2. Material accounting policies2.1 Recognition of income and expenses

The Company earns revenue primarily from giving
loans. Revenue is recognized to the extent that it is
probable that the economic benefits will flow to the
Company and the revenue can be reliably measured.
The following specific recognition criteria must also
be met before revenue is recognized:

2.1.1 Interest income

Interest revenue is recognized using the Effective
Interest Rate method (EIR).

The EIR is the rate that exactly discounts estimated
future cash receipts through the expected life of the
financial instrument or, when appropriate, a shorter

period, to the net carrying amount of the financial
assets

The EIR (and therefore, the amortized cost of the
asset) is calculated by considering any discount or
premium on acquisition, fees and transaction costs
that are an integral part of the EIR. The Company
recognises interest income using a rate of return that
represents the best estimate of a constant rate of
return over the expected life of the loan.

The Company calculates interest income by applying
the EIR to the gross carrying amount of financial
assets other than the credit impaired assets.

When a financial asset becomes credit impaired
and is, therefore, regarded as 'Stage 3', the Company
calculates the interest income by applying the
effective interest rate to the net amortized cost of
the financial asset. If the financial asset cures and is
no longer credit-impaired, the Company reverts to
calculating interest income on a gross basis.

2.1.2 Dividend income

Dividend income is recognized when the Company's
right to receive the payment is established, which is
generally when shareholders approve the dividend.

2.1.3 Net gain on derecognition of financial instruments
under amortized cost category

Where derecognition criteria as per Ind AS 109,
including transaction of substantially all the risks and
rewards relating to assets being transferred to the
buyer being met, the assets have been derecognized.
Income from assignment transactions, i.e. present
value of excess interest spread is recognized.

2.1.4 Net Gain/Loss on fair value changes

The Company recognizes the fair value on investment
measured at FVTPL in the Statement of profit and
loss in accordance with Ind AS 109. In cases there is
a net gain in the aggregate, the same is recognised
in “Net gains on fair value changes” under Revenue
from operations and if there is a net loss the same is
disclosed under “Net loss on fair value changes” in the
statement of profit and loss.

2.1.5 Interest Expense

Interest expense includes issue costs that are initially
recognized as part of the carrying value of the
financial liability and amortized over the expected
life using the effective interest method. These include
fees and commissions payable to arrangers and other

expenses such as external legal costs, provided these
are incremental costs that are directly related to the
origination of financial liability.

2.1.6 Other income

All other financial charges such as late payment fee,
legal charges, collection charges etc are recognized
on receipt basis. These charges are treated to
accrue on realization, due to the uncertainty of their
realization.

2.1.7 Revenue from Contracts with Customers

The Company recognizes revenue from contracts with
customers (other than financial assets to which Ind
AS 109 'Financial Instruments' is applicable) based
on a comprehensive assessment model as set out in
Ind AS 115 'Revenue from Contracts with Customers'.
The Company identifies contract(s) with a customer
and its performance obligations under the contract,
determines the transaction price and its allocation
to the performance obligations in the contract and
recognizes revenue only on satisfactory completion of
performance obligations.

a) Facilitation fees income is earned on distribution
of services and products of other entities under
distribution arrangements. The income so
earned is recognised on completion of successful
distribution on behalf of other entities subject
to there being no significant uncertainty of its
recovery.

b) The Company recognizes revenue from market
support services/corporate agency service
upon satisfaction of performance obligation by
rendering of services underlying the contract
with third party customers.

2.2 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
and financial liabilities are recognized when the
entity becomes a party to the contractual provisions
of the instrument.

Financial Asset

A. Initial recognition and measurement

Financial assets, with the exception of loans and
advances to customers, are initially recognised
on the trade date, i.e., the date that the Company
becomes a party to the contractual provisions of
the instrument. Loans and advances to customers

are recognised when funds are disbursed to the
customers. The classification of financial instruments
at initial recognition depends on their purpose and
characteristics and the management's intention when
acquiring them. All financial assets are recognised
initially at fair value plus transaction costs that are
attributable to the acquisition of the financial asset,
except in the case of financial assets not recorded at
fair value through profit or loss.

