2 Material Accounting Policies
This note provides a list of the material accounting policies adopted in the preparation of these financial statements. These policies have
been consistently applied to all the years presented, unless otherwise stated.
2.a) Basis of preparation
(i) Compliance with Ind AS
These financial statements (‘financial statements’) have been prepared in accordance with the Indian Accounting Standard (‘Ind AS’) notified
under section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, 2015 as amended from time
to time by the Ministry of Corporate Affairs (‘MCA’).
The financial statements are based on the classification provisions contained in Ind AS 1, ‘Presentation of Financial Statements’ and division
II of schedule III of the Companies Act 2013. Further, for the purpose of clarity, various items are aggregated in the statement of profit and
loss and balance sheet. Nonetheless, these items are dis-aggregated separately in the notes to the financial statements, where applicable
or required. All the amounts included in the financial statements are reported in Millions of Indian Rupees (‘Rupees’ or ‘Rs.’) and are rounded
to the nearest Million with two decimals, except per share data and unless stated otherwise.
All assets and liabilities have been classified as current and non-current as per the Company’s normal operating cycle. Based on the nature
of services rendered to customers and time elapsed between deployment of resources and the realisation in cash and cash equivalents of
the consideration for such services rendered, the Company has considered an operating cycle of 12 months.
(ii) Basis of measurement
The financial statements have been prepared on a historical cost basis, except for the following:
• Financial assets and liabilities (including derivative instruments) are measured at fair value or amortised cost
• Defined benefit plans - plan assets measured at fair value
• Share-based payments (ESOP’s) are measured at fair value
b) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity
operates (‘the functional currency’). The financial statements are presented in Indian rupee (Rs.), which is the Company’s functional and
presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities
denominated in foreign currencies at period end exchange rates are generally recognised in the Statement of Profit or Loss.
They are deferred in equity if they relate to qualifying cash flow hedges.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance
costs. All other foreign exchange gains and losses are presented in the Statement of Profit and Loss on a net basis within other gains/
(losses).
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair
value was determined.
c) Revenue recognition
Revenue is measured on transaction price of the consideration received or receivable. Amounts disclosed as revenue are net of returns,
trade allowances, rebates, discounts and taxes.
When two or more revenue generating activities or deliverables are provided under a single arrangement, each deliverable that is considered
to be a separate deliverable is accounted separately. Where the contracts include multiple performance obligations, the transaction price
is allocated to each performance obligation based on the standalone selling prices. Where the standalone selling prices are not directly
observable, these are estimated based on expected cost plus margin or residual method to allocate the total transaction price. In cases
of residual method, the standalone selling price is estimated by reference to the total transaction price less the sum of the observable
standalone selling prices of other goods or services promised in the contract.
Services are provided under time and material contracts and fixed price contracts. Revenue from providing services is recognised over a
period of time in the accounting period in which services are rendered. The revenue from time and material contracts is recognised at the
amount to which the Company has right to invoice.
In respect of fixed price contracts, revenue is recognised based on the technical evaluation of utilization of services as per the proportionate
completion method when no significant uncertainty exists regarding the amount of consideration that will be determined from rendering the
service. The customer pays the fixed amount based on a payment schedule. If the services rendered by the Company exceed the payment,
a contract asset is recognised. If the payment exceed the services rendered, a contract liability is recognised. Revenue from training is
recognised over the period of delivery. The foreseeable losses on completion of contract, if any, are provided for.
Estimates of revenues, costs or extent of progress towards completion are revised if circumstances change. Any resulting increase or
decrease in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision
become known to management.
On certain contracts (Strategic sourcing), where the Company acts as agent, only commission and fees receivable for services rendered are
recognised as revenue. Any third party costs incurred on behalf of the principal that are rechargeable under the contractual arrangement are
not included in revenue.
Revenue in respect of sale of courseware and other physical deliverables is recognised at a point in time when these are delivered, the legal
title is passed and the customer has accepted the courseware and other physical deliverables.
