(a) Statement of Compliance and Basis of Preparation and Presentation of Financial Statements
These financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as per
the Companies (Indian Accounting Standards) Rules as amended and notified under Section 133 of the Companies Act, 2013
("the Act”), in conformity with the accounting principles generally accepted in India and other provisions of the Act.
The accounting policies are applied consistently to all the periods presented in the financial statements. The Balance Sheet and
Statement of Profit & Loss are prepared and presented in accordance with the format prescribed in the Division III to Schedule III
to the Act applicable for Non Banking Finance Companies (NBFC).
(b) Functional and Presentation Currency
The financial statements are presented in INR, the functional currency of the Company. All amounts disclosed in the financial
statements and notes have been rounded off to the nearest thousand as per the requirement of Schedule III, unless otherwise
stated.
(c) Basis of Measurement
The financial statements of the Company have been prepared on the Accrual basis of accounting and Historical cost convention
except for the following material items that have been measured at fair value as required by the relevant Ind AS:
(i) Certain Financial Assets and Liabilities are measured at Fair Value (Refer Note No. (h) and (i) below)
(d) Use of Estimates and Judgements
The preparation of the financial statements requires the Management to make judgments, estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period. The recognition, measurement, classification or disclosure
of an item or information in the financial statements is made relying on these estimates. The estimates and judgements used in
the preparation of the financial statements are continuously evaluated by the management and are based on historical experience
and various other assumptions and factors (including expectations of future events) that the management believes to be
reasonable under the existing circumstances. Actual results may differ from those estimates. Any revision to accounting estimates
is recognised prospectively in current and future periods.
(e) Property, Plant and Equipment (PPE)
Property, plant and equipment is stated at acquisition cost net of accumulated depreciation and accumulated impairment losses, if
any.
The cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable
purchase taxes, after deducting trade discounts and rebates, any directly attributable costs of bringing the asset to its working
condition for its intended use and estimated costs of dismantling and removing the item and restoring the item and restoring the
site on which it is located.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement
of Profit and Loss.
(f) Intangible Assets
Intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.
(g) Depreciation and Amortisation
(i) Property, Plant and Equipment
Depreciation has been provided on Written Down Value basis and in accordance with, method and useful life prescribed in
Schedule II to the Act. The residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at
the end of each financial year and adjusted prospectively, if appropriate.
(ii) Intangible Assets
The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible assets are amortised on a
straight-line basis over the period of their expected useful lives. The amortisation period and the amortisation method for finite life
intangible assets is reviewed at each financial year end and adjusted prospectively, if appropriate. For indefinite life intangible
assets, the assessment of indefinite life is reviewed annually to determine whether it continues, if not, it is impaired or changed
prospectively basis revised estimates.
(h) Financial Assets
Financial Assets are recognised when the Company becomes a party to the contractual provisions of the instruments.
Initial Recognition and Measurement - Financial Assets
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial
assets other than trade receivables are initially recognised at fair value plus transaction costs for all financial assets not carried at
fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and
transaction costs are expensed in the Statement of Profit and Loss.
Classification and Subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortized cost, fair value through Other Comprehensive
Income (“FVTOCI”) or fair value through profit or loss (“FVTPL”) on the basis of following:
(a) the entity's business model for managing the financial assets and
(b) the contractual cash flow characteristics of the financial assets.
Amortised Cost:
A financial asset is classified and measured at amortized cost if both of the following conditions are met:
(i) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash
flows;
and
(ii) 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.
Fair Value Through Other Comprehensive Income (FVTOCI):
A financial asset is classified and measured at FVTOCI if both of the following conditions are met:
(i) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and
selling financial assets; and
(ii) 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.
Fair Value Through Profit or Loss (FVTPL):
A financial asset is classified and measured at FVTPL unless it is measured at amortized cost or at FVTOCI.
All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the
classification of the financial assets.
