Note 2 Significant accounting policies
This note provides a list of significant accounting policies adopted in preparation of standalone financial statements. These policies have
been consistently applied to all the years presented, unless otherwise stated. There is no change in accounting policies during the year
as compared to previous year.
2.1 Basis of preparation of Financial Statements2.1.1 Compliance with Ind-AS
The financial statements of the Company comply with all material aspects with Indian Accounting Standards ('Ind-AS') notified under
section 133 of the Companies Act, 2013 ('the Act') read with the Companies (Indian Accounting Standards) Rules,2015 as amended
from time to time and other relevant provisions of the Act. Any directions issued by the RBI or other regulators are implemented as and
when they become applicable.
2.1.2 Presentation of financial statements
The Balance Sheet, the Statement of Changes in Equity and the Statement of Profit and Loss are presented in the format prescribed
under Division III of Schedule III of the Companies Act,2013,as amended from time to time, for Non Banking Financial Companies
('NBFC's) that are required to comply with Ind-AS. The Statement of Cash Flows has been presented as per the requirements of Ind-AS
7 Statement of Cash Flows.
2.1.3 Basis of preparation
The financial statements have been prepared under the historical cost convention on the accrual basis except for certain financial
instruments and plan assets of defined benefit plans, which are measured at fair values at the end of each reporting period as explained
in the accounting policies below:
Financial instruments at fair value through profit and loss (FVTPL) that is measured at fair value.
Net defined benefit (asset)/ liability - fair value of plan assets less present value of defined benefit obligation.
2.1.4 Functional and Presentation currency
These financial statements are presented in Indian Rupees (INR), which is the Company's functional and presentation currency. All
amounts have been denominated in lacs and rounded off to the nearest two decimal, except when otherwise indicated.
2.1.5 Use of estimates and judgements
The preparation of financial statements in conformity with Ind-AS requires management to make estimates, judgements and assumptions
that affect the application of accounting policies and the reported amounts of assets and liabilities (including contingent liabilities) and
disclosures as of the date of the financial statements and the reported amounts of revenues and expenses for the reporting period.
Actual results could differ from these estimates. Accounting estimates and underlying assumptions are reviewed on an ongoing basis
and could change from period to period. Appropriate changes in estimates are recognized in the periods in which the Company becomes
aware of the changes in circumstances surrounding the estimates. Any revisions to accounting estimates are recognized prospectively
in the period in which the estimate is revised and for future periods. The estimates and judgements that have significant impact on the
carrying amount of assets and liabilities at each balance sheet date are discussed below:
(i) Fair value of financial instruments
Some of the Company's assets and liabilities are measured at fair value for financial reporting purposes. 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 regardless of whether that price is directly observable or estimated using another valuation technique.
Fair value measurements under Ind-AS are categorised into Level 1,2,or 3 based on the degree to which the inputs to the fair value
measurements are observable and the significance of the inputs to the fair value measurement in its entirety. Information about the
valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in Note -38
(ii) Business model assessment
Classification and measurement of financial assets depends on the results of the business model test. The Company determines the
business model at a level that reflects how group of financial assets are managed together to achieve a particular business objective.
This assessment includes judgement reflecting all relevant evidence including how the performance of the assets is evaluated and their
performance measured, the risks that affect the performance of the assets and how these are managed and how the managers of
the assets are compensated, Monitoring is part of the Company's continuous assessment of whether the business model for which the
remaining financial assets are held continues to be appropriate and if it is not appropriate whether there has been a change in business
model and so a prospective change to the classification of those assets.
(iii) Expected credit loss
When determining whether the risk of default on a financial instrument has increased significantly since initial recognition, the Company
considers reasonable and supportable information that is relevant and available without undue cost of effort. This includes both
quantitative and qualitative information and analysis, based on the Company's historical experience and credit assessment and including
forward looking information.
The inputs used and process followed by the Company in determining the ECL have been detailed in Note- 39.
(iv) Effective interest rate
The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected behavioural
life of the financial asset to the gross carrying amount of the financial asset.
