Note 2: SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation
of these financial statements are set out below.

(a) Basis of preparation

(i) Compliance with Ind AS

The Financial Statements of the Company comply
in all material aspects with Indian Accounting
Standards (Ind AS) notified under Section 133 of
the Companies Act, 2013 ("the Act") read with
Companies (Indian Accounting Standards) Rules,
2015 and other relevant provisions of the Act.

The financial statements have been prepared using
the significant accounting policies and measurement
bases summarized as below. These accounting
policies have been applied consistently over all the
periods presented in these financial statements.

(ii) Historical cost convention

The financial statements have been prepared on
a historical cost basis, except for the following:

- Certain financial assets and liabilities (including
derivative instruments) that is measured at
fair value.

- defined benefit plans - plan assets measured
at fair value; and

(iii) Preparation of financial statements

The Company is covered in the definition of Non¬
Banking Financial Company as defined in
Companies (Indian Accounting Standards)
(Amendment) Rules, 2016. As per the format
prescribed under Division III of Schedule III to the
Companies Act, 2013, the Company presents the
Balance Sheet, the Statement of Profit and Loss
and the Statement of Changes in Equity in the
order of liquidity. A maturity analysis of recovery or
settlement of assets and liabilities within 12 months

after the reporting date and more than 12 months
after the reporting date is presented in Note 44

(iv) Use of estimates and judgments

The preparation of financial statements in conformity
with Ind AS requires management to make
estimates, judgments, and assumptions that affect
the application of accounting policies and the
reported amounts of assets and liabilities (including
contingent liabilities) and disclosures as of the date
of financial statements and the reported amounts
of revenue and expenses for the reporting period.
Actual results could differ from these estimates.
Accounting estimates and underlying assumptions
are reviewed on an ongoing basis and could
change from period to period. Appropriate changes
in estimates are recognized in the period in which
the Company becomes aware of the changes in
circumstances surrounding the estimates. Any
revisions to accounting estimates are recognized
prospectively in the period in which the estimate is
revised and future periods. The estimates and
judgments that have significant impact on carrying
amount of assets and liabilities at each balance
sheet date are discussed at note 3.

(v) Operating Cycle

Based on the nature of its activities, the Company
has determined its operating cycle as 12 months
for the purpose of classification of its Assets and
Liabilities as current and non- current.

(b) Revenue recognition

The Company recognizes revenue from contracts with
customers based on a five step model as set out in Ind
AS 115, Revenue from Contracts with Customers, to
determine when to recognize revenue and at what
amount. Revenue is measured based on the consideration
specified in the contract with a customer. Revenue from
contracts with customers is recognized when services
are provided and it is highly probable that a significant
reversal of revenue is not expected to occur.

Revenue is measured at fair value of the consideration
received or receivable. Revenue is recognized when (or
as) the Company satisfies a performance obligation by
transferring a promised good or service (i.e. an asset) to
a customer. An asset is transferred when (or as) the
customer obtains control of that asset.

When (or as) a performance obligation is satisfied, the
Group recognizes as revenue the amount of the
transaction price (excluding estimates of variable
consideration) that is allocated to that performance
obligation.

The Company applies the five-step approach for
recognition of revenue:

- Identification of contract(s) with customers;

- Identification of the separate performance
obligations in the contract;

- Determination of transaction price;

- Allocation of transactions price to the separate
performance obligation.

- Recognition of revenue when (or as) each
performance obligation is satisfied.

(i) Brokerage fee income

It is recognized on trade date basis and is exclusive
of goods and service tax and securities transaction
tax (STT) wherever applicable.

(ii) Interest income

Interest income is recognized on Effective Interest
Rate.

(iii) Dividend income

Dividend income is recognized in the statement of
profit or loss on the date that the Company's right
to receive payment is established, it is probable
that the economic benefits associated with the
dividend will flow to the entity and the amount of
dividend can be reliably measured. This is generally
when the shareholders approve the dividend.

(iv) Portfolio management commission income
Portfolio management commissions is recognized
on an accrual basis in accordance with the terms
of the agreement entered with asset management
Company.

(v) Depository income

Revenue in respect of income from Dp Operation
is recognized on accrual basis and when no
significant uncertainty as to it's determination or
realization exists.

(vi) Other income

Revenue in respect of other income is recognized
when no significant uncertainty as to it's
determination or realization exists.

