1. Corporate information
Intellect Design Arena Limited ('Intellect' or 'the Company') having Company
Identification Number L72900TN2011PLC080183, is a public limited company
domiciled in India and incorporated under the provisions of the Companies Act,
1956 in 2011. Consequent to the approval obtained for listing, the shares of the
Company have been listed on the National Stock Exchange of India Limited (NSE)
and BSE Limited (BSE) with effect from December 18, 2014. The Company has its
registered office in 244, Anna Salai, Chennai-600 006.
The Company is engaged in the development, marketing and sale of integrated
banking software systems. The Company is also involved in supporting the
implementation of the systems at various customer locations around the world
and the implementation and running of systems in cloud environments, as well as
in offering help desk support services to existing users of Intellect software
systems. The customer base consists of mostly banking and other financial services
institutions.
The standalone financial statements for the year ended March 31, 2026 were
approved by the Board of Directors of the Company and authorised for issue on
May 8, 2026.
2. Basis of preparation
The standalone financial statements of the Company are prepared in accordance
with the Indian Accounting Standards (Ind-AS) notified under Section 133 of the
Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting
Standards) Rules, 2015 and relevant amendment rules thereafter.
Accounting policies have been consistently applied 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 have been prepared on a historical cost basis,
except for the following assets and liabilities which have been measured at fair
value:
a. Derivative financial instruments.
b. Certain financial assets and liabilities measured at fair value (refer accounting
policy regarding financial instruments).
The standalone financial statements are presented in INR which is also the
Company's functional currency and all values are rounded to the nearest million,
except where otherwise indicated.
The standalone financial statements have been prepared on a going concern basis.
3. Summary of Material Accounting Policies
(a) Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/
non-current classification. An asset is treated as current when:
a) It is expected to be realised in, or is intended for sale or consumption in, the
Company's normal operating cycle;
b) It is held primarily for the purpose of being traded;
c) It is expected to be realised within twelve months after the reporting date; or
d) It is cash or cash equivalent unless it is restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting date.
A liability has been classified as current when it satisfies any of the following
criteria:
a) It is expected to be settled in the Company's normal operating cycle;
b) It is held primarily for the purpose of being traded;
c) It is due to be settled within twelve months after the reporting date;
d) The Company does not have an unconditional right to defer settlements of
the liability for at least twelve months after the reporting date. Terms of a
liability that could, at the option of the counterparty, result in its settlement
by the issue of equity instruments do not affect its classification.
All other assets and liabilities have been classified as non-current. Deferred tax
assets and liabilities are classified as non-current assets and liabilities. Based on
the nature of products/activities, the Company has determined its operating cycle
as twelve months for the above purpose of classification as current and
non-current.
(b) Fair value measurement
Fair value is the price 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:
a) In the principal market for the asset or liability, or
b) 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 best economic interest.
A fair value measurement of a non-financial asset takes into account 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.
The Company uses valuation techniques that are appropriate in the circumstances
and for which sufficient data are available to measure fair value, maximising the
use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial
statements are categorised within the fair value hierarchy, described as follows,
based on the lowest level input that is significant to the fair value measurement as
a whole:
a) Level 1 — Quoted (unadjusted) market prices in active markets for identical
assets or liabilities.
b) Level 2 — Valuation techniques for which the lowest level input that is
significant to the fair value measurement is directly or indirectly observable.
c) Level 3 — Valuation techniques for which the lowest level input that is
significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised 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.
Management determines the fair value of instruments, such as derivative
instruments, unquoted financial assets measured at fair value or where fair value
is required to be determined for disclosure purposes. In connection therewith
external valuers are involved for valuation of assets, liabilities and contingent
consideration, based on discretion of management. Selection criteria include
market knowledge, reputation, independence and whether professional standards
are maintained.
