3. Summary of material accounting policies
3.1 Current versus non- current classification
The Company presents assets and liabilities in the
financial statements of assets and liabilities based on
current/ non-current classification. An asset is treated as
current when it is:
O Expected to be realised or intended to be sold or
consumed in normal operating cycle
O Held primarily for the purpose of trading
O It is expected to be realised within twelve months
after the reporting period, or
O 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.
All other assets are classified as non-current.
A liability is current when:
O It is expected to be settled in normal operating cycle
O Held primarily for the purpose of trading
O It is due to be settled within twelve months after the
reporting period, or
O There is no unconditional right to defer the
settlement of the liability for at least twelve months
after the reporting period.The Company classifies
all other liabilities as non-current. 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.
The Company has identified twelve months as its
operating cycle.
3.2 Foreign currencies
The Company's financial statements are presented in INR,
which is also its functional currency. Functional currency
is the currency of the primary economic environment
in which the Company operates and is normally the
currency in which the Company primarily generates and
expends cash.
Foreign currency transactions are recorded at the
exchange rate prevailing on the date of transaction.
Foreign currency rate fluctuations relating to monetary
assets and liabilities are restated at the year-end rates.
The net gain or loss arising on restatement/ settlement is
recorded in Statement of Profit and Loss.
Non-monetary assets and non-monetary liabilities
denominated in a foreign currency and measured at
historical cost are translated at the exchange rate
prevalent at the date of the transaction. The related
revenue and expense are recognized using the same
exchange rate.
3.3 Fair value measurement
The Company measures financial instruments such as
derivatives 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:
1. In the principal market for the asset or liability, or
2. 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 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,
maximising the use of relevant observable inputs
and minimising 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:
1. Level 1 — Quoted (unadjusted) market prices in
active markets for identical assets or liabilities.
2. Level 2 — Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is directly or indirectly
observable.
3. Level 3 — Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable.
For assets and liabilities that are recognised in
the financial statements on a recurring basis, the
Company determines whether transfers have
occurred between levels in the hierarchy by re¬
assessing categorisation (based on the lowest level
input that is significant to the fair value measurement
as a whole) at the end of each reporting period.
External valuers may be required for valuation of
significant assets and liabilities. Involvement of
external valuers is decided on the basis of nature
of transaction and complexity involved. Selection
criteria include market knowledge, reputation,
independence and whether professional standards
are maintained.
At each reporting date, the finance team 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, the team verifies the major inputs applied
in the latest valuation by agreeing the information
in the valuation computation to contracts and
other relevant documents. A change in fair value of
assets and liabilities is also compared with relevant
external sources to determine whether the change
is reasonable.
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.
This note summarises accounting policy for fair value.
Other fair value related disclosures are given in the
relevant notes.
3.4 Property, plant and equipment
An item of property, plant and equipment is recognised
as an asset if it is probable that future economic benefits
associated with the item will flow to the Company and its
cost can be measured reliably. This recognition principle
is applied to costs incurred initially to acquire an item of
property, plant and equipment and also to costs incurred
subsequently to add to, replace part of, or service it. All
other repair and maintenance costs, including regular
servicing, are recognised in the Statement of Profit and
Loss as incurred. Where an item of property, plant and
equipment comprises major components having different
useful lives, these components are accounted for as
separate items.
The cost of property, plant and equipment comprises its
purchase price net of any trade discounts and rebates,
any import duties and other taxes (other than those
subsequently recoverable from the tax authorities), any
directly attributable expenditure on making the asset
ready for its intended use, other incidental expenses
and interest on borrowings attributable to acquisition of
qualifying fixed assets up to the date the asset is ready for
its intended use. Subsequent expenditure on fixed assets
after its purchase / completion is capitalized only if such
expenditure results in an increase in the future benefits
from such asset beyond its previously assessed standard
of performance. The Company depreciates property,
plant and equipment over their estimated useful lives
using the straight-line method. Depreciation methods
and useful lives are reviewed periodically at each financial
year end. The gain or loss arising on disposal of an item
of property, plant and equipment is determined as the
difference between sale proceeds and carrying value of
such item and is recognised in the Statement of Profit and
Loss.