B. Classification and subsequent measurement

For subsequent measurement, financial assets are
classified in three categories:

• Debt instrument at amortised cost

• Debt instrument at fair value through other
comprehensive income (FVTOCI)

• Debt instrument and equity instruments at fair
value through profit or loss (FVTPL)

The classification depends on the contractual terms of
the cash flows of the financial assets, the Company's
business model for managing financial assets and, in
case of equity instruments and the intention of the
Company whether strategic or non-strategic. The said
classification methodology is detailed below:

Business model: The business model reflects how the
Company manages the assets in order to generate
cash flows. That is, where the Company's objective is
solely to collect the contractual cash flows from the
assets, the same is measured at amortized cost or
where the Company's objective is to collect both the
contractual cash flows and cash flows arising from
the sale of assets, the same is measured at fair value
through other comprehensive income (FVTOCI). If
neither of these is applicable (e.g. financial assets are
held for trading purposes), then the financial assets
are classified as part of 'other' business model and
measured at FVTPL.

SPPI (Solely payments of principal and interest)
Assessment: The Company assesses the contractual
terms of the financial assets to identify whether they
meet the SPPI test. In making this assessment, the
Company considers whether the contractual cash
flows represent solely payments of principal and
interest which means that whether the cash flows
are consistent with a basic lending arrangement i.e.
interest includes only consideration for the time value
of money, credit risk, other basic lending risks and a

profit margin that is consistent with a basic lending
arrangement. Principal for the purpose of this test
refers to the fair value of the financial asset at initial
recognition.

Debt instruments at amortised costs

A debt instrument' is measured at the amortised cost
if both the following conditions are met:

• The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and

• Contractual terms of the asset give rise on
specified dates to cash flows that are SPPI on the
principal amount outstanding.

After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method less impairment.
Amortised cost is calculated by considering any
discount or premium on acquisition and fees or
costs that are an integral part of the EIR. The EIR
amortisation is included in interest income in the
statement of profit or loss. The losses arising from
impairment are recognised in the statement of profit
and loss.

Debt instrument at FVTOCI

A 'debt instrument' is classified as at the FVTOCI if
both of the following criteria are met:

• The objective of the business model is achieved
both by collecting contractual cash flows and
selling the financial assets, and

• The asset's contractual cash flows represent SPPI.

Debt instruments included within the FVTOCI
category are measured initially as well as at each
reporting date at fair value. Fair value movements
are recognized in the other comprehensive income
(OCI). However, the Company recognizes interest
income, impairment losses & reversals and foreign
exchange gain or loss in the profit and loss. On
derecognition of the asset, cumulative gain or loss
previously recognised in OCI is reclassified from the
equity to P&L. Interest earned whilst holding FVTOCI
debt instrument is reported as interest income using
the EIR method.

Debt instruments at FVTPL

FVTPL is a residual category for debt instruments. Any
debt instrument, which does not meet the criteria for

categorization as at amortized cost or as FVTOCI, is
classified as at FVTPL.

In addition, the Company may elect to designate a debt
instrument, which otherwise meets amortized cost
or FVTOCI criteria, as at FVTPL. However, such election
is allowed only if doing so reduces or eliminates a
measurement or recognition inconsistency (referred
to as 'accounting mismatch'). Debt instruments
included within the FVTPL category are measured at
fair value with all changes recognized in the P&L.

Financial Liabilities

A. Initial recognition and measurement

Financial liabilities are classified and measured
at amortised cost or FVTPL. A financial liability is
classified and financial liabilities are recognised
initially at fair value and in the case of loans and
borrowings and payables, net of directly attributable
transaction costs.

The Company's financial liabilities include loans,
debentures and borrowings including bank overdrafts
and trade & other payables.

B. Loans, Debentures and Borrowings

After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised
cost using the EIR method. Gains and losses are
recognised in profit or loss when the liabilities are
derecognised as well as through the EIR amortisation
process.

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 as finance costs in the
Statement of profit and loss.

C. Financial liabilities subsequently measured at
amortised cost

Financial liabilities that are not held-for-trading and
are not designated as at FVTPL are measured at
amortised cost at the end of subsequent accounting
periods. The carrying amounts of financial liabilities
that are subsequently measured at amortised cost are
determined based on the effective interest method.