Equity Instruments:
Considering the entity's business model for managing equity instruments; the investments in equity shares are recognised at fair
value as on date of balance sheet. Where the Company's management has elected to present fair value gain or losses on equity
instruments in other comprehensive income (OCI), there is no subsequent reclassification of fair value gain and losses to profit or
loss following the derecognition of the investment. Gain and loss on equity investment at FVPL are included in the Statement of
Profit and Loss.
Dividends on these investments in equity instruments are recognised in Statement of Profit and Loss when the Company's right to
receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the
dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
Dividends recognised in Statement of Profit and Loss are included in the ‘Other income'.
Impairment
The Company assesses at each reporting date whether a financial asset (or a group of financial assets) such as investments,
trade receivables, advances and security deposits held at amortised cost and financial assets that are measured at fair value
through other comprehensive income are tested for impairment based on evidence or information that is available without undue
cost or effort. Expected credit losses are assessed and loss allowances recognised if the credit quality of the financial asset has
deteriorated significantly since initial recognition.
The Company's Loans and trade receivables or contract revenue receivables do not contain significant financing component and
loss allowance on trade receivables is measured at an amount equal to life time expected losses i.e. expected cash shortfall,
being simplified approach for recognition of impairment loss allowance.
Under simplified approach, the Company does not track changes in credit risk. Rather it recognizes impairment loss allowance
based on the lifetime ECL at each reporting date right from its initial recognition. The Company uses a provision matrix to
determine impairment loss allowance on the portfolio of 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.
For financial assets other than trade receivables, the Company recognises 12-months expected credit losses for all originated or
acquired financial assets if at the reporting date the credit risk of the financial asset has not increased significantly since its initial
recognition. The expected credit losses are measured as lifetime expected credit losses if the credit risk on financial asset
increases significantly since its initial recognition. If, in a subsequent period, credit quality of the instrument improves such that
there is no longer significant increase in credit risks since initial recognition, then the Company reverts to recognizing impairment
loss allowance based on 12 months ECL. The impairment losses and reversals are recognised in Statement of Profit and Loss.
For equity instruments and financial assets measured at FVTPL, there is no requirement of impairment testing.
Derecognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it
transfers rights to receive cash flows from an asset, 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.
(i) Financial Liabilities
Initial Recognition and Measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial
liabilities are initially recognised at fair value net of transaction costs for all financial liabilities not carried at fair value through profit
or loss.
The Company's financial liabilities includes trade and other payables, loans and borrowings including bank overdrafts.
Subsequent Measurement
Financial liabilities measured at amortised cost are subsequently measured at using EIR method. Financial liabilities carried at fair
value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.
Loans & Borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using EIR method.
Gains and losses are recognized in the Statement of Profit & Loss when the liabilities are derecognized as well as through EIR
amortization process.
Financial Guarantee Contracts
Financial guarantee contracts issued by the Company are those contracts that requires a payment to be made or to reimburse the
holder for a loss it incurs because the specified debtors fails to make payment when due in accordance with the term of a debt
instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are
directly attributable to the issuance of the guarantee. Subsequently the liability is measured at the higher of the amount of loss
allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less cumulative adjustments.
De-recognition
A financial liability is derecognised 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 or 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 recognised amounts and there is an intention to settle on a net basis, to realise the assets and
settle the liabilities simultaneously.
(j) Fair Value Measurement
The Company measures financial instruments, such as, derivatives, investments at fair value at each balance sheet date. 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.
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:
(i) Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
(ii) Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable
(iii) 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.
For the purpose 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.
(k) Cash & Cash Equivalents
Cash and Cash equivalents include cash and Cheque in hand, bank balances, demand deposits with banks and other short-term
highly liquid investments that are readily convertible to known amounts of cash & which are subject to an insignificant risk of
changes in value where original maturity is three months or less.
(l) Foreign exchange transactions & translations
a) Initial Recognition
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences
arising on foreign exchange transactions settled during the year are recognized in the Statement of Profit and Loss of the year.
b) Measurement of Foreign Currency items at the Balance Sheet Date
Foreign currency monetary items of the Company are restated at the closing exchange rates. Non monetary items are recorded at
the exchange rate prevailing on the date of the transaction. Exchange differences arising out of these transactions are charged to
the Statement of Profit and Loss.
