4. Significant accounting policies
i. Revenue recognition
The Company derives revenues primarily from (T services comprising licensing of learning
and assessment software products and platforms, software development and related
services and maintenance, licensing the educational1 learning material copy rights and
content services. Contracts with customers are either on a tirne-and-material, unlt-of-
work, fixed-price or on a fixed-timeframe basis.
Revenue Is recognized upon transfer of control of promised products or services
{'’performance obligations") to customers in an amount that reflects the consideration the
Company has received or expects to receive in exchange for these products or services
('’transaction price’'). When there Is uncertainty as to collectability, revenue recognition is
postponed until such uncertainty is resolved.
Revenue from licenses where the customer obtains a "right to use" the licenses is
recognized at the time the license is made available Lo the customer. Revenue from
licenses where the customer obtains a "right to access" is recognized over the access
period.
Revenue un time-ancl-material and unftjof-work-based contracts, are recognized on
output basis measured by units delivered, efforts expended, number oT transactions
processed etc.
Revenue related to fixed-price maintenance and support revenue is recognized rateably
on a straight-line basis when services are performed through an indefinite number of
repetitive acts over a specified period or the Company is standing ready to provide the
services.
Revenue from other fixed-price, fixed-timeframe contracts, where the performance
obligations are satisfied over time is recognized using the percentage-of-completioii
method or accounting wrth contract cost incurred determining the degree of completion of
the performance obligation. Efforts or costs expended are used to determine progress
towards completion as there is a direct relationship between input and productivity.
Progress towards completion is measured as the ratio of costs or efforts incurred to date
(representing work performed) to the estimated total costs or efforts
Revenue is measured based on the transaction price, which is the consideration, adjusted
for volume discounts, service level credits, price concession and incentives, 0 any, as
specified in the contract with the customer. The Company assesses the services promised
fn a contract and identifies distinct performance obligations in the contract and allocates
the transaction price to each distinct performance obligation based on the relative
standalone selling price.
The billing schedules agreed with customers include periodic performance-based billing
and / or milestone-based progress billings. Revenues In excess of billing are classified as
unbilled revenue while billing in excess of revenues are classified as contract liabilities
(which we refer to as unearned revenues),
In accordance with Tnd-AS 37, the Company recognise an onerous contract provision when
the unavoidable costs of meeting the obligations under a contract exceed the economic
benefits to be received.
The incremental costs of obtaining a contract {i.e,, costs that would not have been incurred
if the contracL had not been obtained) are recognized as an asset if the Company expects
to recover them. Any capitalized contract costs are amortized, with the expense recognized
as the Company transfers the related goods or services to the customer. The Company
prosents revenues net of indirect taxes irr its Consolidated Statement of Profit and Loss.
The Company disaggregates revenue from contracts with customers by geography and
business verticals.
EL Property, plant and equipment
Property, plant and equipment are measured at cost of acquisition or construction less
accumulated depreciation and impairment losses, if any. the cast of an Item of property,
plant and equipment comprises Its purchase price, including import duties and other non¬
refundable taxes or levies and any directly attributable cost of bringing the asset to its
working condition for its intended use and any trade discounts and rebaLes are deducted
in arriving at the purchase price. IT significant parts of an item of property, plant and
equipment have different useful lives, Lhen Lhey are accounted for as separate items
(major components) of property, plant and equipment-
Capital work-in-progress are measured at cost less accumulated impairment losses, iT any.
Depredation on property, plant and equipment is provided on pro-rota basis using the
Straight-Line method based on the useful life specified in the Schedule J i to the Companies
Act, 2013,
Subsequent expenditure related to Property, plant and equipment is capitalized only when
It is probable that future economic benefits associated with these will flow to the Company
and the cost of Item can be measured reliably. Other repairs and maintenance costs are
recognized Tn the Statement cif Profit & Loss while incurred.
The Company doesn't have any Berrami Property under the Benami Transactions
(Prohibition Act), 19&S.
iii. Intangible assets
Intangible assets are stated at cost less accumulated amortization and impairment.
Intangible assets are amortized over their respective individual estimated useful lives on
a straight-line basis, from the date thaL they are available for use, The estimated useful
life of an identifiable intangible asset is based on a number of factors including the effects
of obsolescence, demand, compeLiLionr and other economic factors (such as the stability
of the industry and known technological advances).. Amortization methods and useful lives
arc reviewed periodically including at each financial year end.
