Ind AS 1 was amended vide notification no. GSR 242(E) dated 31st March 2023 to require disclosure
of material accounting policy information from accounting periods beginning on or after 1st April
2023 instead of significant accounting policy disclosure by amending para 117, inserting para 117A
to 117E and deleting para 118 to 121. Para 117 of Ind AS states when an information on accounting
policy is considered as material accounting policies information as follows:
Accounting policy information is material if, when considered together with other information
included in an entity's financial statements, it can reasonably be expected to influence decisions that
the primary users of general-purpose financial statements make on the basis of those financial
statements.
Each of the policies disclosed herein below has been tested to determine whether the information
disclosed is Material Accounting Policy information.
(a) Property, plant and equipment
All items of property, plant and equipment are stated at cost less depreciation; amortization and
impairment, if any. Historical cost includes expenditure that is directly attributable to bringing the
asset to its working condition capable of operating in the manner intended.
Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will
flow to the Company and the cost of the item can be measured reliably. The carrying amount of any
component accounted for as a separate asset is derecognized when replaced. The Company
depreciates them separately based on their specific useful lives. All other repairs and maintenance
are charged to the Statement of Profit and Loss during the reporting period in which they are
incurred.
Depreciation methods, estimated useful lives and residual value
Depreciation is provided on Straight Line Method and the useful lives of the assets for computing
depreciation are calculated in accordance with Schedule II to the Act. Depreciation on additions to
assets or on sale/disposal/discarding of assets is calculated pro-rata from the date of such addition
or upto the date of such sale/disposal/discarding as the case may be.
Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual
value. The residual values are not more than 5% of the original cost of the asset. The asset's residual
values and useful lives are reviewed at regular intervals and adjusted prospectively, if appropriate.
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 included in the Statement of Profit and
Loss when the asset is derecognized
The residual values, useful lives and method of depreciation of property plant and equipment are
reviewed at each financial year and adjusted prospectively, if any.
(b) Intangible assets
Computer software
Computer software are stated at cost, less accumulated amortization and impairments, if any. The
Company amortizes computer software using the straight-line method over the period of 6 years.
Gains and losses on derecognition of an intangible asset are measured as the difference between the
net disposal proceeds and the carrying amount of the asset and are recognized in the statement of
profit or loss when the asset is derecognized.
(c) Cash & Cash Equivalents
Cash and Cash Equivalents comprise of cash at banks and on hand. The Company considers all
highly liquid investments with a remaining maturity at the date of purchase are three months or less
and that are readily convertible to known amounts of cash to be cash equivalents and which are
subject to an insignificant risk of changes in value.
(i) Classification
The Company classifies its financial assets in the following measurement categories:
1. Those to be measured subsequently at fair value (either through other comprehensive
income, or through the Statement of Profit and Loss), and
2. Those measured at amortized cost.
The above classification depends on the Company's business model for managing the financial
assets and the contractual terms of the cash flows.
The Company's business model for managing financial assets refers to how it manages its financial
assets to generate cash flows. The business model determines whether cash flows will result from
collecting contractual cash flows, selling the financial assets, or both.
(ii) Measurement
For a financial asset to be classified and subsequently measured at amortized cost or FVTOCI
(excluding equity instruments which are measured at fair value through other comprehensive
income(FVTOCI)), it needs to give rise to cash flows that are 'solely payments of principal and
interest (SPPI)' on the principal amount outstanding. This assessment is referred to as the SPPI test
and is performed at an instrument level. Financial assets with cash flows that are not SPPI are
classified and measured at fair value through profit or loss(FVTPL), irrespective of the business
model.
At initial recognition:
The Company recognizes a financial asset in its financial statements when it becomes party to
contractual provisions of the instrument. All financial assets are recognized initially at fair value,
plus in the case of financial assets not recorded at fair value through profit or loss (FVTPL),
transaction costs that are attributable to the acquisition of the financial assets. However, trade
receivables that do not contain a significant financing component are measure at transaction price.
