(C) MATERIAL ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these financial
statements.
(I) CURRENT - NON-CURRENT CLASSIFICATION
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the following criteria:
• it is expected to be realised in, or is intended for sale or consumption in, the Company's normal operating cycle;
• it is held primarily for the purpose of being traded;
• it is expected to be realised within 12 months after the reporting period; or
• it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12
months after the reporting period.
Current assets include the current portion of non-current financial assets. All other assets are classified as non¬
current
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
• it is expected to be settled in the Company's normal operating cycle;
• it is held primarily for the purpose of being traded;
• it is due to be settled within 12 months after the reporting period; or
• the Company does not have an unconditional right to defer settlement of the liability for at least 12 months
after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its
settlement by the issue of equity instruments do not affect its classification.
Current liabilities include the current portion of non-current financial liabilities. All other liabilities are
classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
(II) OPERATING CYCLE
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash or
cash equivalents. Based on the nature of operations and the time between the acquisition of assets for processing
and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle being a
period of 12 months for the purpose of classification of assets and liabilities as current and non- current.
(III) FOREIGN CURRENCY TRANSACTIONS AND TRANSLATIONS
Functional and presentation currency
The management has determined the currency of the primary economic environment in which the Company
operates i.e., functional currency, to be Indian Rupees (Rs.). The financial statements are presented in Indian
Rupees, which is the Company's functional and presentation currency. All amounts have been rounded to the
nearest lakhs, unless otherwise stated.
Transactions and Balances
Monetary and non-monetary transactions in foreign currencies are initially recorded in the functional currency of
the Company at the exchange rates at the date of the transactions or at an average rate if the average rate
approximates the actual rate at the date of the transaction.
Monetary foreign currency assets and liabilities remaining unsettled on reporting date are translated at the rates
of exchange prevailing on reporting date. Gains/(losses) arising on account of realisation/settlement of foreign
exchange transactions and on translation of monetary foreign currency assets and liabilities are recognised in the
Statement of Profit and Loss.
Foreign exchange gains / (losses) arising on translation of foreign currency monetary loans are presented in the
Statement of Profit and Loss on net basis. However, foreign exchange differences arising from foreign currency
monetary loans to the extent regarded as an adjustment to borrowing costs are presented in the Statement of
Profit and Loss, within finance costs.
(IV) FAIR VALUE MEASUREMENT
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
The principal or the most advantageous market must be accessible to/ by the Company.
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
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 reassessing 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.
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
The Company measures financial instruments, such as, investments , at fair value at each reporting date. Also,
fair value of financial instruments measured at amortised cost is disclosed in Notes.
(V) FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.
Financial assets
Recognition and initial measurement
All financial assets are initially recognised when the Company becomes a party to the contractual provisions of
the instrument. All financial assets are initially measured at fair value plus, in the case of financial assets not
recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the
financial asset.
Classification and subsequent measurement
Classification
For the purpose of subsequent measurement, the Company classifies financial assets in following categories:
> Financial assets at amortised cost
> Financial assets at fair value through other comprehensive income (FVTOCI)
> Financial assets at fair value through profit or loss (FVTPL)
A financial asset being 'debt instrument' is measured at the amortised cost if both of the following conditions
are met:
> The financial asset is held within a business model whose objective is to hold assets for collecting
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 (SPPI) on the principal amount outstanding.
A financial asset being 'debt instrument' is measured at the FVTOCI if both of the following criteria are met:
> The asset is held within the business model, whose objective is achieved both by collecting contractual
cash flows and selling the financial assets, and
> A financial asset being equity instrument is measured at FVTPL.
All financial assets not classified as measured at amortised cost or FVTOCI as described above are measured at
FVTPL.
Subsequent measurement
Financial assets at amortisedcost
These assets are subsequently measured at amortised cost using the effective interest method. The amortised
cost is reduced by impairment losses, if any. Interest income and impairment are recognised in the Statement
of Profit and Loss.