Jn 1' ‘ i
The estimated useful life of amortizable intangibles is reviewed and where appropriate are
adjusted, annually. The estimated useful lives of the amortizable intangible assets for the
current and comparative periods are considered as (Customer-related software products)
10 years. (Comparative periods 10 years)
Research costs are expensed as incurred Software product development costs are
expensed as incurred unless technical and commercial feasibility of the project is
demonstrated, future economic benefits are probable, the Company has an Intention and
ability to complete and use or sell the software, and the costs can be measured reliably.
The costs which can be capitalized include the cost of material, direct labour and overhead
costs that are directly attributable to preparing the asset for its intended use.
Intangible assets are evaluated for recoverability whenever events or changes In
circumstances Indicate that their carrying amounts may not be recoverable. For the
purpose of impairment testing, the recoverable amount (l.e. Lhe higher of the fair value
less cost to sell and the value-in-use} is determined on an individual asset basis unless
the asset does not generate cash flows that are largely independent pf those from other
assets. In such cases, the recoverable amount is determined for the CGU to which the
asset belongs. If such assets are considered to be impaired, the impairment to be
recognized in the Statement of Profit and Loss is measured by the amount by which Lhe
carrying value of the assets exceeds the estimated recoverable amount of the asset,
iv. Impairment
a} Financial assets
The Company applies the expected credit loss model for recognising impairment loss on
financial assets measured al amortized cost, Lrade receivables, unbilled receivables,
contract assets and other financial assets, Expected credit loss is the difference between
the contractual cash flows and the cash flows that the entity expects to receive, discounted
using the effective interest rate.
Loss allowances for trade receivables, unbilled receivables and contract assets are
measured at an amount equal to lifetime expected credit loss, Lifetime expected credit
losses are the expected credit losses that result from all possible default events over the
expected life of a financial instrument. Lifetime expected credit loss is computed based on
a provision matrix which takes in to account risk profiling or customers and historical crudil
loss experience adjusted for forward looking Information.
b) Non-financial assets
The Company assesses long lived assets such as property, plant and equipment, right-of-
use assets and intangible assets for impairment whenever events or changes in
circumstances indicate LhaL the carrying amount of an asset or group of assets may not
be recoverable. If any such Indication exists, the Company astimates the recoverable
amount of Lhe asstit or group of assets,
lhe recoverable amount of an asset or cash generating unit is the higher of its fair value
less cost of disposal (FVLCD) and its value-in-use {VIU}. The VIU of long-lived assets is
calculated using projected future cash flows. FVLCD of a cash generating unit is computed
using turnover and earnings multiples, if the recoverable amount of the asset or the
recoverable amount of the cash generating unit to which the asset belongs is less than ltsJ
carrying amount, the carrying amount is reduced to its recoverable amount. The reduction
in treated ns an impairment loss and is recognized in the consolidated statement of profit
and loss. If at the reporting daLe, there, is an indication that a previously assessed
•A
impairment loss no longer exists, the recoverable amount Is reassessed and the
impairment losses previously recognized are reversed such that the asset Is recognized at
its recoverable amount but not exceeding written down value which would have been
repotted if the impairment looses had not been recognized initially. An impairment in
respect of goodwill is not reversed.
v. teases
The Company evaluates each contract or arrangement whether it gualifies as lease as
defined under Ind AS 116.
The Company recognises the right-of*Use assets and lease liability at the commencement
dote of the [ease. The right of use asset is initially measured at cost, which comprises of
present value of future lease rent payments adjusLed for any payments made at or before
commencement date, any initial direct cosL incurred and estimate of cost to dismantle or
remove an underlying asset or to restore an asset less any lease incentives received I he
lease liability is initially measured at present value of lease payments that is not paid at
commencement date discounted at implicit rate mentioned in lease or incremental
borrowing rate. The generally uses incremental borrowing rate as discount rate. The nghL
of use asset is depreciated using the straight-line method from the commencement date
of the lease over useful life of right to use asset.
Subsequently, the right-of-use assets Is measured at cost less any accumulated
depreciation and accumulated Impairment losses, if any. The estimated useful lives of
right-of-use assets are determined on the same basis as those of properly, plant and
equipment.