(m) Revenue from Contracts with Customers:
Effective Interest Rate Method
Interest income is recognised in Statement of Profit and Loss using effective interest rate method for all financial instruments at
amortised cost, debt instrument measured at FVOCI and debt instrument designated at FVTPL..The 'effective interest rate' is the
rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument.
Calculation of effective interest includes transaction cost and fees that are an integral part of the contract. Transaction cost include
incremental cost that are directly attributable to the acquisition of financial asset.
If expectations regarding the cash flows on the financial asset are revised for reasons other than credit risk, the adjustment is
recorded as positive or negative adjustment to the carrying amount of the asset, in the balance sheet, with an increase or
reduction in interest income. The adjustment is subsequently amortised through interest income in the Statement of profit and
loss. .
Interest
The Company calculates interest income related to financing business by applying the EIR to the gross carrying amount of
financial asset other than credit-impaired assets.
When a financial asset becomes credit- impaired, the Company calculates interest income by applying the effective interest rate to
the net amortised cost of the financial asset. If the financial assets cures and is no longer credit impaired, the Company reverts to
calculating interest income on a gross basis.
Dividend
Dividend Income is recognized when right to receive the same is established.
Gain on Sale of Investment / Financial Instruments
Net gain/loss on fair value changes and any realised gain or loss on sale of financial assets (including investments, derivatives and
stock in trade) being classified as fair value through profit or loss (“FVTPL”) is recognised as “Net gain or loss on fair value
changes” under “Revenue from operations” or " Expenses” respectively in the statement of profit and loss.
Similarly, any differences between the fair values of financial assets (including investments, derivatives and stock in trade) being
classified as fair value through profit or loss (“FVTPL”), held by the Company on the balance sheet date is recognised as an
unrealised gain / loss.
In cases there is a net gain in the aggregate, the same is recognised as “Net gain on fair value changes” under “Revenue from
operations” and if there is a net loss the same is disclosed as “Net loss on fair value changes” under “ Expenses” in the statement
of Profit and Loss.
(n) Employee Benefits
Liability towards leave entitlements (short term) of employees is determined as per rules of the Company and provided for. Liability
towards Gratuity entitlement is determined as per provisions of the Payment of Gratuity Act, 1972 and provided for.
(o) Taxes on Income
Income Tax comprises of current and deferred tax. Income tax expense is recognized in the statement of profit and loss except to
the extent it relates to items directly recognized in equity or in other comprehensive income.
Current tax is based on taxable profit for the year. Taxable profit is different from accounting profit due to temporary differences
between accounting and tax treatments, and due to items that are never taxable or tax deductible. Tax provisions are included in
current liabilities. The Company offsets, the current tax assets and liabilities (on a year on year basis) where it has a legally
enforceable right and where it intends to settle such assets and liabilities on a net basis or to realise the assets and liabilities on
net basis.
Deferred income tax is recognized using the balance sheet approach. Deferred income tax assets and liabilities are recognized for
deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount in
financial statements. Deferred income tax asset are recognized 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
utilized. Deferred tax assets are not recognised where it is more likely than not that the assets will not be realised in the future.
The carrying amount of deferred income 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 income tax asset to be utilized. Deferred
income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized
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 items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
(p) Borrowing Cost
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets
are capitalized as a part of Cost of that assets, during the period till all the activities necessary to prepare the Qualifying assets for
its intended use or sale are complete during the period of time that is required to complete and prepare the assets for its intended
use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or
sale.
Other borrowing costs are recognized as an expense in the period in which they are incurred.
(q) Earning Per Share
Basic Earning Per Share is calculated by dividing the net profit or loss after tax for the period attributable to equity shareholders by
the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earning per
share, the net profit or loss for the period attributable to the equity shareholders and the weighted average number of shares
outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
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