This estimation by nature, requires an element of judgement regarding the expected behaviour and life cycle of the instruments, the
effect of potentially different interest rates at various stages and other characteristics of the product life cycle (including prepayments
and penalty interest and charges) as well expected changes to the base rate and other transaction costs and fees paid or received that
are integral parts of the instrument.
(v) Useful life and expected residual value of assets
Depreciation and amortization is derived after determining an estimate of an asset's expected useful life and expected residual value
at the end of the life. The useful lives and residual values of Company's assets are determined by management at the time the asset is
acquired and reviewed periodically, including at each financial year end, The lives are based on historical experience with similar assets
as well as anticipation of future events, which may impact their life, such as changes in technology.
(vi) Deferred Tax
Deferred Tax is recognized on temporary differences between the tax bases of assets and liabilities and their carrying amounts, at
the rates that have been enacted or substantively enacted at the reporting date. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable profits during the periods in which those temporary differences become deductible.
The Company considers the expected reversal of deferred tax liabilities and projected future taxable income in making this assessment.
The amount of the deferred tax assets considered realisable, however could be reduced in the near term if estimates of future taxable
income during the carry forward period are reduced.
(vii) Defined benefit plans
The cost of the defined benefit plans and the present value of the defined benefit obligations are based on actuarial valuation using the
projected unit credit method. An actuarial valuation involves making various assumptions that may differ from actual developments in the
near future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities
involved in the valuation and its long term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All
assumptions are reviewed at each reporting date.
(viii) Leases
The determination of the incremental borrowing rate used to measure lease liabilities
(ix) Provisions and contingencies
The Company creates a provision when there is present obligation as a result of a past event and, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. When the likelihood of outflow of resources is remote, no provision or disclosure is made.
If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate,
the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a
finance cost.
2.2 Investments and financial instruments / assets2.2.1 Date of recognition
Financial assets and financial liabilities are recognized in the Company's balance sheet when the Company becomes a party to the
contractual provisions of the instrument.
2.2.2 Initial recognition and measurement
Recognised financial instruments are initially measured at transaction price, which equates fair value.
Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities are added to or
deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit and loss are recognized immediately in
the statement of profit & loss.
2.2.3 Classification and Subsequent measurement
(i) Financial assets
The Company based on the business model, the contractual characteristics of the financial assets and specific election where appropriate,
classifies and measures financial assets in the following three categories:
(a) Financial assets at amortised cost
A financial asset is measured at amortised cost if both following conditions are met :
- The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows,
and
-The contractual terms of The financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on The principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR)
method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included in other income in the statement of profit and loss. The losses arising from
impairment are recognised in the statement of profit and loss.
The Company records loans at amortised cost.
(b) Financial assets at fair value through other comprehensive income
A financial asset is measured at fair value through other comprehensive income if both of the following criteria are met :
-The financial asset is held within a business model whose objective is achieve by both collecting contractual cash flows and selling the
financial assets, and
-The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
Gains and losses on these equity instruments are never recycled to Statement of profit & loss but transferred in retained earnings.
Dividends on such equity instruments are recognised in Statement of Profit & Loss as dividend income when the right of the payment
has been established, except when the Company benefits from such proceeds as a recovery of part of the cost of the instrument, in
which case such gains are recorded in OCI.
Equity Instruments at FVOCI are not subject to an impairment assessment.
(c )Financial assets at fair value through profit or loss
A financial asset which do not meet the criteria for categorisation as at amortised cost or as FVOCI, are measured at FVTPL. Subsequent
changes in fair value are recognised in the Statement of Profit & Loss.
The Company records investments in equity instruments, other than those classified at amortized cost and at FVOCI and investment in
mutual funds at FVTPL.
(ii) Financial Liabilities and equity instrument
Equity instruments or debt issued by the Company are classified as either as equity or as financial liabilities in accordance with the
substance of the contractual arrangements and the definitions of an equity instrument or of an financial liability.
(a) Equity instrument
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. An
equity instrument issued by the Company is recognized at the proceeds received, net of directly attributable transactions costs.
(b)Financial liabilities
Financial liabilities are measured at amortised cost. The carrying amounts are determined based on the EIR method. Interest expense is
recognised in Statement of Profit and Loss.