The effective interest method is a method of
calculating the amortised cost of financial liability
and of allocating interest expense over the relevant
period. The effective interest rate is the rate that exactly
discounts estimated future cash payments (including

all fees paid or received that form an integral part
of the effective interest rate, transaction costs and
other premiums or discounts) through the expected
life of the financial liability, or (where appropriate) a
shorter period, to the net carrying amount on initial
recognition.

D. Derivative Financial Instrument

The Company holds derivatives to mitigate the risk
of changes in exchange rates on foreign currency
exposures as well as interest fluctuations. The
counterparty for these contracts is generally a
bank. Derivatives that are not designated a hedge
are categorized as financial assets or financial
liabilities, at fair value through profit or loss. Such
derivatives are recognized initially at fair value, and
attributable transaction costs are recognized in net
in the Statement of Profit and Loss when incurred.
Subsequent to initial recognition, these derivatives
are measured at fair value through profit or loss,
and the resulting gains or losses are included in the
statement of profit and loss.

Reclassification of Financial Assets and Liabilities

The Company doesn't 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.
Financial liabilities are never reclassified.

De-recognition of financial assets and financial

liabilities

Financial Assets

The Company derecognises a financial asset when
the contractual rights to the cash flows from the asset
expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership
of the asset to another party. If the Company neither
transfers nor retains substantially all the risks and
rewards of ownership and continues to control the
transferred asset, the Company recognises its retained
interest in the asset and an associated liability for
amounts it may have to pay. If the Company retains
substantially all the risks and rewards of ownership of
a transferred financial asset, the Company continues
to recognise the financial asset and recognises a
collateralised borrowing for the proceeds received.

On derecognition of a financial asset in its entirety,
the difference between the asset's carrying amount
and the sum of the consideration received and
receivable and the cumulative gain or loss that had

been recognised in other comprehensive income
and accumulated in equity is recognised in profit or
loss if such gain or loss would have otherwise been
recognised in profit or loss on disposal of that financial
asset.

On derecognition of a financial asset other than
in its entirety (e.g. when the Company retains an
option to repurchase part of a transferred asset), the
Company allocates the previous carrying amount
of the financial asset between the part it continues
to recognise under continuing involvement, and
the part it no longer recognises on the basis of the
relative fair values of those parts on the date of the
transfer. The difference between the carrying amount
allocated to the part that is no longer recognised
and the sum of the consideration received for the
part no longer recognised and any cumulative gain
or loss allocated to it that had been recognised in
other comprehensive income is recognised in profit
or loss if such gain or loss would have otherwise
been recognised in profit or loss on disposal of that
financial asset. A cumulative gain or loss that had
been recognised in other comprehensive income
is allocated between the part that continues to be
recognised and the part that is no longer recognised
on the basis of the relative fair values of those parts.

Financial Liabilities

The Company derecognises financial liabilities when,
and only when, the Company's obligations are
discharged, cancelled or have expired. An exchange
between with a lender of debt instruments with
substantially different terms is accounted for as an
extinguishment of the original financial liability and
the recognition of a new financial liability. Similarly,
a substantial modification of the terms of an existing
financial liability (whether or not attributable to the
financial difficulty of the debtor) is accounted for as
an extinguishment of the original financial liability
and the recognition of a new financial liability. The
difference between the carrying amount of financial
liability derecognised and the consideration paid and
payable is recognised in profit or loss.

2.3 Impairment of Financial Assets2.3.1 Overview of principles for measuring expected
credit loss ('ECL') on financial assets.

The Company records allowance for expected credit
losses for all loans, other financial debt assets not

held at FVTPL or FVTOCI, in this section all referred to
as 'financial instruments. Equity instruments are not
subject to impairment under Ind AS 109 as they are
measured at FVTOCI and FVTPL.

The ECL allowance is based on the credit losses
expected to arise over the life of the asset (the lifetime
expected credit loss or LTECL), unless there has been
no significant increase in credit risk since origination,
in which case, the allowance is based on the 12
months' expected credit loss (12mECL).

The 12mECL is the portion of LTECLs that represent
the ECLs that result from default events on a financial
instrument that are possible within the 12 months
after the reporting date.