At each reporting date, the management analyses the movements in the values of
assets and liabilities which are required to be remeasured or re-assessed as per the
Company's accounting policies. For this analysis, management verifies the major
inputs applied in the latest valuation by agreeing the information in the valuation
computation to contracts and other relevant documents. The management in
conjunction with the Company's external valuers, compares the change in the fair
value of each asset and liability with relevant external sources to determine
whether the change is reasonable.
For the purposes of fair value disclosures, the Company has determined classes of
assets and liabilities on the basis of the nature, characteristics and risks of the asset
or liability and the level of the fair value hierarchy as explained above.
(c) Use of Estimates and judgements
The preparation of the standalone financial statements in conformity with Ind AS
requires management to make estimates, judgements, and assumptions. These
estimates, judgements and assumptions affect the application of accounting
policies and the reported amounts of assets and liabilities, the disclosures of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the year. Application of
accounting policies that require critical accounting estimates involving complex
and subjective judgements and the use of assumptions in these standalone
financial statements have been disclosed in Note 28. Accounting estimates could
change from period to period. Actual results could differ from those estimates.
Appropriate changes in estimates are made as management becomes aware of
changes in circumstances surrounding the estimates. Changes in estimates are
reflected in the financial statements in the period in which changes are made and,
if material, their effects are disclosed in the notes to the financial statements.
(d) Cash and cash equivalents
Cash and cash equivalents for the purposes of Statement of cash flow comprise
cash at bank and in hand and short-term deposits with an original maturity of three
months or less that are readily convertible into known amounts of cash and which
are subject to insignificant risks of change in value.
(e) Statement of Cash flow
Cash flows are reported using the indirect method, whereby profit / (loss) before
tax is adjusted for the effects of transactions of non-cash nature and any deferrals
or accruals of past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are segregated based
on the available information.
(f) Property, plant and equipment ('PPE')
Property, plant and equipment are stated at cost, less accumulated depreciation
(other than freehold land) and impairment losses if any. Freehold land is measured
at cost and not depreciated. Costs comprises the purchase price and any directly
attributable to acquisition are capitalised until the property, plant and equipment
are ready for use, as intended by the management.
Property, plant and equipment retired from active use and held for sale are stated
at the lower of their net book value and net realisable value and are disclosed
separately in the Balance Sheet.
Depreciation
Depreciation on plant, property and equipment is calculated on a straight-line
basis using the rates arrived at, based on the useful lives estimated by the
management. The identified components are depreciated separately over their
useful lives; the remaining components are depreciated over the life of the
principal asset. The management, based on technical assessment made by an
expert, depreciates building over estimated useful life of 30 years which are
different from the useful life prescribed in Schedule II to the Companies Act, 2013.
The useful lives considered for depreciation of plant, property and equipment are
as prescribed in Schedule II of the Companies Act:
The residual values, useful lives and methods of depreciation of PPE are reviewed
at each financial year end and adjusted prospectively, if appropriate.
Advances paid towards the acquisition of property, plant and equipment
outstanding at each balance sheet date is classified as Capital advances under
other non-current assets and the cost of asset not ready for use before such date
are disclosed under “Capital Work in Progress". Subsequent expenditure relating
to property, plant and equipment is capitalised only when it's probable that future
economic benefit associated with these will flow to the company and the cost of
the item can be measured reliably. Repairs and maintenance cost are recognised
in the Statement of Profit and Loss when incurred. The cost and related
accumulated depreciation are derecognised on sale or retirement of the asset and
the resultant gains or loss are recognised in the Statement of profit and loss. Asset
held for disposal are reported at the lower of the carrying value or the fair value
less cost to sell.
(g) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost.
The cost of intangible assets acquired in a business combination is their fair value
at the date of acquisition. Following initial recognition, intangible assets are carried
at cost less any accumulated amortisation and accumulated impairment losses.
Internally generated intangibles, excluding capitalised development costs, are not
capitalised and the related expenditure is reflected in profit or loss in the period in
which the expenditure is incurred.