Any gain or loss on de-recognition of financial liabilities is also recognised in Statement of Profit and Loss.
Undrawn loan commitments are not recorded in the balance sheet. However, these financial instruments are in the scope of expected
credit loss (ECL) calculation.
2.2.4 De-recognition of financial assets
A financial asset is de-recognised when :
(i) The contractual rights to receive cash flows from the financial asset have expired, or
(ii) The Company has transferred its contractual 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-through 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.
On de-recognition of financial asset, the difference between the carrying amount of the asset ( or the carrying amount allocated to the
portion of the asset de-recognised) and the sum of (i) the consideration received ( including any new asset obtained less any new liability
assumed) and (ii) any cumulative gain or loss that had been recognised in OCI is recognised in Statement of Profit & Loss.
2.2.5 Reclassification
The Company does not reclassify its financial assets subsequent to their initial recognition, apart from the exceptional circumstances
in which the Company acquires, disposes of, or terminates a business line or changes its business model. Financial liabilities are never
reclassified. However, such reclassifications, if any are done prospectively.
2.2.6 Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. The
impairment methodology applied depends on whether these has been a significant increase in credit risk and if so, assess the need to
provide for the same in the Statement of Profit & Loss.
ECL impairment loss allowance ( or reversal) is recognised during the period only if material and is recognised as income / expense in
the Statement of Profit and Loss. This amount is reflected under the head 'other expenses"' in the Statement of Profit & Loss.
Financial assets measured at amortised cost: ECL is presented as an allowance i.e. as an integral part of the measurement of those
assets in the Balance Sheet. The allowance reduces the net carrying amount. Until the assets meet write-off criteria, the Company does
not reduce impairment allowance from the carrying amount.
2.2.7 Investments in Subsidiary and Associates
Interest in subsidiaries, associates and a joint venture are recognised at cost and not adjusted to fair value at the end of each reporting
period. Cost represents amount paid for acquisition of the said investments.
The Company assesses at the end of each reporting period, if there are any indications that the said investments 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.
2.3. Fair value measurement
The Company measures financial instruments, such as, investment in mutual funds and investments in equity shares except investment
in subsidiaries, associates and joint venture, at fair value at each balance sheet date. Fair value is the price that would be received to sell
as 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 or transfer the liability takes place either:
(i) In the principal market for the asset or liability, or
(ii) In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of the asset or 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.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure
the fair value, maximising 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 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:
(i) Level 1- Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
(ii) Level 2- Valuation techniques for which the lowest level input is significant to the fair value measurement is directly or indirectly
observable;
(iii) Level 3- valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
The Company has set policies and procedures for both recurring and non recurring fair value measurement of financial assets, which
includes valuation techniques and inputs to use for each case.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature,
characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
2.4. Investment property
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is
classified as Investment Property. Investment Property is measured at its cost, including related transaction costs and where applicable
borrowing costs less depreciation and impairment, if any. Subsequent expenditure is capitalised to the asset's carrying amount only
when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can
be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is
replaced, the carrying amount of the replaced part is derecognised.
Depreciation on investment property is provided on a prorate basis on straight line method over the estimated useful lives. Useful life of
assets, as assessed by the Management,
The fair values of investment property is disclosed in the notes. Fair values is determined by the company based on the management
on the basis of prevailing rates in the area in which the property is situated considering other factors like age of building etc and once in
every three years, fair value is being ascertained by an independent valuer who holds a recognised and relevant professional qualification
and has recent experience in the location and category of the investment property.
2.5. Property, plant & equipments and depreciation / amortisation
(i) Property, plant & equipment
Property plant & equipment, capital work in progress except freehold land are carried at cost of acquisition or cost of construction as
the case may be, less accumulated depreciation and amortisation. Freehold land is carried at cost.
Cost comprises of the purchase price including import duties and non refundable taxes, and directly attributable expenses incurred to
bring the asset to the location and condition necessary for it to be capable of being operated in a manner intended by the management.
Changes in the expected useful life, if any, are accounted for by changing the amortisation period and treated as changes in accounting
estimates. All other repair and maintenance costs are recognised in the Statement of profit & Loss.