Both LTECLs and 12mECLs are calculated on either
an individual basis or a collective basis, depending
on the nature of the underlying portfolio of financial
instruments.

Based on the above process, the Company categorizes
its loans into Stage 1, Stage 2, Stage 3 as described
below:

Stage 1

When loans are first recognised, the Company
recognises an allowance based on 12m ECLs. Stage
1 loans also include facilities where the credit risk
has improved, and the loan has been reclassified
from Stage 2. The Company has assessed that all
standard exposures (i.e. exposures with no overdues)
and exposure up to 30 days overdues fall under this
category.

Stage 2

When loans that have had a significant increase in
credit risk since initial recognition are classified under
this stage. Based on empirical evidence, significant
increase in credit risk is witnessed after the overdues
on an exposure exceed for a period more than 30
days and less than 90 days. Accordingly, the Company
classifies all exposures with overdues exceeding 30
days and less than 90 days at each reporting date
under this Stage. The Company records an allowance
for the LTECLs.

Stage 3

Loans considered credit impaired. The Company
records an allowance for the LTECLs. All exposures
having overdue balances for a period exceeding 90

days are considered to be defaults and are classified
under this stage.

For financial assets for which the Company has no
reasonable expectations of recovering either the
entire outstanding amount, or a proportion thereof,
the gross carrying amount of the financial asset is
reduced. This is considered a (partial) derecognition
of the financial asset.

2.3.2 Methodology for calculating ECL

The Company calculates ECL based on a probability
weighted outcome and historical data to measure
the expected cash shortfalls discounted at an
approximation to EIR. A cash shortfall is the difference
between the cash flows that are due to an entity in
accordance with the contract and the cash flows that
the entity expects to receive:

Key factors applied to determine ECL are outlined as
follows:

Probability of default (PD) - The probability of
default is an estimate of the likelihood of default over
a given time horizon. A default may only happen at
a certain time over the assessed period, if the facility
has not been previously derecognized and is still in
the portfolio.

Exposure at default (EAD) - Exposure at default
(EAD) is the sum of outstanding principal and the
interest amount accrued but not received on each
loan as at reporting date.

Loss given default (LGD) - It is an estimate of the loss
arising when the event of default occurs. It is based
on the difference between the contractual cash
flows due and those that the lender would expect to
receive. It is usually expressed as a percentage of the
EAD.

The mechanics of the ECL method are summarised
below:Stage 1

The 12mECL is calculated as the portion of LTECLs
that represent the ECLs that result from default
events on a financial instrument that are possible
within the 12 months after the reporting date. The
Company calculates the 12mECL allowance based
on the expectation of a default occurring in the 12
months following the reporting date. These expected
12-month default probabilities are applied to a EAD

and multiplied by the expected LGD and discounting
factor. The discounting factor is computed using the
effective interest rate (EIR) of the portfolio.

Stage 2

When a loan has shown a significant increase in
credit risk since origination, the Company records an
allowance for the LTECLs. The mechanics are similar to
those explained above, including the use of multiple
scenarios, but Marginal PDs and LGDs are estimated
over the lifetime of the instrument. The marginal PD
is used in case cash flows/ repayment schedule is
available, else cumulative PD is used.

Stage 3:

For loans considered credit-impaired, the Company
recognises the lifetime expected credit losses for
these loans. The method is similar to that for Stage 2
assets, with the PD set at 100%.

For impairment loss allowance on financial assets
except loans, the Company uses simplified approach
for arriving at impairment loss allowance.

2.3.3 Forward looking information

While estimating the expected credit loss, the
Company reviews macro-economic developments
occurring in the economy and market it operates in.
On a periodic basis, the Company analyses if there
is any relationship between key economic trends,
with the estimate of PD and LGD determined by the
Company based in its internal data. While the internal
estimates of PD, LGD rates by the Company may not
be always reflective of such relationships, temporary
overlays are embedded in the methodology to reflect
such macro-economic trends reasonably.

2.3.4 Write-offs

Loans are written off in their entirety only when
pursuing. This is generally the case when the
Company determines that the borrower does not
have assets or sources of income that could generate
sufficient cash flows to repay the amounts subject to
write-offs. If the amount to be written off is greater
than the accumulated loss allowance, the difference
is first treated as an addition to the allowance that is
then applied against the gross carrying amount. Any
subsequent recoveries against such loan are credited
to the Statement of profit and loss.

