2 Material Accounting Policies
2.1 Basis of Preparation of Standalone Financial Statements
(a) Statement of Compliance with Ind AS
These standalone financial statements have been prepared in accordance with Indian Accounting
Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the “Act”) read with the
Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting
Standards) Amendment Rules, 2016.
Accounting policies have been consistently applied to all the years presented except where a newly
issued accounting standard is initially adopted or a revision to an existing accounting standard
requires a change in the accounting policy hitherto in use.
The standalone financial statements were authorized for issue by the Company’s Board of Directors
on May 30, 2025.
(b) Basis of measurement
The standalone financial statements have been prepared on a historical cost convention on an accrual
basis except certain financial assets and liabilities measured at fair value as required by relevant Ind
AS.
(c) Current/non-current classification of assets/liabilities
All assets and liabilities have been classified as current or non-current as per the Company’s operating
cycle and other criteria set out in the Schedule III to the Act. Based on the nature of services and the
time between the rendering of service and their realization in cash and cash equivalents, the Company
has ascertained its operating cycle as twelve months for the purpose of current and noncurrent
classification of assets and liabilities.
(d) Use of estimates
The preparation of financial statements in conformity with Ind AS requires the Management to make
estimate and assumptions that affect the reported amount of assets and liabilities as at the Balance
Sheet date, reported amount of revenue and expenses for the year and disclosures of contingent
liabilities as at the Balance Sheet date. The estimates and assumptions used in the accompanying
financial statements are based upon the Management's evaluation of the relevant facts and
circumstances as at the date of the financial statements. Actual results could differ from these
estimates. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to
accounting estimates, if any, are recognized in the year in which the estimates are revised and in any
future years affected. Refer Note 3 for detailed discussion on estimates and judgments.
(e) Functional and presentation currency
These standalone financial statements are presented in Indian Rupees, which is also the Company’s
functional currency. All amounts have been rounded-off to the nearest Lakhs, unless otherwise
indicated.
(f) Fair value measurement
Certain accounting policies and disclosures of the Company require the measurement of fair values,
for both financial and non-financial assets and liabilities. Fair values are categorized into different levels
in a fair value hierarchy based on the inputs used in the valuation techniques as follows:¬
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as
far as possible. If the inputs used to measure the fair value of an asset or a liability fall into a different
levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the
same level of the fair value hierarchy as the lowest level input that is significant to the entire
measurement.
Further information about the assumptions made in the measuring fair values is included in the notes
regarding Financial instruments.
2.2 Dividend Income
Income from dividend on investments is accrued in the year in which it is declared, whereby the
Company’s right to receive is established.
2.3 Leases
As a lessee. Under IND AS 116, the Company recognizes right-of-use assets and lease liabilities for
most leases.
• Leases of low value assets; and
• Leases with a duration of 12 months or less
Lease liabilities are measured at the present value of the contractual payments due to the lessor over
the lease term, with the discount rate determined by reference to the rate inherent in the lease unless
this is not readily determinable, in which case the entities incremental borrowing rate on commencement
of the lease is used. Variable lease payments are only included in the measurement of the lease liability
if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes
the variable element will remain unchanged throughout the lease term. Other variable lease payments
are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also includes:
• Amounts expected to be payable under any residual value guarantee;
• The exercise price of any purchase option granted in favour of the Company if it is
reasonable certain to assess option;
• Any penalties payable for terminating the lease, if the term of the lease has been estimated
on the basis of termination option being exercised.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease
incentives received, and increased for:
• Lease payments made at or before commencement of the lease;
• Initial direct costs incurred; and
• The amount of any provision recognised where the Company is contractually required to
dismantle, remove or restore the leased asset.
2.4 Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term
deposits with original maturity of three months or less, which are subject to an insignificant risk of
changes in value. In 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 as integral
part of the Company’s cash management.
2.5 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.
a) Financial assets
Initial recognition and measurement of financial assets
All financial assets are recognised initially 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.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in the following
categories:
-Debt instruments at amortised cost
-Debt instruments at fair value through profit or loss (FVTPL)
-Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt instruments at amortised cost
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 solely payments
of principal and interest (SPPI) on the principal amount outstanding.
This category is the most relevant to the Company. After initial measurement, such financial
assets are subsequently measured at amortised cost using the EIR method. 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 in finance income in the statement
of profit and loss. The losses arising from impairment are recognised in the statement of profit
and loss.
Debt instrument 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.
Debt instruments included within the FVTPL category are measured at fair value with all changes
recognized in the statement of profit and loss.
Equity investments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments
which are held for trading and contingent consideration recognised by an acquirer in a business
combination to which Ind AS103 applies are classified as at FVTPL. For all other equity
instruments, the Company may make an irrevocable election to present subsequent changes in
the fair value in other comprehensive income. The Company makes such election on an
instrument-by-instrument basis. The classification is made on initial recognition and is
irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes
on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the
amounts from OCI to statement of profit and loss, even on sale of investment. However, the
Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all
changes recognized in the statement of profit and loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar
financial assets) is primarily derecognised when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has
assumed an obligation to pay the received cash flows in full without material delay to a third
party under a ‘pass- through’ arrangement; and either (a) the Company has transferred
substantially all the risks and rewards of the asset, or (b) the Company has neither
transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered
into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and
rewards of ownership. When it has neither transferred nor retained substantially all of the risks
and rewards of the asset, nor transferred control of the asset, the Company continues to
recognise the transferred asset to the extent of the Company’s continuing involvement. In that
case, the Company also recognises an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects the rights and obligations that the
Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured
at the lower of the original carrying amount of the asset and the maximum amount of consideration
that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for
measurement and recognition of impairment loss on the following financial assets and credit risk
exposure:
- Financial assets that are debt instruments and are measured at amortised cost.