(c) Income tax

The income tax expense or credit for the period is the
tax payable on the current period's taxable income
based on the applicable income tax rate for each
jurisdiction adjusted by changes in deferred tax assets
and liabilities attributable to temporary differences and
to unused tax losses. Current and deferred tax is
recognized in profit or loss, except to the extent that it
relates to items recognized in other comprehensive
income or directly in equity. In this case, the tax is also
recognized in other comprehensive income or directly
in equity, respectively.

Current Tax

Current tax is measured at the amount of tax expected
to be payable on the taxable income for the year as
determined in accordance with the provisions of the
Income Tax Act, 1961. Current tax assets and current
tax liabilities are off set when there is a legally enforceable
right to set off the recognized amounts and there is an
intention to settle the asset and the liability on a net
basis.

Deferred Tax

Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the

tax bases of assets and liabilities and their carrying
amounts. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantially
enacted by the end of the reporting period and are
expected to apply when the related deferred income tax
asset is realized or the deferred income tax liability is
settled.

Deferred tax assets are recognized for all deductible
temporary differences and unused tax losses only if it
is probable that future taxable amounts will be available
to utilize those temporary differences and losses.
Deferred tax liabilities are not recognized for temporary
differences between the carrying amount and tax bases
of investments in subsidiaries where the Company is
able to control the timing of the reversal of the temporary
differences and it is probable that the differences will not
reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate
to the same taxation authority.

(d) Financial instruments

Initial recognition and measurement:

Financial assets and financial liabilities are recognized
when the entity becomes a party to the contractual
provisions of the instrument. Regular way purchases
and sales of financial assets are recognized on trade-
date, the date on which the Company commits to
purchase or sell the asset.

At initial recognition, the Company measures a financial
asset or financial liability at its fair value plus or minus,
in the case of a financial asset or financial liability not
at fair value through profit or loss, transaction costs that
are incremental and directly attributable to the acquisition
or issue of the financial asset or financial liability, such
as fees and commissions. Transaction costs of financial
assets and financial liabilities carried at fair value
through profit or loss are expensed in profit or loss.
Immediately after initial recognition, an expected credit
loss allowance (ECL) is recognized for financial assets
measured at amortized cost.

When the fair value of financial assets and liabilities
differs from the transaction price on initial recognition,
the entity recognizes the difference as follows:

a) When the fair value is evidenced by a quoted price
in an active market for an identical asset or liability
(i.e. a Level 1 input) or based on a valuation
technique that uses only data from observable
markets, the difference is recognized as a gain or
loss.

b) In all other cases, the difference is deferred and
the timing of recognition of deferred day one profit
or loss is determined individually. It is either
amortized over the life of the instrument, deferred
until the instrument's fair value can be determined
using market observable inputs, or realized through
settlement.

When the Company revises the estimates of future cash
flows, the carrying amount of the respective financial
assets or financial liability is adjusted to reflect the new
estimate discounted using the original effective interest
rate. Any changes are recognized in profit or loss.
Fair Value of Financial Instrument:

Some of the Company's assets and liabilities are measured
at fair value for financial reporting purpose. 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 regardless of whether
that price is directly observable or estimated using another
valuation technique.

Information about the valuation techniques and inputs used
in determining the fair value of various assets and liabilities
are disclosed in Note 45.

A) Financial Assets

(i) Classification and Subsequent Measurement

The Company has applied Ind AS 109 and classifies
its financial assets in the following measurement
categories:

- Fair Value through Profit & Loss (FVTPL)

- Fair Value through Other Comprehensive
Income (FVTOCI)

- Amortised Cost

1. Financial assets carried at amortised cost

A financial asset 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. After initial
measurement, such financial assets are
subsequently measured at amortised cost
using the effective interest rate (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 interest income in the Statement
of Profit and Loss.

2. Financial assets carried at Fair Value through
Other Comprehensive Income (FVTOCI)

A financial asset shall be classified and measured
at fair value through OCI if both of the following
conditions are met:

• The financial asset is held within a business
model whose objective is achieved by both
collecting contractual cash flows and selling
financial assets and,

• The contractual terms of the financial asset

give rise on specified dates to cash flows that
are solely payments of principal and interest
on the principal amount outstanding.

3. Financial assets carried at Fair Value through
Profit & loss

A financial asset shall be classified and measured
at fair value through profit or loss unless it is
measured at amortised cost or at fair value through
OCI.