2.3.5 Impairment of non-financial assets

The Company assesses, at each reporting date,
whether there is an indication that an asset may be
impaired. If any indication exists, or when annual
impairment testing for an asset is required, the
Company estimates the asset's recoverable amount.
An asset's recoverable amount is the higher of an
asset's fair value less costs of disposal and its value
in use. Recoverable amount is determined for an
individual asset, unless the asset does not generate
cash inflows that are largely independent of those
from other assets or groups of assets. When the
carrying amount of an asset exceeds its recoverable
amount, the asset is considered impaired and is
written down to its recoverable amount.

In assessing value in use, the estimated future cash
flows are discounted to their present value using
a pre-tax discount rate that reflects current market
assessments of the time value of money and the
risks specific to the asset. In determining fair value
less costs of disposal, recent market transactions are
considered. If no such transactions can be identified,
an appropriate valuation model is used.

2.4 Fair value measurement

The Company measures financial instruments at fair
value at each balance sheet date.

Fair value is the price at the measurement date 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 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
considers 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.

Accordingly, the Company uses valuation techniques
that are appropriate in the circumstances and for
which sufficient data is available to measure fair value,
maximizing the use of relevant observable inputs and
minimizing the use of unobservable inputs.

In order to show how fair values have been derived,
financial instruments are classified based on a
hierarchy of valuation techniques, as summarised
below:

• Level 1 financial instruments - Quoted

(unadjusted) market prices in active markets for
identical assets or liabilities.

• Level 2 financial instruments - Valuation

techniques for which the lowest level input that
is significant to the fair value measurement is
directly or indirectly observable.

• Level 3 financial instruments - Valuation

technique for which the lowest level input that
is significant to the fair value measurement is
unobservable.

For assets and liabilities that are recognized 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.

The Company evaluates the levels at each reporting
period on an instrument-by-instrument basis and
reclassifies instruments when necessary, based on
the facts at the end of the reporting period.

2.5 Foreign Currency transactions2.5.1 Functional and presentation currency

The Financial statements are presented in Indian
Rupees (INR), which is the functional currency of the
Company and the currency of the primary economic
environment in which the Company operates.

2.5.2 Transaction and balance

Transactions in foreign currencies are initially recorded
in the functional currency at the spot rate of exchange
ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are
retranslated into the functional currency at the spot
rate of exchange at the reporting date. All exchange
differences arising from foreign currency borrowings
to the extent not capitalized are regarded as a cost of
borrowing and presented under Finance cost.

Non-monetary items that are measured at historical
cost in a foreign currency are translated using the
spot exchange rates as at the date of recognition.

2.6 Leasing

The Company assesses at contract inception whether
a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration.

Where the Company is lessee

The Company applies a single recognition and
measurement approach for all leases, except for
short-term leases and leases of low-value assets. The
Company recognises lease liabilities to make lease
payments and right-of-use assets representing the
right to use the underlying assets.

Right-of-use assets

The Company recognises right-of-use assets at the
commencement date of the lease (i.e., the date
the underlying asset is available for use). Right-of-
use assets are measured at cost, less accumulated
depreciation and accumulated impairment losses,
and adjusted for any remeasurement of lease
liabilities. The cost of right-of-use assets includes the
amount of lease liabilities recognised, initial direct
costs incurred, and lease payments made at or before
the commencement date less any lease incentives
received. Right-of-use assets are depreciated on a
straight-line basis over the shorter of the lease term
or the estimated useful lives of the assets.

If ownership of the leased asset transfers to the
Company at the end of the lease term or the cost
reflects the exercise of a purchase option, depreciation
is calculated using the estimated useful life of the
asset.

The right-of-use assets are also subject to impairment.
Refer to the accounting policies in note 2.3.5
Impairment of non-financial assets.

Lease Liabilities

At the commencement date of the lease, the Company
recognises lease liabilities measured at the present
value of lease payments to be made over the lease
term. The lease payments include fixed payments
(including in substance fixed payments) less any
lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees.
The lease payments also include the exercise price of
a purchase option reasonably certain to be exercised
by the Company and payments of penalties for
terminating the lease, if the lease term reflects the
Company exercising the option to terminate.