Research and development cost:
Expenditure on research is expensed under respective heads of account in the
period in which it is incurred.
Development expenditure incurred on an individual new project is recognised as
an intangible asset when the Company can demonstrate all the following:
1. The technical feasibility of completing the intangible asset so that the asset
will be available for use or sale.
2. Its intention to complete and its ability and intention to use or sell the asset.
3. How the asset will generate future economic benefits.
4. The availability of resources to complete the asset.
5. The ability to measure reliably the expenditure during development.
Intangible assets not ready for the intended use on the date of the Balance
Sheet are disclosed as “intangible assets under development" Following initial
recognition of the development expenditure as an asset, the asset is carried at cost
less any accumulated amortisation and accumulated impairment losses.
Amortisation of the asset begins when development is completed, and the asset is
ready for intended use. It is amortised over the period of expected future benefit.
Amortisation expense is recognised in the Statement of profit and loss unless such
expenditure forms part of carrying value of another asset.
During the period of development, the asset is tested for impairment annually.
The amortisation of internally generated intangible assets comprising software
development costs, and intellectual property costs, is allocated on a straight-line
basis over the best estimate of its useful life after the asset is ready for use. The
factors considered for identifying the basis include obsolescence, product life cycle
and actions of competitors. The amortisation period and the amortisation method
are reviewed at each year end. If the expected useful life of the asset is significantly
different from previous estimates, the amortisation period is changed accordingly.
The estimated useful life of the intangible assets is in the range of 3 to 5 years.
The amortisation period and the amortisation method for computer software
acquired separately with a finite useful life are reviewed at least at the end of each
reporting period. 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. The amortisation expense is recognised in the
Statement of Profit and Loss unless such expenditure forms part of carrying value
of another asset.
Gains or losses arising from de-recognition of an intangible asset are measured as
the difference between the net disposal proceeds and the carrying amount of the
asset and are recognised in the Statement of Profit and Loss when the asset is
derecognised.
(h) Other assets
Cost incurred in fulfilling a contract are capitalised if all the following conditions
are satisfied:
1. The costs relate directly to a contract;
2. The costs generate or enhance resources of the entity that will be used to
satisfy future performance obligation; and
3. The costs are recoverable.
(i) Impairment of non-financial assets
The Company assesses at each reporting date whether the carrying amounts of
PPE, investment property, ROU assets, intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss.
If such indication exists, these are tested for impairment to determine the
impairment loss, if any. Internally generated intangibles including intangibles
under development are tested for impairment on annual basis.
Recoverable amount is determined: (i) in the case of an individual asset, at the
higher of the fair value less costs to sell and the value-in-use; and (ii) in the case of
a cash generating unit (the smallest identifiable group of assets that generates
independent cash flows), at the higher of the cash generating unit's fair value less
costs to sell and the value-in-use. The amount of value-in-use is determined as the
present value of estimated future cash flows from the continuing use of an asset,
which may vary based on the future performance of the Company and from its
disposal at the end of its useful life. For this purpose, the discount rate (pre-tax) is
determined based on the weighted average cost of capital of the Company suitably
adjusted for risks specified to the estimated cash flows of the asset.
In determining fair value less costs to sell or net selling price in relation to PPE or
Investment property, recent market transactions are considered, if available. If no
such transactions can be identified, an appropriate valuation model is used.
The Company bases its recoverable amount calculation based on detailed budgets
and forecast calculations which are prepared separately for each of the Company's
asset or cash-generating units to which the individual assets are allocated. These
budgets and forecast calculations are generally covering a period of three years
(five years in the case of Internally Generated Intangible assets (IPR)). For longer
periods, a long term growth rate is calculated and applied to project future cash
flows after the third year / fifth year in case of IPR.