4. Equity Instruments

Equity instruments are instruments that meet the
definition of equity from the issuer's perspective;
that is, instruments that do not contain a contractual
obligation to pay and that evidence a residual
interest in the issuer's net assets.

All investments in equity instruments classified
under financial assets are initially measured at fair
value, the Company may, on initial recognition,
irrevocably elect to measure the same either at
FVOCI or FVTPL. The Company makes such
election on an instrument-by-instrument basis. Fair
value changes on an equity instrument is recognised
as revenue from operations in the Statement of
Profit and Loss unless the Company has elected
to measure such instrument at FVOCI. Fair value
changes excluding dividends, on an equity
instrument measured at FVOCI are recognized in
OCI. Amounts recognised in OCI are not
subsequently reclassified to the Statement of Profit
and Loss. Dividend income on the investments in
equity instruments are recognised as 'Revenue
from operations' in the Statement of Profit and
Loss.

(ii) Impairment of financial assets

The Company recognizes impairment allowances
using Expected Credit Losses ("ECL") method on
all the financial assets that are not measured at
FVPTL:

ECL are probability-weighted estimate of credit
losses. They are measured as follows:

- Financials assets that are not credit impaired
- as the present value of all cash shortfalls that
are possible within 12 months after the
reporting date.

- Financials assets with significant increase in
credit risk - as the present value of all cash
shortfalls that result from all possible default
events over the expected life of the financial
assets.

- Financials assets that are credit impaired - as
the difference between the gross carrying
amount and the present value of estimated
cash flows.

- The Company also do not recognize
impairment on investment in shares since
they are measured at fair value.

Financial assets are written off / fully provided for
when there is no reasonable of recovering a
financial assets in its entirety or a portion thereof.
However, financial assets that are written off could
still be subject to enforcement activities under the
Company's recovery procedures, taking into account
legal advice where appropriate. Any recoveries
made are recognised in the Statement of Profit and
Loss.

(iii) Derecognition

A financial asset is derecognised only when :
The Company has transferred the rights to receive
cash flows from the financial asset or retains the
contractual rights to receive the cash flows of the
financial asset, but assumes a contractual obligation
to pay the cash flows to one or more recipients.
Where the Company has transferred an asset, the
Company evaluates whether it has transferred
substantially all risks and rewards of ownership of
the financial asset. In such cases, the financial
asset is derecognised. Where the entity has not
transferred substantially all risks and rewards of
ownership of the financial asset, the financial asset
is not derecognised.

Where the Company has neither transferred a
financial asset nor retains substantially all risks and
rewards of ownership of the financial asset, the
financial asset is derecognised if the Company has
not retained control of the financial asset. Where
the Company retains control of the financial asset,
the asset is continued to be recognised to the
extent of continuing involvement in the financial
asset.

B) Financial Liabilities

(i) Initial recognition and measurement

Financial liabilities are classified at amortised cost
or FVTPL. A financial liability is classified as at
FVTPL if it is classified as held for trading, or it is
a derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are
measured at fair value and net gains and losses,
including any interest expense, are recognised in
profit or loss. Other financial liabilities are
subsequently measured at amortised cost using
the effective interest method. Interest expense and
foreign exchange gains and losses are recognised
in profit or loss. Any gain or loss on derecognition
is also recognised in Statement of Profit or loss.

(ii) Subsequent measurement

Financial liabilities are subsequently measured at
amortised cost using the EIR method. Financial
liabilities carried at fair value through profit or loss
is measured at fair value with all changes in fair
value recognised in the Statement of Profit and
Loss.

(iii) Derecognition

A financial liability is derecognised when the
obligation specified in the contract is discharged,
cancelled or expires.

(e) Impairment of assets

Intangible 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 costs of disposal and value in use. For the
purposes 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 groups of assets
(cash- generating units). Non financial assets other than
goodwill that suffered an impairment are reviewed for
possible reversal of the impairment at the end of each
reporting period.

(f) Offsetting financial instruments

Financial assets and liabilities are offset and the net
amount is reported in the balance sheet where there is
a legally enforceable right to offset the recognised
amounts and there is an intention to settle on a net basis
or realise the asset and settle the liability simultaneously.
The legally enforceable right must not be contingent on
future events and must be enforceable in the normal
course of business and in the event of default, insolvency
or bankruptcy of the Company or the counter party.

