Ind AS 18.
Commitments to provide a loan at a below-market interest rate
Commitments to provide a loan at a below-market interest rate are initially measured at
their fair values and, if not designated as at FVTPL, are subsequently measured at the
higher of:
• the amount of loss allowance determined in accordance with impairment requirements
of Ind AS 109; and
• the amount initially recognised less, when appropriate, the cumulative amount of
income recognised in accordance with the principles of Ind AS 18.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company's
obligations are discharged, cancelled or have expired. An exchange between a lender of
debt instruments with substantially different terms is accounted for as an
extinguishment of the original financial liability and the recognition of a new financial
liability. Similarly, a substantial modification of the terms of an existing financial liability
(whether or not attributable to the financial difficulty of the debtor) is accounted for as
an extinguishment of the original financial liability and the recognition of a new financial
liability. The difference between the carrying amount of the financial liability
derecognised and the consideration paid and payable is recognised in profit or loss.
k) Employee benefits
Employee benefits are recognized as an expense in the profit and loss account of the
year
l) Leases
Leases under which the company assumes substantially all the risks and rewards of
ownership are classified as finance leases. When acquired, such as sets are capitalized at
fair value or present value of the minimum lease payments at the inception of the lease,
whichever is lower. Lease payments under operating leases are recognized as an
expenses on a straight-line basis in net profit in the Statement of Profit and Loss over
the lease term.
m) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of
qualifying assets, which are assets that necessarily take a substantial period of time to
get ready for their intended use or sale, are added to the cost of those assets, until such
time as the assets are substantially ready for their intended use or sale.
Interest income earned on the temporary investment of specific borrowings pending
their expenditure on qualifying assets is deducted from the borrowing costs eligible for
capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are
incurred.
n) Earnings per share
i. Basic earnings per share
Basic earnings per share is calculated by dividing:
• The profit attributable to owners of the Company.
• By the weighted average number of equity shares outstanding during the
financial year, adjusted for bonus elements in equity shares issued during the
year and excluding treasury shares.
ii. Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic
earnings per share to take into account.
• The after income tax effect of interest and other financing costs associated
with dilutive potential equity shares and
• The weighted average number of additional equity shares that would have
been outstanding assuming the conversion of all dilutive potential equity
shares.
o) Income tax
The income tax expense or credit for the period is the tax payable on the current
period's taxable income based on the applicable income tax rate for each jurisdiction
adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the end of the reporting period in the countries where the
Company and its subsidiaries (including branches) operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It establishes
provisions, where appropriate, on the basis of amounts expected to be paid to the tax
authorities.
Deferred income tax is provided in full, using the liability method, on temporary
differences arising between the tax basis of assets and liabilities and their carrying
amounts in the financial statements. Deferred income tax is also not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither accounting profit
nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantially enacted by the end of the reporting period
and are expected to apply when the related deferred income tax asset is realized or the
deferred income tax liability is settled.
Deferred tax assets are recognized for all deductible temporary differences and unused
tax losses only if it is probable that future taxable amounts will be available to utilize
those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to
offset current tax assets and liabilities and when the deferred tax balances relate to the
same taxation authority. Current tax assets and tax liabilities are offset where the entity
has a legally enforceable right to offset and intends either to settle on a net basis, or to
realize the asset and settle the liability simultaneously.
Current tax & deferred tax are recognized in statement of profit or loss, except to the
extent that it relates to items recognized in Other Comprehensive Income or directly in
equity. In this case, the tax is also recognized in Other Comprehensive Income or
directly in equity, respectively.
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