II Summary of material accounting policies
The standalone financial statements have been prepared using the material accounting policies and measurement bases
summarised below. These were used throughout all periods presented in the standalone financial statements.
a) Property, plant and equipment
Recognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if
capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use.
Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the asset's
carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Company. All other repair and maintenance costs are recognised in statement of
profit and loss as incurred.
Subsequent measurement (depreciation and useful lives)
Property, plant and equipment are subsequently measured at cost less accumulated depreciation and impairment losses.
Depreciation on property, plant and equipment is provided on a straight-line basis, computed on the basis of useful lives
prescribed in Schedule II to the Act.
De-recognition
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when
no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognized in the
statement of profit and loss, when the asset is derecognised.
b) Intangible assets
Recognition and initial measurement
Intangible assets are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization
criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use.
Subsequent measurement (amortisation)
Intangible assets consisting of software are amortised on a straight line basis over a period of 4 years from the date when
the assets are available for use. The estimated useful life (amortisation period) of the intangible assets is arrived basis the
expected pattern of consumption of economic benefits and is reviewed at the end of each financial year and the amortisation
period is revised to reflect the changed pattern, if any.
c) Revenue recognition
Revenue (other than for those items to which Ind AS 109 Financial Instruments are applicable) towards satisfaction of a
performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that
performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account
of various discounts and schemes offered by the Company as part of the contract. Ind AS 115, Revenue from contracts with
customers, outlines a single comprehensive model of accounting for revenue arising from contracts with customers.
The Company recognises revenue from contracts with customers based on a five step model as set out in Ind AS 115:
Step 1: Identify contract(s) with a customer: A contract is defined as an agreement between two or more parties that creates
enforceable rights and obligations and sets out the criteria for every contract that must be met.
Step 2: Identify performance obligations in the contract: A performance obligation is a promise in a contract with a customer
to transfer a good or service to the customer.
Step 3: Determine the transaction price: The transaction price is the amount of consideration to which the Company expects
to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf
of third parties.
Step 4: Allocate the transaction price to the performance obligations in the contract: For a contract that has more than
one performance obligation, the Company allocates the transaction price to each performance obligation in an amount
that depicts the amount of consideration to which the Company expects to be entitled in exchange for satisfying each
performance obligation.
Step 5: Recognise revenue when (or as) the Company satisfies a performance obligation.
The Company recognises revenue from the following sources:
Interest income
Interest income is recorded on accrual basis using the effective interest rate (EIR) method.
Commission income
Commissions / brokerage from distribution of financial products are recognised upon allotment of the securities to the
applicant.
Depository account maintenance income
Depository account maintenance income is recognised on accrual basis and as at the time when the right to receive is
established by the reporting date.
Dividend income
Dividend income is recognised when the right to receive payment of the dividend is established, it is probable that the
economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured
reliably.
d) Borrowing costs
Borrowing costs directly attributable to the acquisition and/or construction of a qualifying asset are capitalized during the
period of time that is necessary to complete and prepare the asset for its intended use or sale. A qualifying asset is one that
necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to the
statement of profit and loss as incurred basis the effective interest rate method.
e) Taxation
Tax expense recognized in statement of profit and loss comprises the sum of deferred tax and current tax except the ones
recognized in other comprehensive income or directly in equity.
Current tax is determined as the tax payable in respect of taxable income for the year and is computed in accordance with
relevant tax regulations. Current Income-tax relating to items recognised outside profit or loss is recognised outside profit or
loss (either in other comprehensive income or in equity).
Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and
it is intended to realise the asset and settle the liability on a net basis or simultaneously.
Deferred tax is recognised in respect of temporary differences between carrying amount of assets and liabilities for financial
reporting purposes and corresponding amount used for taxation purposes. Deferred tax assets on unrealised tax loss are
recognised to the extent that it is probable that the underlying tax loss will be utilised against future taxable income. This
is assessed based on the Company's forecast of future operating results, adjusted for significant non-taxable income and
expenses and specific limits on the use of any unused tax loss. Unrecognised deferred tax assets are re-assessed at each
reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred
tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which
the Company expects, at the reporting date to recover or settle the carrying amount of its assets and liabilities. Deferred tax
assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended
to realise the asset and settle the liability on a net basis or simultaneously. Deferred tax relating to items recognised outside
statement of profit and loss is recognised outside statement of profit or loss (either in other comprehensive income or in
equity).
f) Employee benefits
Short-term employee benefits
Short-term employee benefits comprise of employee costs such as salaries, bonus etc. is recognized on the basis of the
amount paid or payable for the period during which services are rendered by the employee.
Defined contribution plans
The Company has a defined contribution plans namely provident fund, pension fund, labour welfare fund and employees
state insurance scheme. The contribution made by the Company in respect of these plans are charged to the statement of
profit and loss.
Defined benefit plans
The Company has unfunded gratuity as defined benefit plan where the amount that an employee will receive on retirement
is defined by reference to the employee's length of service and final salary. The liability recognised in the balance sheet
for defined benefit plans as the present value of the defined benefit obligation (DBO) at the reporting date. Management
estimates the DBO annually with the assistance of independent actuaries. Actuarial gains/losses resulting from re¬
measurements of the liability are included in other comprehensive income.
Other long-term employee benefits
The Company also provides the benefit of compensated absences to its employees which are in the nature of long-term employee
benefit plan. Liability in respect of compensated absences becoming due and expected to availed after one year from the Balance
Sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit
method as on the reporting date. Actuarial gains and losses arising from past experience and changes in actuarial assumptions are
charged to statement of profit and loss in the year in which such gains or losses are determined.
g) Share based payments
The Company has formulated various Employees Stock Option Schemes. The fair value of options granted under Employee
Stock Option Plan is recognised as an employee benefits expense with a corresponding increase in other equity. The total
amount to be expensed is determined by reference to the fair value of the options. The total expense is recognised over the
vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each
period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting
and service conditions. It recognises the impact of the revision to original estimates, if any, in statement of profit and loss,
with a corresponding adjustment to equity.
h) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits and short-term highly liquid investments that are
readily convertible into known amount of cash and which are subject to an insignificant risk of changes in value. For cash
flow statement purposes, cash and cash equivalents includes bank overdrafts that are repayable on demand and form an
integral part of the Company's cash management.
i) Equity investment in subsidiaries
Investment in subsidiaries is recognised at cost and are not adjusted to fair value at the end of each reporting period as
allowed by Ind AS 27 'Separate financial statement'. Cost of investment represents amount paid for acquisition of the said
investment and a proportionate recognition of the fair vale of shares granted to employees of subsidiary under a group share
based payment arrangement.
Impairment of Investments
The Company assesses at the end of each reporting period, if there are any indications that the said investment may be
impaired. If so, the Company estimates the recoverable value/amount of the investment and provides for impairment, if any
i.e. the deficit in the recoverable value over cost.
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