Subsequent measurement:
Subsequent measurement of financial assets depends on the Company's business model for
managing the asset and the cash flow characteristics of the asset. The Company classifies its debt
instruments into following categories:
A. Amortized cost:
A 'debt instrument' is measured at the amortized cost if both the following conditions are met:
a. The asset is held within a business model whose objective is to hold assets for collecting
contractual cash flows, and
b. Contractual terms of the asset give rise on specified dates to cash flows that are Solely
Payments of Principal and Interest (SPPI) on the principal amount outstanding. After initial
measurement, such financial assets are subsequently measured at amortized cost and
Interest income from these financial assets is included in other income using the Effective
Interest Rate (EIR) method.
B. Fair value through profit and loss (FVTPL):
Financial Assets that do not meet the criteria for amortized cost are measured at fair value
through Profit and Loss e.g. Investments in mutual funds. A gain or loss on a financial asset
that is subsequently measured at FVTPL is recognized in profit or loss and presented net in the
Statement of Profit and Loss within other gains/(losses) in the period in which it arises.
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'). The Company has designated investments in mutual funds (other than
FMP) as at FVTPL. Debt instruments included within the FVTPL category are measured at fair
value with all changes recognized in the Statement of Profit and Loss.
C. Fair value through Other Comprehensive Income (FVTOCI):
The Company measures its current equity investment i.e. Equity instruments which are held for
trading, if any, at FVTPL and all other equity instruments at FVTOCI. The Company makes
such election on an instrument-by-instrument basis.
Equity 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).
(iii) Impairment of financial assets
The Company assesses on a forward-looking basis, the expected credit losses associated with its
financial assets carried at amortized cost for e.g, trade receivables and bank balances. The
impairment methodology applied depends on whether there has been a significant increase in credit
risk and if so, assess the need to provide for the same in the Statement of Profit and Loss.
The Company follows 'simplified approach' for recognition of impairment loss allowance on trade
receivables and all lease receivables.
(iv) Derecognition of financial assets
The Company derecognizes a financial asset only when the contractual rights to the cash flows from
the asset expires or it transfers the financial asset and substantially all the risks and rewards of
ownership of the asset.
(v) Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After
initial recognition, no reclassification is made for financial assets which are equity instruments and
financial liabilities.
The Company applies amortized cost, where it has ability to demonstrate that the underlying
instruments in the portfolio fulfill the solely payments of principal and interest ('SPPI') test and the
churn in the portfolio is negligible.
(vi) Financial Liability
The Company's financial liabilities includes Security deposits, trade payable, accrued expenses and
other payables etc.
At Initial recognition and measurement
All financial liabilities at initial recognition are classified as financial liabilities at amortized cost or
financial liabilities at fair value through profit or loss, as appropriate. All financial liabilities
classified at amortized cost are recognized initially at fair value net of directly attributable
transaction costs. Any difference between the proceeds (net of transaction costs) and the fair value at
initial recognition is recognized in the Statement of Profit and Loss or in the Capital Work-In¬
Progress, if another standard permits inclusion of such cost in the carrying amount of an asset over
the period of the borrowings using the Effective interest rate ('EIR') method.
Subsequent recognition
The subsequent measurement of financial liabilities depends upon the classification as described
below: -
Financial Liabilities classified as Amortized Cost
Financial Liabilities that are not held for trading and are not designated as at FVTPL are measured
at amortized cost at the end of subsequent accounting periods. Amortized 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. Interest expense that is not capitalized as part of costs of assets is included as
Finance costs in the Statement of Profit and Loss.
Financial Liabilities classified as Fair value through profit and loss (FVTPL)
Financial liabilities classified as FVTPL includes financial liabilities held for trading and financial
liabilities designated upon initial recognition as FVTPL. Financial liabilities are classified as held for
trading if they are incurred for the purpose of repurchasing in the near term. Financial liabilities
designated upon initial recognition at FVTPL only if the criteria in Ind AS 109 is satisfied.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged / cancelled
/ expired. When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the de recognition of the original liability and the recognition
of a new liability. The difference in the respective carrying amounts is recognized in the Statement
of Profit and Loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet
if there is a currently enforceable legal right to offset the recognized amounts and there is an
intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
Assets are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which
the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset's fair value less cost 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 the
purpose of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash inflows which are largely independent of the cash inflows from other
assets or group of assets (cash-generating units). Impairment loss of non-financial assets, if any are
recognised in the Statement of Profit and Loss
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