3.5 Intangible assets
Design, development and software costs are included in
the balance sheet as intangible assets when it is probable
that associated future economic benefits would flow
to the Company. All other costs on the aforementioned
are expensed in the statement of profit and loss as and
when incurred. Intangible assets are stated at cost less
accumulated amortization and accumulated impairment.
The estimated useful life of an identifiable intangible asset
is based on a number of factors including the effects of
obsolescence, demand, competition, and other economic
factors (such as the stability of the industry and known
technological advances). Amortization methods and
useful lives are reviewed periodically including at each
financial year end.
Amortisation method: The Company amortizes
intangible assets with a future useful life using the
straight-line method over following period:
3.6 Investment property
Investment properties are measured initially at cost,
including transaction costs. Subsequent to initial
recognition, investment properties are stated at cost less
accumulated depreciation and accumulated impairment
loss, if any.
The cost includes the cost of replacing parts and
borrowing costs for long-term construction projects if
the recognition criteria are met. When significant parts
of the investment properties are required to be replaced
at intervals, the Company depreciates them separately
based on their specific useful lives. All other repair and
maintenance costs are recognised in profit or loss as
incurred.
The company depreciates building component of
investment property over 30 years using written down
value method from the date of original purchase.
The company, based on technical assessment made by
technical expert and management estimate, depreciates
the building over estimated useful lives which are
different from the useful life prescribed in Schedule II to
the Companies Act, 2013. The management believes that
these estimated useful lives are realistic and reflect fair
approximation of the period over which the assets are
likely to be used.
Though the company measures investment properties
using cost-based measurement, the fair value of
investment properties are disclosed in the notes. Fair
values are determined based on an annual evaluation
performed by an accredited external independent
valuer applying a valuation model recommended by the
International Valuation Standards Committee.
Investment properties are derecognised either when
they have been disposed of or when they are permanently
withdrawn from use and no future economic benefit is
expected from their disposal. The difference between
the net disposal proceeds and the carrying amount of
the asset is recognised in profit or loss in the period
of derecognition. In determining the amount of
consideration from the derecognition of investment
properties the Company considers the effects of variable
consideration, existence of a significant financing
component, non-cash consideration, and consideration
payable to the buyer (if any).
Transfers are made to (or from) investment properties
only when there is a change in use. Transfers between
investment property, owner-occupied property and
inventories do not change the carrying amount of the
property transferred and they do not change the cost of
that property for measurement or disclosure purposes.
3.7 Depreciation of property, plant and equipment
Depreciation is provided on the written down value
method. The estimated useful life of each asset as
prescribed under Schedule II of the Companies Act, 2013
and based on technical assessment of internal experts
(after considering the expected usage of the asset,
expected physical wear and tear, technical and commercial
obsolescence and understanding of past practices and
general industry experience) are as depicted below:
The residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting
period. Lease hold Improvements are amortised on a
straight-line basis over the lease period.
3.8 Leases
The Company's leased assets primarily consist of leases
for office space. 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 in exchange for consideration. To assess whether
a contract conveys the right to control the use of an
identified asset, the Company assesses whether:
O the contract involves the use of an identified asset
O the Company has substantially all of the economic
benefits from use of the asset through the period of
the lease; and
O the Company has the right to direct the use of the
asset.
1. Right of use assets
At the date of commencement of the lease, the
Company recognizes a right-of-use asset ("ROU“) and a
corresponding lease liability for all lease arrangements in
which it is a lessee, except for leases with a term of twelve
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.
The right-of-use 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. Right-of-use 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 unless the lease transfers ownership of
the underlying asset to the Company by the end of the
lease term or the cost of the right-of-use asset reflect
that the Company exercise a purchase option. The
Company applies Ind AS 36 to determine whether a right-
of-use asset is impaired and accounts for any identified
impairment loss as described in the accounting policy
below on "Impairment of non- financial assets".
2. Lease liabilities
The lease liability is initially measured at amortized cost at
the present value of the future lease payments that
are not paid at the commencement date. The lease
payments are discounted using the interest rate implicit
in the lease or, if not readily determinable, using the
Company's incremental borrowing rates. Lease liabilities
are remeasured with a corresponding adjustment to the
related right of use asset (or in profit or loss if the carrying
amount of the right-of-use asset has been reduced to
zero) if the Company changes its assessment of whether
it will exercise an extension or a termination or a purchase
option. The interest cost on lease liability (computed using
effective interest method), is expensed in the statement
of profit and loss.