Financial assets at FVTPL
These assets are subsequently measured at fair value. Net gains and losses, including any interest income, are
recognised in the Statement of Profit and Loss.
Derecognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial
asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially
all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither
transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the
financial asset. Any gain or loss on derecognition is recognised in the Statement of Profit and Loss.
Impairment of financial assets (other than at fair value)
The Company makes allowance for doubtful trade receivable and contract assets using simplified approach ,
significant judgement is used to estimate doubtful accounts as prescribed in IND AS 109 . In estimating doubtful
accounts historical and anticipated customer performance are considered. Changes in the economy, industry,
or specific customer conditions may require adjustments to the allowance for doubtful accounts recorded in
financial statements. This is done on the basis of company's past history, existing market conditions as well as
forward looking estimates at the end of each reporting period.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is
no realistic prospect of recovery. This is generally the case when the Company determines that the counterparty
does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject
to the write-off. However, financial assets that are written off could still be subject to enforcement activities in
order to comply with the Company's procedures for recovery of amounts due.
Financial liabilities
Recognition and initial measurement
All financial liabilities are initially recognised when the Company becomes a party to the contractual provisions
of the instrument. All financial liabilities are initially measured at fair value minus, in the case of financial
liabilities not recorded at fair value through profit or loss, transaction costs that are attributable to the liability.
Classification and subsequent measurement
Financial liabilities are classified as measured at amortised cost or FVTPL.
A financial liability is classified as FVTPL if it is classified as held-for-trading, or it is a derivative or it is
designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net
gains and losses, including any interest expense, are recognised in the Statement of Profit and Loss.
Financial liabilities other than classified as FVTPL, are subsequently measured at amortised cost using the
effective interest method. Interest expense are recognised in Statement of Profit and Loss. Any gain or loss on
derecognition is also recognised in the Statement of Profit and Loss.
Derecognition
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled,
or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the
modified terms are substantially different. In this case, a new financial liability based on modified terms is
recognised at fair value. The difference between the carrying amount of the financial liability extinguished
and the new financial liability with modified terms is recognised in the Statement of Profit and Loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and
only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to
settle them on a net basis or to realise the assets and settle the liabilities simultaneously.
(VI) EQUITY SHARE CAPITAL
Issuance of ordinary shares are recognised as equity share capital in equity. Incremental costs directly
attributable to the issuance of new equity shares are recognized as a deduction from equity, net of any tax
effects.
(VII) CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprises of cash at banks and on hand, cheques 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.
(VIII) PROPERTY, PLANT AND EQUIPMENT
Items of property, plant and equipment are measured at cost, less accumulated depreciation and accumulated
impairment losses, if any.
The cost of an item of property, plant and equipment comprises: (a) its purchase price, including import duties
and non-refundable purchase taxes, after deducting trade discounts and rebates; (b) any costs directly
attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the
manner intended by management.
If significant parts of an item of property, plant and equipment have different useful lives, then they are
accounted for as separate component of property, plant and equipment.
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 derecognition of property, plant and equipment (calculated as the difference between the net disposal
proceeds and the carrying amount of property, plant and equipment) is included in the Statement of Profit
and Loss when property, plant and equipment is derecognised. The carrying amount of any component
accounted as a separate component is derecognised, when replaced or when the property, plant and
equipment to which the component relates gets derecognised.
Subsequent costs
Subsequent costs are included in the asset's carrying amount or recognised as separate assets, as appropriate,
only when it is probable that the future economic benefits associated with expenditure will flow to the
Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to
Statement of Profit and Loss at the time of incurrence.
(IX) DEPRECIATION ON PROPERTY, PLANT AND EQUIPMENT
Depreciation is calculated on cost of items of property, plant and equipment less their estimated residual values
and is charged to Statement of Profit and Loss. Depreciation on property, plant and equipment, is provided on
straight-line method at the rates and in the manner provided in Schedule II of the Companies Act, 2013.