If recoverable amount of an asset (or cash generating unit) is estimated to be less
than it's carrying amount, such deficit is recognised immediately in the Statement
of Profit and Loss as impairment loss and the carrying amount of the asset (or cash
generating unit) is reduced to its recoverable amount. An assessment is made at
each reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such
indication exists, the Company estimates the asset's (or cash-generating unit's)
recoverable amount. A previously recognised impairment loss is reversed only if
there has been a change in the assumptions used to determine the asset's
recoverable amount since the last impairment loss was recognised. When an
impairment loss subsequently reverses, the carrying amount of the asset (or cash
generating unit) is increased to the revised estimate of its recoverable amount,
such 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 the Statement of Profit and Loss.
After impairment, depreciation is provided on the revised carrying amount of the
asset over its remaining useful life.
(j) Investment properties
Investment property represents property held to earn rentals or for capital
appreciation or both. Investment properties are measured initially at cost,
including transaction costs. Subsequent to initial recognition, investment
properties are stated at cost less accumulated depreciation and accumulated
impairment loss, if any.
When significant parts of the investment property are required to be
reconstructed, the Company depreciates them separately based on their specific
useful lives. Depreciation on building classified as Investment Property has been
provided on the straight-line method over a period of 60 years as prescribed in
Schedule II to the Companies Act, 2013.
Though the Company measures Investment Property using cost based
measurement, the fair value of investment property is disclosed in the notes. Fair
values are determined based on an annual evaluation performed by an external
independent valuer applying valuation models.
Investment properties are derecognised either when they have been disposed of
or when they are permanently withdrawn from use and no future economic
benefit is expected from their disposal. The difference between the net disposal
proceeds and the carrying amount of the asset is recognised in the Statement of
Profit and Loss in the period of derecognition.
(k) Revenue recognition
The Company derives revenues primarily from software development and related
services, and from the licensing of software products and related services
(together referred to as “software related services").
Revenue is recognised upon transfer of control of promised products or services
to customers and is measured in an amount that reflects the consideration the
entity expects to receive in exchange for those products or services. Arrangements
with customers for software related services are either on a fixed-price, fixed-bid
or on a time-and-material basis.
Revenue on time-and-material contracts are recognised as the related services are
performed and revenue from the end of the last invoicing to the reporting date is
recognised as revenue accrued not billed. Maintenance revenue is recognised
rateably over the term of the underlying maintenance arrangement.
Revenue from services performed on fixed-price, fixed-bid contracts, where
performance obligations are satisfied over time and there is no uncertainty as to
measurement or collectability of consideration, is recognised based on
percentage-of-completion method and to measure progress towards completion,
uses either relevant input or output measures. For revenue recognised using
output method, measures such as the achievement of any project milestones
stipulated in the contract, or internal quality milestones are used to assess
proportional performance. While using the input (cost expended) method to
measure progress, management estimates total expected contract revenue and
costs and reviews key factors in estimating the future costs to complete the
contractual obligations. Management ensures that the input method is aligned to
milestones and to the consideration recoverable. When there is uncertainty as to
measurement or ultimate collectability, revenue recognition is postponed.
Revenue accrued not billed represents earnings on ongoing fixed-price, fixed-bid
and time and material contracts over amounts invoiced to customers. Billings in
excess of revenues represents amounts billed in case of ongoing fixed-bid, fixed-
price and time and material contracts wherein amounts have been billed in
accordance with the billing cycle and efforts would be incurred subsequent to the
balance sheet date.
Contractual arrangements with customers to deliver software products and
related services generally have these elements of performance obligation: license,
software development, implementation, customisation of license, and annual
maintenance services. For allocating the transaction price, the Company measures
the revenue in respect of each performance obligation at its relative standalone
selling price where each element is considered as distinct performance obligation.
In cases where the entity is unable to determine the standalone selling price, the
entity uses the expected cost plus margin approach in estimating the standalone
selling price.