An item of property, plant & 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 derecognition of the assets (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss,
when the asset is derecognised.
(ii) Depreciation
Depreciation is provided on a pro-rata basis for all tangible assets on straight line method over the useful life of assets at the rates and
in the manner prescribed under Schedule II to the Companies Act, 2013. Depreciation on addition to assets and assets sold during the
year is being provided for on a pro rata basis with reference to the month in which such asset is added or sold as the case may be.
Amount paid for leasehold land is amortised over a period of lease on straight line method.
The residual values, useful lives and method of depreciation of property, plant and equipment are reviewed at each financial year end
and adjusted prospectively, if appropriate.
(iii) Impairment of property, plant & equipment
An assessment is done at each balance sheet date as to whether there are any indications that an asset may be impaired. If any such
indication exists, an estimate of the recoverable amount of the asset / cash generating unit (CGU) is made. Where the carrying amount of
the asset/CGU exceeds the recoverable amount, the carrying value is written down to the recoverable amount. The reduction is treated
as an impairment loss and is recognised in the Statement of Profit and Loss. If at the balance sheet date there is an indication that a
previously assessed impairment loss on longer exists, the recoverable amount is reassessed and the asset is reflected at the revised
recoverable amount, subject to maximum of there depreciated historical cost.
(iv) Assets held for sale
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale
transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for
immediate sale in its present condition and the sale is highly probable, as per the criteria laid down under Ind AS 105.
On classification as held for sale, the non-current assets or disposal groups are measured at the lower of their carrying amount and fair
value less costs to sell. Depreciation on such assets ceases from the date they are classified as held for sale.
Assets and liabilities classified as held for sale are separately presented in the Balance Sheet under current assets and current liabilities,
respectively.
Gains or losses on subsequent measurement or on disposal of held-for-sale assets are recognised in the Statement of Profit and Loss.
2.6. Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity
of three months or less, which are subject to an insignificant risk of changes in value.
2.7. Dividend on equity shares
The final dividend on equity shares is recorded as a liability on the date of approval by the shareholders, and interim dividends are
recorded as a liability on the date of declaration by the Company's Board of Directors. A corresponding amount is recognised directly
in equity.
2.8. Revenue recognition
(i) Dividend income on equity shares is recognised when the Company's right to receive the payment is established, which is generally
when shareholders approve the dividend.
(ii) The Company recognises gains/losses on fair value change of financial assets measured as FVTPL and realised gains/losses on
derecognition of financial asset measured at FVTPL and FVOCI.
(iii) The Company recognises other income (including rent etc) on accrual basis to the extent that it is probable that the economic benefits
will flow to the Company and the revenue can be reliably measured. However, where the ultimate collection of revenue lacks reasonable
certainty, revenue recognition is postponed.
2.9. Employee benefits
(i) Short-term employee benefits
Short -term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid, if the Company has a legal or constructive obligation to pay this amount as
a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
(ii) Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company's net obligation in respect
of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in
the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When
the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits
available in the form of any future refunds from the plan or reductions in future contributions to the plan ("the asset ceiling”). In order to
calculate the present value of economic benefits, consideration is given to any minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding
interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in OCI. The Company determines the net interest
expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined
benefit obligation at the beginning of the annual period to the then net defined benefit liability (asset), taking into account any changes
in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and
other expenses related to defined benefit plans are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service ('past
service cost' or 'past service gain') or the gain or loss on curtailment is recognised immediately in profit or loss. The Company
recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
(iii) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and
will have no legal or constructive obligation to pay further amounts. The Company makes specified monthly contributions towards
Government administered provident fund scheme. Obligations for contributions to defined contribution plans are recognised as an
employee benefit expense in profit or loss in the periods during which the related services are rendered by employees.
(iv) Other long term employee benefit obligations
The Company's net obligation in respect of long-term employee benefits other than post-employment benefits is the amount of future
benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine
its present value, and the fair value of any related assets is deducted. The obligation is measured on the basis of an annual independent
actuarial valuation using the projected unit credit method. Remeasurement gains or losses are recognised in profit or loss in the period
in which they arise.
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