The useful lives have been determined based on internal evaluation done by management and are in
line with the estimated useful lives, to the extent prescribed by the Schedule II of the Companies Act, 2013,
in order to reflect the technological obsolescence and actual usage of the asset. The residual values are not
more than 5% of the original cost of the asset.
Depreciation is calculated on a pro-rata basis for assets purchased/sold during the year.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed by
management at each reporting date and adjusted prospectively, as appropriate.
Capital work-in-progress
Cost of property, plant and equipment not ready for use as at the reporting date are disclosed as capital work-in¬
progress.
(X) INVESTMENTPROPERTY
Property that is held for Long-term rental yields or for capital appreciation or both, and that is not occupied by
the Group, is classified as Investment Property. Investment Property is measured initially at its cost, including
related transaction costs and where applicable borrowing costs. 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 group and the cost of the item can be measured reliably. All other repair and maintenance costs
are expensed when incurred. When part of an investment property is replaced, the carrying amount of the
replaced part is derecognised.
Investment Properties are depreciated using the straight line method over their estimated useful lives. The useful
life has been determined based on technical evaluation performed by the management's expert.
(XI) INTANGIBLEASSETS
Recognition and measurement
Other intangible assets that are acquired are recognised only if it is probable that the expected future economic
benefits that are attributable to the asset will flow to the Company and the cost of assets can be measured reliably.
The other intangible assets are recorded at cost of acquisition including incidental costs related to acquisition and
installation and are carried at cost less accumulated amortisation and impairment losses, if any.
Gain or losses arising from derecognition of an other intangible asset are measured as the difference between the
net disposal proceeds and the carrying amount of the other intangible asset and are recognised in the Statement
of Profit and Loss when the asset is derecognised.
Subsequent costs
Subsequent costs is capitalised only when it increases the future economic benefits embodied in the specific asset
to which it relates. All other expenditure on other intangible assets is recognised in the Statement of Profit and
Loss, as incurred.
Amortization
Amortisation is calculated to write off the cost of other intangible assets over their estimated useful lives of 3 ye
using the straight-line method. Amortisation is calculated on a pro-rata basis for assets purchased/ dispo
during the year.
Amortisation method, useful lives and residual values are reviewed at each reporting date and adjus
prospectively, if appropriate.
Intangible assets under development
Cost of intangible assets under development as at the reporting date are disclosed as intangible assets under
development.
(XII) LEASES
(i) As a lessee
The Company recognizes a right-of-use asset and a lease liability at the lease commencement date.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before the commencement date, plus any
initial direct cost incurred and an estimate of costs to dismantle and remove the underlying asset
or to restore the underlying asset or the site on which it is located, less any lease incentives
received. The right-of-use asset is subsequently depreciated using the straight-line method from
the commencement date to the earlier of the end of the useful life of the right-to-use asset or the
end of the lease term. The estimated useful life of right-of-use asset is determined on the same
basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease
liability.
The lease liability is initially measured at the present value of the lease payments that are not paid
at the commencement date, discounted using the interest rate implicit in the lease or, if that rate
cannot be readily determined, the Company's incremental borrowing rate. The lease liability is
measured at amortized cost using the effective interest method. It is re-measured when there is a
change in future lease payments from a change in an index or rate. When the lease liability is re¬
measured in this way, a corresponding adjustment is made to the carrying amount of the right-of-
use asset, or is recorded in the profit and loss if the carrying amount of the right-of-use asset has
been reduced to zero. The Company presents right-of- use asset that do not meet the definition of
investment property as a separate line item and lease liabilities in "other financial liabilities” in the
Balance Sheet. The Company has elected not to recognize right-of-use asset and lease liabilities for
short term leases that have a lease term of 12 months or less, leases of low value assets and leases
with no written agreement. The Company recognizes the lease payments associated with these
leases as an expense on a straight-line basis over the lease term.