Revenue from licenses where the customer obtains a “right to use" the licenses is
recognised at the time the license is made available to the customer. Revenue from
licenses where the customer obtains a “right to access" is recognised over the
access period. Where the license is required to be substantially customised as part
of the implementation service the entire arrangement fee for license and
implementation is considered as a single performance obligation and the revenue
is recognised using the percentage-of-completion method as the implementation
is performed. For software development and related services, the performance
obligations are satisfied as and when the services are rendered since the customer
generally obtains control of the work as it progresses.
Revenue from client training, support and other services arising due to the sale of
software products is recognised as the performance obligations are satisfied.
Contract modifications are accounted for when additions, deletions or changes are
approved either to the contract scope or contract price. The accounting for
modifications of contracts involves assessing whether the services added to an
existing contract are distinct and whether the pricing is at the standalone selling
price. Services added that are not distinct are accounted for on a cumulative catch
up basis, while those that are distinct are accounted for prospectively, either as a
separate contract, if the additional services are priced at the standalone selling
price, or as a termination of the existing contract and creation of a new contract if
not priced at the standalone selling price.
The Company assesses the timing of the transfer of goods or services to the
customer as compared to the timing of payments to determine whether a
significant financing component exists. As a practical expedient, the Company does
not assess the existence of a significant financing component when the difference
between payment and transfer of deliverables is a year or less. If the difference in
timing arises for reasons other than the provision of finance to either the customer
or us, no financing component is deemed to exist.
The entity presents revenues net of indirect taxes in its Statement of Profit and
Loss.
Performance obligations and remaining performance obligations
The remaining performance obligation disclosure provides the aggregate amount
of the transaction price yet to be recognised as at the end of the reporting period
and an explanation as to when the entity expects to recognise these amounts in
revenue. Applying the practical expedient as given in Ind AS 115, the entity has not
disclosed the remaining performance obligation related disclosures for contracts
where the revenue recognised corresponds directly with the value to the customer
of the entity's performance completed to date, typically those contracts where
invoicing is on time and material basis or fixed price basis. Remaining performance
obligation estimates are subject to change and are affected by several factors,
including terminations, changes in the scope of contracts, periodic revalidations
and adjustment for revenue that has not materialised and adjustments for
currency.
Other income
For all debt instruments measured at amortised cost, interest income is recorded
using the effective interest rate (EIR). Interest income is included in finance income
in the statement of profit and loss.
Dividend income is recognised when the Company's right to receive dividend is
established by the reporting date.
Profit on sale of units of mutual funds is recognised at the time of redemption and
is determined as the difference between the redemption price and the carrying
value.
(l) Foreign currency transactions
Initial recognition
Transactions in foreign currencies entered into by the Company are accounted at
the exchange rates prevailing on the date of the transaction or at the average rates
that closely approximate the rate at the date of the transaction.
Measurement as at balance sheet date
Foreign currency monetary items (other than derivative contracts) of the Company
outstanding at the Balance Sheet date are restated at year end exchange rates.
Non-monetary items carried at historical cost are translated using the exchange
rates at the dates of initial transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at the date
when the fair value is determined. The gain or loss arising on translation of non¬
monetary items measured at fair value is treated in line with the recognition of the
gain or loss on the change in fair value of the item.
Treatment of exchange differences
Exchange differences arising on settlement/restatement of foreign currency
monetary assets and liabilities of the Company are recognised as income or
expense in the Statement of Profit and Loss.
(m) Leases
The Company assesses at contract inception whether a contract is, or contains, a
lease. A contract is, or contains, a lease if the contract conveys the right to control
the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all
leases, except for short-term leases. The Company recognises lease liabilities to
make lease payments and right-of-use assets representing the right to use the
underlying assets.
1. 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 any accumulated depreciation and 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 and the estimated useful lives of the assets.
The right-of-use assets are also subject to impairment. Right-of-use assets mainly
consists of buildings, having a lease term of 2 to 5 years.
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 an index or rate used to
determine such lease payments) or a change in the assessment of an option to
purchase the underlying asset. The Company's lease liabilities are included in
financial liabilities (see note 14(a) and 16(b).