The Company applies Ind AS 36 to determine whether a RoU asset is impaired and
accounts for any identified impairment loss as described in the impairment or non-flnanciaf
assets below.
After the commencement date, Lhe amount of lease liabilities is increased to reflect the
accretion of interest and reduced for the lease payments made.
The Company recognizes the amount of the re-measurement of lease liability as an
adjustment to the right-of-use assets. Where thd carrying Amount of the righL-of-usc asset
is reduced to zero and there is a further reduction in the measurement pf the lease liability,
rhe Company recognizes any remaining amount of the re-measurement in statement of
profit and loss.
Lease liability payments are classified as cash used in financing activities in the statement
of cash flows.
The Company as a lessor
Leases under which the Company is a lessor are classified as a finance or opeiating lease.
Lease, confracts where all the risks and rewards are substantially transferred to Lite lessee,
are classified as a finance lease. All other leases are classified as. operating lease.
For leases under which the Company is an intermediate lessor, the Company accounts for
the head-lease and the sub-lease as two separate contracts The sun-lease is further
classified either as a finance lease or an operating lease by reference to the RoU asset
arising from the head-lease,
vli Earnings per share
Basic Earnings per share is computed using the weighted average number of equity shares
outstanding during the period adjusted for treasury shares held. Diluted earnings per share
is computed using the weighted-average number of equity and dilutive equivalent shares
outstanding during the period, using the treasury stock method for options, except where
the results would be anti-dllutlve,
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 statements by the Board of
Directors.
vri. Functional and presentation currency
These standalone financial statements are presented In Indian rupees, which is Lhe
functional currency of the Company,
viii. Foreign currency transactions and translation
a. Transactions and balances
Transactions in foreign currency are translated into the functional currencies using lhe
exchange rates prevailing at the date of the transaction Foreign exchange gams and
losses resulting from the settlement of such transactions and from translation at the
exchange rates prevailing at the reporting date of monetary assets and liabilities
denominated in foreign currencies are recognized in the statement of profit and loss and
reported within foreign exchange gains/flosses), net, within results of operating activities.
Galns/flosses), net, relating to translation or settlement of borrowings denominated in
foreign currency are reported within finance costs. Non-monetary assets and liabilities
denominated in foreign currency and measured at historical cost are translated at "he
exchange rate prevalent at the date of transaction,
b. Foreign operations
For Lhe purpose of presenting financial statements, the assets and liabilities of the
Company's foreign operations that have a functional currency other than Indian rupees
are translated into Indian rupees using exchange rates prevailing at the reporting date,
income and expense items are translated at the average exchange rates for Lhe period.
Exchange differences arising, if any, are recognized in other comprehensive income and
held in foreign currency translation reserve {FCTR), a component of equity When a foreign
operation is disposed of, the relevant amount recognized in FCTR. is transferred to the
statement of profit and loss as part of the profit or loss on disposal.
(x. Financial assets and liabilities
A.)Initial Recognition
Financial assets and [labilities are recognised when the Company becomes a party to the
contractual provisions of Lhe instrument. Financial 3SseLs and liabilities are Initially
measured at fair value. Transaction costs that are directly attributable to the acquisition
or issue of financial assets and financial liabilities [other than financial assets end financial
liabilities at fair value through profit or loss) are added to or deducted from the fair value
measured on initial recognition of financial asset or financial liability,
B) Subsequent measurement
i) Financial assets carried at amortised cost
A Financial asset is subsequently measured at amortised cost IF it held within a business
model whose objectives is to hold the asset in order to collect contractual cash Flows and
the contractual terms of Lhe Financial asset give rise on specified dates cash Flows that are
solely payment of principals ana interest on the principal amount outstanding
ii) financial assets at Fair value through other comprehensive income
A financial asset is subsequently measured at fair value Lhrough other comprehensive
income if It is held within a business model whose objective Is achieved by both contractual
cash flows and selling financial asset and the contractual terms of the financial asset give
rise on specified dates cash flows that are solely payment of principals and interest on rhe
principal amount outstanding.
til) Financial assets at fair value through profit or loss
A Financial asset which Is not classified in any of the abova categoric are subsequently
fair valued through profit or loss,
However, in cases where the company has made an irrevocable election For particular
Investment In equity instrument that would otherwise be pleasured at fair value through
profiL or loss, the subsequent changes in fair value are measured In other comprehensive
income.
C) Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest
method, except for contingent consideration recognised in business combination which Is
subsequently measured at fair value through profit or loss. For trade and other payables
maturing within one year from Lhe balance sheet date, the carrying amounts approximate
fair value due to the short maturity or these instruments,
D) Investment in subsidiaries
Investment in subsidiaries are measured at cost less impairment loss, If any.
E) Derecognition of financial assets and liabilities
The Company derecognises a Financial asset when the contractual rights to the cash Flow
from the financial asset expires or IL transfers the financial asset and the transfer qualifies
for derecognition under Ind-AS 109. A financial liability {or a part of financial liability} is
derecognised when the obligation specified in Lhe contract Is discharged or cancelled or
expires
F) Cash and cash equivalents
The Company's cash and cash equivalents consist or cash on hand and lr) banks and
demand deposits with banks, which can be withdrawn at any fime, without prior notice or
penalty on the principal.
For Lhe purposes of Lhe cash flow statement, cash and cash equivalents include cash on
hand, in banks and demand deposiLs with banks are considered part of the Company's
cash management system. In the balance sheet, bank overdrafts are presented under
borrowings within current liabilities.
. jj _ '
e)Other financial assets
OLher financial assets are non-derivative financial asset? with fixed or determinable
payments that are not quoted in an active market. They are presented as current assets,
except for those maturing later than 12 monLhs after the reporting date which are
presented as non-current assets. These are initially recognized at fair value and
subsequently measured at amortized cost using the effective interest method, iess any
impairment losses. These comprise trade receivables, unbilled receivables, employee and
other advances and eligible current and non-current assets.
H)Trade payables and other payables
Trade payables and other payables are initially recognized at fair value, arid subsequently
carried at amortized cost using the effective interest method. For these Financial
instruments, the carrying amounts approximate fair value due to the short-term maturity
of these instruments.
x. Employee benefits
a. Short term employee benefits
All employee benefits payable wholly within twelve months of rendering the service are
classified as short-term employee benefits. Benefits such as salaries and wages are
recognised in the period in which the employee renders the related service. A liability is
recognised for the amount expected to be paid when Lhere is a present legal or constructive
obligation tD pay this amount as a result of past service provided by the employee and the
obligation can be estimated reliably,
b. Provident fund
Eligible employees of the company receive benefits from a provident fund, which is 3
defined benefit plan. Both the eligible employee and the Company make monthly
contributions to the provident fund plan equal to a specified percentage of the covered
employee's salary. The monthly contributions are made to the government administered
provident and pension fund. The rate at which the annual interest is payable to the
beneficiaries is being administered by the government and the same is paid by the
provident and pension fund,
c. Gratuity
The Company provides for gratuity, a defined benefit retirement plan ["the Gratuity Plan")
covering eligible employees of the company. The Gratuity Plan provides a lump-sum
payment to vested employees at retirement, death, incapacitation or termination of
employment, of an amount based on the respective employee's salary and the tenure of
employment with the company.
Liabilities With regard ta Lhe Gratuity Plan are determined by actuarial valuation,
performed by an independent actuary, at each balance Sheet date using the projected
unit credit method. i he company recognizes the net obligation of a defined benefit plan in
its Balance Sheet as an asset or liability. Gains and losses through remeasurements of the
net defined benefit liability are recognized in other comprehensive income and are not
reclassified to profit or loss in subsequent periods. The effect of any pian amendments is
recognized in the Statement of Profit and Loss.
d. Compensated absences
The Company has a policy on compensated absences which are both accumulating and
non-accumulating in nature; The expected cost of accumulating compensated absences is
determined by actuarial valuation performed by an independent actuary at each Balance
Sheet date using projected unit credit method on thE additional amount expected to be
paid / availed as a result of the unused entitlement that has accumulated at the Balance
Sheet date. Expense on non-accumulating compensated absences is recognized in the
period m which the absences occur.
xb Employee stock option
In respect of stock options granted pursuant to the Company's Employee Stock Option
Scheme, the Company recognise employee compensation expense, using the grant date
fan value in accordance with Ind-As 102 - Share Based payment, on straight line basis
over the period over which the employees would become unconditionally entitled to apply
for the shares,
|