- Trade receivables or any contractual right to receive cash or another financial asset that
result from transactions that are within the scope of Ind AS 115
The Company follows ‘simplified approach’ for recognition of impairment loss allowance on trade
receivable.
The application of simplified approach does not require the Company to track changes in credit
risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting
date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company
determines that whether there has been a significant increase in the credit risk since initial
recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for
impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a
subsequent period, credit quality of the instrument improves such that there is no longer a
significant increase in credit risk since initial recognition, then the entity reverts to recognising
impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the
expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which
results from default events that are possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the Company in
accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash
shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required
to consider:
- All contractual terms of the financial instrument (including prepayment, extension, call and
similar options) over the expected life of the financial instrument. However, in rare cases
when the expected life of the financial instrument cannot be estimated reliably, then the
entity is required to use the remaining contractual term of the financial instrument.
- Cash flows from the sale of collateral held or other credit enhancements that are integral
to the contractual terms.
As a practical expedient, the Company uses a provision matrix to determine impairment loss
allowance on portfolio of its trade receivables. The provision matrix is based on its historically
observed default rates over the expected life of the trade receivables and is adjusted for forward¬
looking estimates. At every reporting date, the historical observed default rates are updated and
changes in the forward-looking estimates are analysed.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as
expense/ (income) in the statement of profit and loss. This amount is reflected under the head
‘other expenses’ in the statement of profit and loss. The balance sheet presentation for various
financial instruments is described below:
- Financial assets measured as at amortised cost and contractual revenue receivables: ECL
is presented as an allowance, i.e., as an integral part of the measurement of those assets
in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets
write-off criteria, the Company does not reduce impairment allowance from the gross
carrying amount.
- Loan commitments and financial guarantee contracts: ECL is presented as a provision in
the balance sheet, i.e., as a liability
For assessing increase in credit risk and impairment loss, the Company combines financial
instruments on the basis of shared credit risk characteristics with the objective of facilitating an
analysis that is designed to enable significant increases in credit risk to be identified on a timely
basis. The Company does not have any purchased or originated credit impaired (POCI) financial
assets, i.e., financial assets which are credit impaired on purchase/ origination.
b) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, loans and borrowings or payables as
appropriate.
All 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 trade and other payables.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or
cancelled or expires. 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 derecognition 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.
c) Offsetting of financial instruments
Financial assets and liabilities are offset, and the net amount is reported in the balance sheet if
there is a currently enforceable legal right to offset the recognised amounts and there is an
intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
2.6 Employee Benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly
within 12 months after the end of the year in which the employees render the related service are
recognized in respect of employees’ services up to the end of the year and are measured at the amounts
expected to be paid when the liabilities are settled. The liabilities are presented as current employee
benefit obligations in the balance sheet.
2.7 Contributed equity
Equity shares are classified as equity share capital.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
2.8 Taxes
Tax expense for the year, comprising current tax and deferred tax, are included in the determination
of the net profit or loss for the year.
a) Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted at the reporting date.
Current income tax relating to items recognised outside profit or loss is recognised outside profit
or loss (either in OCI or in equity). Current tax items are recognised in correlation to the underlying
transaction either in OCI or directly in equity. Management periodically evaluates positions taken
in the tax returns with respect to situations in which applicable tax regulations are subject to
interpretation and establishes provisions where appropriate.
b) Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases
of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting
date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
• When the deferred tax liability arises from the initial recognition of goodwill or an asset or
liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss;
• In respect of taxable temporary differences associated with investments in subsidiaries,
when the timing of the reversal of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse in the foreseeable future
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of
unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent
that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry forward of unused tax credits and unused tax losses can be utilised
except:
• When the deferred tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting profit nor taxable profit or
loss;
• In respect of deductible temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, deferred tax assets are recognised only to the
extent that it is probable that the temporary differences will reverse in the foreseeable future
and taxable profit will be available against which the temporary differences can be utilised
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part
of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each
reporting date and are recognised to the extent that it has become probable that future taxable
profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the
year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the reporting date. Deferred tax relating to items
recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive
income or in equity). Deferred tax items are recognised in correlation to the underlying transaction
either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set
off current tax assets against current tax liabilities and the deferred taxes relate to the same
taxable Company and the same taxation authority.
2.9 Earnings Per Share
Basic EPS is calculated by dividing the Company’s earnings for the year attributable to ordinary equity
shareholders of the Company by the weighted average number of ordinary shares outstanding during
the year. The earnings considered in ascertaining the Company’s EPS comprise the net profit after tax
attributable to equity shareholders. The weighted average number of equity shares outstanding during
the year is adjusted for events of bonus issue, bonus element in a rights issue to existing shareholders,
share split, and reverse share split (consolidation of shares) other than the conversion of potential equity
shares that have changed the number of equity shares outstanding, without a corresponding change in
resources.
The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential
dilutive equity shares. There were no instruments excluded from the calculation of diluted earnings per
share for the periods presented because of an anti-dilutive impact.
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