Lease liability and right-of-use asset have been separately
presented in the Balance Sheet and lease payments have
been classified as financing cash flows. The Company
has applied a practical expedient wherein the Company
has ignored the requirement to separate non- lease
components (such as maintenance services) from the
lease components. Instead, the Company has accounted
for the entire contract as a single lease contract.
3.9 Revenue recognition
The Company has revenue from its clients. The Company
recognizes revenue when it satisfies performance
obligations under the terms of its contracts, and control
of its services is transferred to its client's users in an
amount that reflects the consideration the Company
expects to receive from its client in exchange for those
services. This process involves identifying the client
contract, determining the performance obligations in the
contract, determining the contract price, allocating the
contract price to the distinct performance obligations
in the contract, and recognizing revenue when the
performance obligations have been satisfied.
The Company through its platform allows transactions
between the customers of its clients and service operators
enlisted with the platform. The Company earns revenue
when the customers of its clients utilize services such as
Lounge Access, Meet and Assist, Airport Transfers, Food
and Beverages, Door-step Baggage and Spa & Wellness
either through the DreamFolks App, DreamFolks Card,
Issuer's Card, Issuer's Website, Issuer's web or mobile
Application (App) or Interactive voice response (IVR).
Further it earns revenue by aggregating golf clubs across
the globe including India to offer golf games and golf
lessons to the customers of its clients who are primarily
banks, card networks, and corporate enterprises.
Revenue is recognised in the accounting period in which
the services are rendered. A receivable is recognised
when the services are delivered as this is the point in time
that the consideration is unconditional because only the
passage of time is required before the payment is due
Amount received before the goods and services are
delivered is recognised as a contract liability.
Financing Components: The Company does not expect
to have any contracts where the period between the
transfer of the promised goods or services to the
customer and payment by the customer exceeds one
year. As a consequence, the Company does not adjust any
of the transaction prices for the time value of money.
Other income
Interest income from a financial asset is recognised when
it is probable that the economic benefits will flow to the
Company and the amount of income can be measured
reliably. Interest income is accrued on a time proportion
basis, by reference to the principal outstanding and
effective interest rate applicable, which is the rate that
exactly discounts estimated future cash receipts through
the expected life of the financial asset to that asset's net
carrying amount on initial recognition.
3.10 Retirement and other employee benefits
Employee benefits include provident fund, employee
state insurance scheme, gratuity and compensated
absences.
Long-term employee benefits:
Defined contribution plans: The Company's contribution
to provident fund and employee state insurance
scheme are considered as defined contribution plans
and are charged as an expense based on the amount of
contribution required to be made and when services are
rendered by the employees.
Defined benefit plans: The Company has Defined Benefit
Plan in the form of Gratuity. Liability for Defined Benefit
Plans is provided on the basis of valuations, as at the
balance sheet date, carried out by an independent
actuary. The defined benefit obligation is calculated
annually by independent actuary using the projected
unit credit method. The present value of the defined
benefit obligation is determined by discounting the
estimated future cash outflows using discount rate
(interest rates of government bonds) that have terms
to maturity approximating to the terms of the gratuity.
Remeasurement gains and losses arising from experience
adjustments and changes in actuarial assumptions are
recognised in the period in which they occur, directly in
other comprehensive income. They are included in 'Other
comprehensive income' (net of taxes) in the statement of
changes in equity and in the balance sheet. Net interest
is calculated by applying the discount rate to the net
defined benefit liability or asset. The Company presents
the first two components of defined benefit costs in profit
or loss in the line item 'Employee Benefits Expense'.
Short-term employee benefits:
The undiscounted amount of short-term employee
benefits expected to be paid in exchange for the services
rendered by employees are recognised during the year
when the employees render the service. These benefits
include performance incentive and compensated
absences which are expected to occur within twelve
months after the end of the period in which the employee
renders the related service. The cost of short-term
compensated absences is accounted as under:
O in case of accumulated compensated absences, when
employees render the services that increase their
entitlement of future compensated absences; and
O in case of non-accumulating compensated absences,
when the absences occur.