(g) Leases as per Ind AS 116:

Determining whether an arrangement contains a
lease:

As per the standard, the Company has availed the
exemption from recognizing impact of Ind AS 116
'Leases' as the Company has entered into the agreement
of short term lease having lease term for less than 12
months. Accordingly the Company directly charge the
lease rentals to the profit and loss statement.

The Company determines whether a contract is (or
contains) a lease is based on the substance of the
contract at the inception of the 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. The Company recognises
Right to Use and lease liability at the commencement
of the lease period.

Subsequently the right to use is shown as at cost less
any accumulated depreciation and any accumulated
impairment losses; and adjusted for any re-measurement
of the lease liability. The Company applies depreciation
requirements of Ind AS 16, Property, Plant and
Equipment, in depreciating the right-of-use asset and
the lease term mentioned in the contract is taken as
useful life for calculating the depreciation.

The Company measures the lease liability at the present
value of the lease payments. The lease payments are
discounted using incremental borrowing rate applicable
to the Company for a similar term. Subsequently the
lease liability is increasing the carrying amount to reflect
interest on the lease liability; reducing the carrying
amount to reflect the lease payments made; and re¬
measuring the carrying amount to reflect any
reassessment or lease modifications or to reflect revised
in-substance fixed lease payments.

(h) Segment reporting

The Company is engaged in business of share stock
broking & allied activities and there are no separate
reportable segments.

(i) Property, plant and equipment

PPE is recognised 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. PPE is stated at original cost, net of tax/duty
credits availed, if any, less accumulated depreciation
and cumulative impairment. Freehold land is carried at
historical cost.

Cost comprises the purchase price and any attributable
costs of bringing the asset to its working condition for
its intended use as estimated by the management. Any
trade discounts and rebates are deducted in arriving at
the purchase price.

Each part of an item of property, plant and equipment
with a cost that is significant in relation to the total cost
of the item is depreciated separately. When significant
parts of plant and equipment are required to be replaced
at intervals, the Company depreciates them separately
based on their specific useful lives. Likewise, when a
major inspection is performed, its cost is recognised in
the carrying amount of the plant and equipment as a
replacement, if the recognition criteria are satisfied.
PPE not ready for the intended use, on the date of the
Balance Sheet are disclosed as "Capital Work-in¬
Progress".

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.

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 Company
and the cost of the item can be measured reliably. The
carrying amount of any component accounted for as a
separate asset is derecognised when replaced. All other
repairs and maintenance are charged to profit or loss
during the reporting period in which they are incurred
equipment are stated at historical cost less depreciation.
Historical cost includes expenditure that is directly
attributable to the acquisition of the items.

An item of property, plant and equipment and any
significant part initially recognised is de-recognised

upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss
arising on de-recognition of the asset (calculated as the
difference between the net disposal proceeds and the
carrying amount of the asset) is included in the income
statement when the property, plant and equipment is de¬
recognised.

Depreciation methods, estimated useful lives and
residual value

Depreciation is calculated on a Straight-Line Method on
the basis of the useful life as specified in Schedule II
to the Companies Act, 2013. Depreciation method is
reviewed at each financial year end to reflect expected
pattern of consumption of the future economic benefits
embodied in the asset.

Depreciation for additions to/deductions from, owned
Assets is calculated on pro rata basis.

Depreciation charged for impaired Assets is adjusted in
future periods in such a manner that the revised carrying
amount of the asset is allocated over its remaining
useful life.

Depreciation is calculated using the straight-line method
to allocate their cost, net of their residual values, over
their estimated useful lives specified in schedule II to
the Companies Act, 2013 except for the following:

(j) Intangible assets

(i) Computer software

Recognition and measurement

Intangible assets are recognized when it is probable
that the future economic benefits that are attributable
to the assets will flow to the Company and the cost
of the asset can be measured reliably.

Intangible assets viz. Computer software and
product registration, which are acquired by the
Company and have finite useful lives are measured
at cost less accumulated amortisation and any
accumulated impairment losses.

Amortisation

Amortisation is calculated to write off the cost of
intangible assets less their estimated residual values
using the straight-line method over their estimated
useful lives, and is generally recognised in profit
or loss. The intangible assets are amortised over
the estimated useful lives for 6 years.