In calculating the present value of lease payments,
the Company uses its incremental borrowing rate at
the lease commencement date because the interest
rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made.
In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change in
the lease term, a change in the lease payments (e.g.,
changes to future payments resulting from a change
in rate used to determine such lease payments) or a
change in the assessment of an option to purchase
the underlying asset.

Short-term lease

The Company applies the short-term lease recognition
exemption to its short-term leases (i.e., those leases
that have a lease term of 12 months or less from the
commencement date and do not contain a purchase
option). Lease payments on short-term leases are
recognized as and when due.

2.7 Cash and Cash equivalents

Cash and cash equivalent 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.

For the purpose of the Statement of cash flows, cash
and cash equivalents consist of cash and short-term
deposits, as defined above, net of outstanding bank
overdrafts as they are considered an integral part of
the Company's cash management.

2.8 Property, Plant and Equipment (PPE)

Property, plant and equipment is stated at cost,
less accumulated depreciation and accumulated

impairment in value if any. Cost comprises the
purchase price and any attributable cost of bringing
the asset to its working condition for its intended use.
Changes in the expected useful life are accounted for
by changing the amortisation period or methodology,
as appropriate, and treated as changes in accounting
estimates.

If significant parts of an item of Property, plant and
equipment have different useful lives, then they are
accounted for as a separate item (major components)
of Property, plant and equipment.

Leasehold improvements are amortized on straight
line basis over the lease term or the estimated useful
life of the assets, whichever is lower.

The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate

Property, plant and equipment is derecognized
on disposal or when no future economic benefits
are expected from its use. Any gain or loss arising
on derecognition of the asset (calculated as the
difference between the net disposal proceeds and
the carrying amount of the asset) is recognized in
other income / expense in the Statement of profit
and loss in the year the asset is derecognised.

Depreciation on Property, plant and equipment
(except freehold land) provided on written down
value method at the rate arrived based on useful life
of the assets, prescribed under schedule II of the Act,
which also represents the estimate of the useful life of
the assets by the management.

Depreciation on assets sold during the year is charged
to the Statement of profit and loss up to the date of
sale.

The Company has used the following useful lives
to provide depreciation on its Property, plant and
equipment.

2.9 Intangible assets and Intangible asset under
development2.9.1 Intangible assets

The Company's intangible assets mainly include
Computer Software. An intangible asset is
recognized only when its cost can be measured
reliably, and it is probable that the expected future
economic benefits that are attributable to it will
flow to the Company. Intangible assets acquired
separately are measured on initial recognition at
cost.

The Company assesses at each Balance Sheet date
whether there is any indication that an intangible
asset may be impaired.

The useful lives of intangible assets are assessed to
be either finite or indefinite. Intangible assets with
finite lives are amortized over the useful economic
life. The amortisation period and the amortisation
method for an intangible asset with a finite useful
life are reviewed at least at the end of each reporting
period.

Amortisation is calculated using the straight-line
method to write down the cost of intangible assets
to their residual values over their estimated useful
lives, as follows:

Computer software - 3-5 years

Changes in the expected useful life or the expected
pattern of consumption of future economic benefits
embodied in the asset are considered to modify the
amortisation period or method, as appropriate, and
are treated as changes in accounting estimates.

An intangible asset is derecognized upon disposal
(i.e., at the date the recipient obtains control) or when
no future economic benefits are expected from its
use. Any gain or loss arising upon derecognition of
the asset (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 derecognized.

2.9.2 Intangible asset under development

Intangible Assets under development comprise of
assets which are not yet ready for their intended
use and includes all direct expenses and directly
attributable indirect expenses incurred for
development of assets.

Cost of developmental work, which is completed,
wherever eligible, is recognised as an Intangible
Asset.

Cost of developmental work under progress,
wherever eligible, is classified as “Intangible Assets
under Development”.

Intangible Asset under development includes
expenditure incurred by the Company towards
payment to external agencies for developmental
project(s) and expenditure incurred by the Company
towards material cost, employee cost and other
direct expenditure pertaining to identified project.