3.11 Share based payments
Employees (including senior executives) of the Company
receive remuneration in the form of share based payment
transactions, whereby employees render services as
consideration for equity instruments (equity-settled
transactions). The cost of equity-settled transactions is
determined by the fair value at the date when the grant
is made using an appropriate valuation model. That cost
is recognised, together with a corresponding increase
in share Options outstanding reserves in equity, over
the period in which the performance and/or service
conditions are fulfilled in employee benefits expense.
The cumulative expense recognised for equity-settled
transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired
and the Company's best estimate of the number of equity
instruments that will ultimately vest. The statement of
profit and loss expense or credit for a period represents
the movement in cumulative expense recognised as at
the beginning and end of that period and is recognised in
employee benefits expense.
When the terms of an equity-settled award are modified,
the minimum expense recognised is the expense had
the terms had not been modified, if the original terms of
the award are met. An additional expense is recognised
for any modification that increases the total fair value
of the share-based payment transaction or is otherwise
beneficial to the employee as measured at the date of
modification. Where an award is cancelled by the entity
or by the counterparty, any remaining element of the
fair value of the award is expensed immediately through
profit or loss.
The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of diluted
earnings per share.
3.12 Taxes
a. Current income tax
Current tax is the tax payable on the taxable profit
for the year. Taxable profit differs from 'profit before
tax' as reported in the Statement of Profit and Loss
because of items of income or expense that are
taxable or deductible in other years and items that
are never taxable or deductible. The Company's
current tax is calculated using tax rates that have
been enacted or substantively enacted by the end of
the reporting period, in accordance with the Income
Tax Act, 1961.
Current income tax relating to items recognised
outside financial statements profit and loss is
recognised outside financial statements profit
and loss (either in other comprehensive income
or in equity). Current tax items are recognised in
correlation to the underlying transaction either in
OCI or directly in equity. Management periodically
evaluates positions taken in the tax returns with
respect to situations in which applicable tax
regulations are subject to interpretation and
establishes provisions where appropriate.
Advance taxes and provisions for current income
taxes are presented in the statement of assets
and liabilities 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.
b. Deferred taxes
Deferred tax assets and liabilities are recognized
for the future tax consequences of temporary
differences between the carrying values of assets
and liabilities and their respective tax bases.
Deferred tax assets are recognised for all deductible
temporary differences and unused tax losses only
if it is probable that future taxable amounts will be
available to utilise those temporary differences and
losses.
The carrying amount of deferred tax assets is
reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to
allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at
the tax rates that are expected to apply in the period
in which the liability is settled or the asset is realised,
based on the tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the
reporting period.
The measurement of deferred tax liabilities and
assets reflects the tax consequences that would
follow from the manner in which the Company
expects, at the end of the reporting period, to
recover or settle the carrying amount of its assets
and liabilities.
Deferred tax assets and liabilities are offset when
there is a legally enforceable right to offset current
tax assets and liabilities and where the deferred tax
balances relate to the same taxation authority.
Current tax assets and tax liabilities are off set
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 and deferred tax is recognised in profit
or loss, except to the extent that it relates to
items recognised in other comprehensive income
or directly in equity. In this case, the tax is also
recognised in other comprehensive income or
directly in equity, respectively.
3.13 Segment reporting
Operating segments are defined as components of an
entity where discrete financial information is evaluated
regularly by the chief operating decision maker
("CODM“) in deciding allocation of resources and in
assessing performance. The Company's Managing
Director is its CODM. The Company's CODM reviews
financial information presented on a consolidated basis
for the purposes of making operating decisions, allocating
resources, and evaluating financial performance. Our
business activity primarily falls within a single business
and geographical segment, hence, the disclosure of
segment-wise information is not applicable under Ind AS
108- 'Operating Segments'.
3.14 Earnings per share
Basic earnings per share is computed using the weighted
average number of equity shares outstanding during the
period. Diluted earnings per share is computed using
the weighted-average number of equity and dilutive
equivalent shares outstanding during the period, except
where the results would be anti-dilutive.
The number of equity shares and potentially dilutive
equity shares are adjusted retrospectively for all periods
presented for any splits and bonus shares issues including
for change effected prior to the approval of the financial
Information by the Board of Directors.
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