3. Material Accounting Policies

3.1 Revenue recognition

Revenue from contract with customers is recognized
when the Company satisfies the performance obligation
by transfer of control of promised product or service to
customers in an amount that reflects the consideration,
which the Company expects to receive in exchange for
those products or services. Revenue excludes taxes
collected from customers.

Brokerage income is recognized when it is probable that
the economic benefits will flow to the Company and the
amount of income can be measured reliably. In respect
of brokerage income, the performance obligations are
satisfied over a period of time and is recognized as per
the agreed percentage of the underlying investments.
Dividend income from investments is recognized when
the right to receive payment is established. Interest
income from a financial asset is recognised on time
basis, by reference to the principal outstanding at the

effective interest rate applicable, which is the rate which
exactly discounts estimated future cash receipts through
the expected life of the financial asset to that asset’s net
carrying amount on initial recognition.

3.2 Investments in subsidiary and associate

Investments in subsidiary and associate are carried at
cost less accumulated impairment, if any. On disposal of
investments in subsidiary and associate the difference
between net disposal proceeds and the carrying amounts
are recognised in the Statement of Profit and Loss.

3.3 Employee benefits
Short-term employee benefits:

All employee benefits payable wholly within twelve months
of rendering the service are classified as short-term
employee benefits. All short-term employee benefits are
accounted on undiscounted basis during the accounting
period based on services rendered by employees and
recognized as expenses in the Statement of profit and
loss. A liability is recognised 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. These benefits include salary and
wages, bonus, commission, performance incentives, short¬
term compensated absences etc.

Long-term employee benefits:

The Company participates in various employee benefit
plans. Post-employment benefits are classified as either
defined contribution plans or defined benefit plans.

Defined contribution plans:

Retirement benefit in the form of provident and pension
fund is a defined contribution scheme. The Company has
no obligation, other than the contribution payable to the
fund. Payments to defined contribution plan are recognised
as an expense when employees have rendered service
entitling them to the contributions.

Defined benefit plans:

The Company's gratuity scheme is a defined benefit
plan and is unfunded. For defined benefit plan, the cost
of providing benefits is determined using the projected
unit credit method, with actuarial valuations being carried
out at the end of each reporting period. Remeasurement,
comprising actuarial gains and losses reflected immediately
in the balance sheet with a charge or credit recognised in
other comprehensive income in the period in which they

occur. Remeasurement recognised in other comprehensive
income is reflected immediately in retained earnings and is
not reclassified to statement of profit and loss. Past service
cost is recognised in the statement of profit and loss in
the period of a plan amendment. Net interest is calculated
by applying the discount rate to the net defined benefit
plan at the start of the reporting period, taking account of
any change in the net defined benefit plan during the year
as a result of contributions and benefit payments. Defined
benefit costs are categorised as follows:

• service cost (including current service cost, past
service cost, as well as gains and losses on
curtailments and settlements);

• net interest expense or income; and

• remeasurement

The Company presents the first two components of
defined benefit costs in the statement of profit and loss in
the line item 'Employee benefits expense'.

Other long-term employee benefits:

The employees of the Company are entitled to
compensated absences. The employees can carry-forward
a portion of the unutilized accumulating compensated
absences and utilise it in future service periods or receive
cash compensation on termination of employment. Since
the compensated absences do not fall due wholly within
twelve months after the end of the period in which the
employees render the related service and are also not
expected to be utilized wholly within twelve months
after the end of such period, the benefit is classified as
a long-term employee benefit. The Company records an
obligation for such compensated absences in the period
in which the employee renders the services that increase
this entitlement. The obligation is measured on the basis
of independent actuarial valuation using the projected unit
credit method.

3.4 Property, plant and equipment

An item of Property, Plant and Equipment (PPE) that
qualifies as an asset is measured on initial recognition
at cost. Following initial recognition, property, plant and
equipment are carried at cost, as reduced by accumulated
depreciation and impairment losses, if any.