Development costs that are directly attributable to
the design and testing of identifiable products and
solutions are recognised as intangible assets when
the following criteria are met:

• Management intends to and it is technically feasible
to complete the project so that it will be available
for use

• It can be demonstrated how the intangible asset
will generate probable future economic benefits

• Adequate technical, financial and other resources
to complete the development and to use or sell the
asset are available, and

• The expenditure attributable during its
development can be reliably measured.

Cost of an internally generated asset comprises
all expenditure that can be directly attributed, or
allocated on a reasonable and consistent basis, to
create, produce and make the asset ready for its
intended use.

Subsequent costs are included in the asset's
carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will
flow to the entity and the cost can be measured
reliably.

2.10 Retirement and other Employee benefits2.10.1 Short term employee benefits

Short-term employee benefits are expensed as the
related service is provided. A liability is recognized
for the amount expected to be paid if the Company
has a present legal or constructive obligation to pay
this amount as a result of past service provided by
the employee and the obligation can be estimated
reliably.

2.10.2 Share-based payment arrangements

The Company has formulated an Employees Stock
Option Schemes to be administered through a Trust.
The scheme provides that subject to continued
employment with the Company; the employees
are granted an option to acquire equity shares of
the Company that may be exercised within the
specified period.

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 recognized in employee benefits
expense over the period in which service conditions
are fulfilled, together with a corresponding increase
in employee stock option plan reserve in other
equity. The cumulative expense is recognized
for equity-settled transactions at each reporting
date until the vesting date reflects the extent to
which the vesting period has expired. The expense
or credit in the Statement of profit and loss for a
period represents the movement in cumulative
expense recognized as at the beginning and end of
that period and is recognized in employee benefits
expense.

Service conditions are not taken into account
when determining the grant date fair value of
awards, but the likelihood of the conditions being
met is assessed as part of the Company's best
estimate of the number of equity instruments that
will ultimately vest. No expense is recognized for
awards that do not ultimately vest because service
conditions have not been met.

The dilutive effect of outstanding options is reflected
as additional share dilution in the computation of
diluted earnings per share.

2.10.3 Defined contribution plans

Obligations for contributions to defined
contribution plans are expensed as the related
service is provided. Post-employment benefits in
the form of provident funds and other funds are
defined contribution schemes.

The Company has no obligation, other than
the contribution payable to the provident fund
and pension scheme. The Company recognises
contribution payable to scheme as an expense,
when an employee renders the related service. If

the contribution payable to the scheme for service
received before the balance sheet date exceeds the
contribution already paid, the deficit payable to the
scheme is recognized as a liability after deducting
the contribution already paid. If the contribution
already exceeds the contribution due to services
received before the balance sheet date, then excess
is recognized as an asset to the extent that the pre¬
payment will lead to, for example, a reduction in
future payment or a cash refund.

2.10.4 Defined benefit plans

The Company has defined benefit gratuity plan.
The Company's net obligation in respect of gratuity
is calculated 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 obligations 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
recognized 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. To calculate the present
value of economic benefits, consideration is given
to any applicable minimum funding requirements.

Remeasurement of the net defined benefit liability/
asset, 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 recognized immediately in the
balance sheet with a corresponding debit or credit
to OCI ( other Comprehensive Income) in the period
in which they occur. Net interest expense (income)
on the net defined liability (assets) is computed
by applying the discount rate, used to measure
the net defined liability (asset), to the net defined
liability (asset) at the start of the financial year
after taking into account any changes as a result of
contribution and benefit payments during the year.
Net interest expense and other expenses related
to defined benefit plans are recognized in profit or
loss. Remeasurements are not reclassified to profit
or loss in subsequent periods.

When the benefits of a plan are changed or when
a plan is curtailed, the resulting change in benefit
that relates to past service or the gain or loss on
curtailment is recognized immediately in profit or
loss. The Company recognises gains and losses on
the settlement of a defined benefit plan when the
settlement occurs.

2.10.5 Other long-term employee benefits

Compensated absences are a long-term employee
benefit and are accrued based on an actuarial
valuation done as per projected unit credit method
as at the Balance Sheet date, carried out by an
independent actuary.

Actuarial gains and losses arising during the year
are immediately recognized in the Statement of
profit and loss.