3. Short-term leases
The Company applies the short-term lease recognition exemption to its short-term
leases of Buildings (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 recognised as expense on a straight-line basis
over the lease term.
Company as Lessor
Leases in which the Company does not transfer substantially all the risks and
rewards incidental to ownership of an asset are classified as operating leases.
Rental income arising is accounted for on a straight-line basis over the lease terms
and is included in revenue in the statement of profit or loss due to its operating
nature. Initial direct costs incurred in negotiating and arranging an operating lease
are added to the carrying amount of the leased asset and recognised over the lease
term on the same basis as rental income. Contingent rents are recognised as
revenue in the period in which they are earned.
(n) Employee benefits
i. Provident Fund
Employees receive benefits from a provident fund, which is a defined contribution
plan. Both the employee and the Company make monthly contributions to the
Regional Provident Fund equal to a specified percentage of the covered
employee's salary. The Company recognises contribution payable to the provident
fund scheme as an expenditure, when an employee renders the related service.
The Company has no further obligations under the plan beyond its monthly
contributions.
ii. Gratuity
The Company provides for gratuity in accordance with Code on Social Security,
2020 ('Code'), a defined benefit retirement plan ('the Plan') for employees in India.
The Plan, subject to the provisions of the Code, provides a lump sum payment to
eligible employees at retirement, death, incapacitation or termination of
employment, of an amount based on the respective employee's salary and the
tenure of employment. A trust by name “Intellect Design Group Gratuity Trust" has
been constituted to administer the gratuity fund. Gratuity liability is accrued and
provided for on the basis of an actuarial valuation on projected unit credit method
made as at balance sheet date. Re-measurement, comprising of actuarial gain or
loss and the return on plan assets excluding amounts included in net interest on
the net defined benefit liability are recognised immediately in the balance sheet
with a corresponding debit or credit to retained earnings through other
comprehensive income (OCI) in the period in which they occur. Re-measurements
are not re-classified to profit or loss in subsequent periods. Past service cost is
recognised immediately to the extent that the benefits are already vested and
otherwise is amortised on a straight-line basis over the average period until the
benefits become vested. The defined benefit obligation recognised in the balance
sheet represents the present value of the Defined Benefit Obligation less the Fair
Value of Plan Assets out of which the obligations are expected to be settled and
adjusted for unrecognised past service cost, if any. Any asset arising out of this
calculation is limited to the past service cost plus the present value of available
refunds and reduction in future contributions.
iii. Superannuation
The Company contributes a specified percentage of the eligible employees' basic
salary towards superannuation (the Plan) to a fund. A trust has been created and
approved by the Income-tax authorities for this purpose. This Plan provides for
various options for payment of pension at retirement or termination of
employment as per the trust rules. The company recognises contribution payable
to the fund as an expenditure when an employee renders the related service. The
Company has no further obligations under the plan beyond its monthly
contributions.
iv. Compensated absences
The Company treats accumulated leave expected to be carried forward beyond
twelve months, as long-term employee benefit for measurement purposes. Such
long-term compensated absences are provided for based on the actuarial
valuation using the projected unit credit method as at balance sheet date. Actuarial
gains/losses are immediately taken to the statement of profit and loss and are not
deferred. The Company presents the leave as a current liability in the balance
sheet, to the extent it does not have an unconditional right to defer its settlement
for 12 months after the reporting date.
(o) Taxes on income
Income tax expense comprises current and deferred taxes. Income tax expense is
recognised in the statement of profit and loss except to the extent it relates to
items recognised directly in equity, in which case it is recognised in equity.
Current tax is the amount of tax payable on the taxable income for the year and is
determined in accordance with the provisions of the Income Tax Act, 1961. 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 other comprehensive income 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.
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
for taxable temporary differences associated with investments in subsidiaries and
associates, 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. The carrying amount of
deferred tax assets is reviewed at each reporting date and written off 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 the Statement of
profit and loss is recognised 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.
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