Depreciation is recognised so as to write off the cost of
PPE less their residual values over their useful lives, using
the straight-line method. The useful lives prescribed in
Schedule II to the Companies Act, 2013 are considered

as the minimum lives. If the management’s estimate of
the useful life of property, plant and equipment at the time
of acquisition of the asset or of the remaining useful life
on a subsequent review is shorter than that envisaged
in the aforesaid schedule, depreciation is provided at a
higher rate based on the management’s estimate of the
useful life/remaining useful life. The estimated useful lives,
residual values and depreciation method are reviewed at
the end of each reporting period, with the effect of any
changes in estimate accounted for on a prospective basis.
PPE are depreciated over its estimated useful lives as per
Part C of 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.

An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected to arise from its use or disposal. Any gain or loss
arising on the disposal or retirement of an item of property,
plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of
the asset and is recognised in profit or loss.

3.5 Impairment of property, plant and equipment and
investments in subsidiary and associate

At the end of each reporting period, the Company reviews
the carrying amounts of its property, plant and equipment
and investments in subsidiary and associate, to determine
whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any).

Recoverable amount is the higher of fair value less costs
of disposal and value in use. 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 for which the estimates of future
cash flows have not been adjusted. If it is not possible to
measure fair value less cost of disposal because there
is no basis for making a reliable estimate of the price at
which an orderly transaction to sell the asset would take
place between market participants at the measurement
dates under market conditions, the asset’s value in use is
used as recoverable amount.

If the recoverable amount of an asset is estimated to be
less than its carrying amount, the carrying amount of the
asset (or cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised immediately in
profit or loss.

When an impairment loss subsequently reverses, the
carrying amount of the asset (or a cash-generating unit)
is increased to the revised estimate of its recoverable
amount, to the extent that the increased carrying amount
does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for
the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in profit or
loss.

3.6 Leases

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

The Company as lessee

The Company recognises a right-of-use asset and a lease
liability at the lease commencement date.

The right-of-use assets are initially recognised 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, if any. 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.

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, company’s incremental borrowing rate.

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). It also applies the lease of low-value assets
recognition exemption to leases that are considered to
be low value. Lease payments on short-term leases and
leases of low-value assets are recognised as expense on
a straight-line basis over the lease term.

3.7 Taxation

Income tax expense comprises of current tax and deferred
tax. It is recognized in Statement of profit and loss except
to the extent that it relates to an item recognized directly in
equity or in other comprehensive income.

Current tax:

Current tax comprises amount of tax payable in respect
of the taxable income or loss for the year determined in
accordance with Income Tax Act, 1961 and any adjustment
to the tax payable or receivable in respect of previous
years. The Company’s current tax is calculated using tax
rates that have been enacted or substantively enacted by
the end of the reporting period.

Deferred tax:

Deferred tax is recognised on temporary differences
between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax
bases used in the computation of taxable profit. Deferred
tax liabilities are recognised for all taxable temporary
differences. Deferred tax assets are generally recognised
for all deductible temporary differences to the extent that
it is probable that taxable profits will be available against
which those deductible temporary differences can be
utilised. Such deferred tax assets and liabilities are not
recognised if the temporary difference arises from the
initial recognition (other than in a business combination)
of assets and liabilities in a transaction that affects neither
the taxable profit nor the accounting profit. In addition,
deferred tax liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill.

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 realised, based on 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.

Presentation of current and deferred tax:

Current and deferred tax are recognised in the statement
of profit and loss, except when they relate to items that are
recognised in other comprehensive income or directly in
equity, in which case, the current and deferred tax are also
recognised in other comprehensive income or directly in
equity respectively. Where current tax or deferred tax arises
from the initial accounting for a business combination, the
tax effect is included in the accounting for the business
combination.

The Company offsets current tax assets and current tax
liabilities, where it has a legally enforceable right to set
off the recognized amounts and where it intends either to
settle on a net basis, or to realize the asset and settle the
liability simultaneously. In case of deferred tax assets and
deferred tax liabilities, the same are offset if the Company
has a legally enforceable right to set off corresponding
current tax assets against current tax liabilities and the
deferred tax assets and deferred tax liabilities relate
to income taxes levied by the same tax authority on the
Company.