(ii) As a lessor
When the Company acts as a lessor, it determines at lease inception whether each lease is a finance
lease or an operating lease. To classify each lease, the Company makes an overall assessment of
whether the lease transfers substantially all the risk and rewards incidental to the ownership of
the underlying asset. If this is the case, then the lease is a finance lease, if not, then it is an operating
lease. As part of the assessment, the Company considers certain indicators such as whether the
lease is for the major part of the economic life of the asset. If an arrangement contains lease and
non-lease components, the Company applies Ind AS 115 "Revenue from contract with customers”
to allocate the consideration in the contract. The Company recognizes lease payments received
under operating lease as income on a straight-line basis over the lease term as part of “Other
Income”.
(XIII) INVENTORY
Inventories are stated at cost or net realizable value, whichever is lower. Net realizable value (NRV)
is the estimated selling price in the ordinary course of the business, less the estimated costs of
completion and the estimated costs necessary to make the sale. Cost of inventories comprises all
cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their
present location and condition. The cost of all categories of inventory is determined using first in
first out basis (FIFO).
(XIV) IMPAIRMENT - NON-FINANCIAL ASSETS
At each reporting date, the Company reviews the carrying amounts of its non-financial assets to
determine whether there is any indication of impairment. If any such indication of impairment exists,
then the asset's recoverable amount is estimated. For impairment testing, assets are grouped together
into the smallest group of assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or cash generating units (CGUs).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs
to sell. Value in use is based on the estimated future cash flows, discounted to their present value using
a discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset or CGU. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds
its estimated recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss.
An impairment loss is reversed if there has been a change in the estimates used to determine the
recoverable amount. Such a reversal is made only to the extent that the asset's carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
(XV) EMPLOYEE BENEFITS
Short-term employee benefits
Employee benefit liabilities such as salaries, wages and bonus, etc. that are expected to be settled
wholly within twelve months after the end of the period in which the employees render the related
service are recognised in respect of employees' services up to the end of the reporting period and are
measured at an undiscounted amount expected to be paid when the liabilities are settled.
Post-employment benefit plans
Defined contribution plans
The Company pays provident fund contributions to the appropriate government authorities. The
Company has no further payment obligations once the contributions have been paid. The contributions
are accounted for as defined contribution plans and the contributions are recognised as employee
benefits expense when they are due.
Defined benefit plans
Defined benefit plans of the Company comprise gratuity.
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible
employees. The plan provides for a lump sum payment to vested employees at retirement, death while
in employment or on termination of employment, of an amount based on the respective employee's
salary and the tenure of employment. Vesting occurs upon completion of five years of service. The
gratuity plan of the Company is unfunded.
The liability recognised in the balance sheet in respect of defined benefit gratuity plan is the present value
of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is
calculated by actuary using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash
outflows by reference to market yields at the end of the reporting period on government bonds that have
terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit
obligation. This cost and other costs are included in employee benefit expense in the Statement of Profit
and Loss.
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 equity" in the Statement of Changes in Equity and in the Balance Sheet.
Changes in the present value of the defined benefit obligation resulting from settlement or curtailments
are recognised immediately in Statement of Profit and Loss as past service cost.
Other long-term employee benefits
i. Compensated absences
Accumulated leave which is expected to be utilised within the next 12 months is treated as a short-term
employee benefit. The Company measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
Accordingly, benefits under compensated expenses are accounted as other long-term employee benefits.
The Company's net obligation in respect of compensated absences is the amount of benefit to be settled
in future, that employees have earned in return for their service in the current and previous years. The
benefit is discounted to determine its present value. The obligation is measured on the basis of an
actuarial valuation using the projected unit credit method. Remeasurements are recognised in Statement
of Profit and Loss in the period in which they arise.
ii. Others
The Company's net obligation in respect of long-term employee benefits other than post-employme
benefits is the amount of benefit to be settled in future, that employees have earned in return for their serv
in the current and previous years. The benefit is discounted to determine its present value. The obligation
measured on the basis of an actuarial valuation using the projected unit credit method. Remeasurements a
recognised in Statement of Profit and Loss in the period in which they arise.
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