Revenues in excess of invoicing are treated as contract assets while invoicing in excess of revenues are treated as contract liabilities. The
Company classifies amounts due from customer but not billed as unbilled revenue or contract assets depending on whether the company
has unconditional right to receive the sale consideration. If only the passage of time is required before receipt of consideration is due, the
amounts are classified as unbilled revenue under other financial assets. Otherwise, such amounts are classified as contract assets under
other current assets.
d) Other Income
Other income mainly comprises interest income on bank and other deposits, profit on sale of property, plant and equipment, corporate and
management cost recovery, common resources cost recovery, corporate guarantee and mutual fund and exchange differences. Interest
income is recognized using effective interest rate method taking into account the amount outstanding and the rate of Interest applicable
(refer policy to investment and other financial assets).Dividend income is recognized when the right to receive payment is established.
e) Income taxes
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year. Current and
deferred taxes are recognised in statement of profit and loss, except when they relate to items that are recognised in other comprehensive
income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in
equity, respectively.
Current income taxes
The current income tax expense includes income taxes payable by the Company. The current tax payable by the Company in India is Indian
income tax payable on worldwide income after taking credit for tax relief available.
Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income
tax provision.
Deferred income taxes
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 in the financial statements. 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 realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
f) Leases
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 accounts for each lease component within the contract as a lease separately from non-lease components of the contract and
allocates the consideration in the contract to each lease component on the basis of the relative standalone price of the lease component
and the aggregate standalone price of the non-lease components.
Right-of-use assets
The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement
date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability
adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct
costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the
underlying asset or site on which it is located. The right-of-use assets is subsequently measured at cost less any accumulated depreciation,
accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated
using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated
useful lives of right-of use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are
tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is
recognised in the statement of profit and loss.
Lease liabilities
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted
using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of
these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right-of-use asset if the Company changes its
assessment to whether it will exercise an extension or a termination option.
Lease liability and Right-of-use assets have been separately presented in the Balance Sheet and Lease payments have been classified as
financing cash flows.
The Company has elected to not recognize leases with a lease term of 12 months or less in the standalone balance sheet, and lease costs
for those short-term leases are recognized on a straight-line basis over the lease term in the standalone statement of profit and loss.
g) Investments and other financial assets
(i) Classification
The Company classifies its financial assets in the following measurement categories:
• those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), or
• those measured at amortised cost.
The classification depends on the Company’s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments
in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account
for the equity investment at fair value through other comprehensive income.
(ii) Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through
profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets
carried at fair value through profit or loss are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment
of principal and interest.
Financial Assets
Subsequent measurement of financial assets depends on the Company’s business model for managing the asset and the cash flow
characteristics of the asset. There are three measurement categories into which the Company classifies its financial assets:
• Amortised Cost : Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of
principal and interest are measured at amortised cost.
• Fair value through other comprehensive income (FVOCI): Assets that are held for collection of the contractual cash flows and for
selling the financial assets, where the asset’s cash flow represents solely payments of principal and interest, are measured at fair value
through other comprehensive income (FVOCI). Movements in the carrying amount are taken through Other Comprehensive Income
(OCI), except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are
recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is
reclassified from equity to profit or loss and recognised in other gains/ (losses).
• Fair value through profit or loss (FVTPL): Assets that do not meet the criteria for amortised cost or fair value through other
comprehensive income (FVOCI) are measured at fair value through profit or loss (FVTPL). A gain or loss on a debt investment that is
subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and
presented net in the Statement of Profit and Loss within other gains/(losses) in the period in which it arises. Interest income from these
financial assets is included in other income.
Investment in subsidiaries: Investment in subsidiaries are measured at cost less impairment loss, if any.
(iii) Impairment of financial assets
The Company recognises a loss allowance for expected credit losses on investments such as financial assets that are measured at amortised
cost or at FVOCI, trade receivables and contract assets, financial guarantee contracts, and certain other financial assets measured at
amortised cost such as deferred consideration receivable on disposal of subsidiaries. The amount of expected credit losses is updated at
each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.
The Company recognises lifetime expected credit losses (ECL) for trade receivables and contract assets. The expected credit losses on
these financial assets are estimated using a provision matrix based on the Company’s historical credit loss experience, adjusted for factors
that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of
conditions at the reporting date, including time value of money where appropriate.
For all other financial instruments, the Company recognises lifetime ECL when there has been a significant increase in credit risk since
initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Company
measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial
instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial
instrument that are possible within 12 months after the reporting date.
Investment in subsidiaries is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might
be impaired, and is carried at cost less accumulated impairment losses.
(iv) Derecognition of financial assets
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 entity 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 entity 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.
h) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments
with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant
risk of changes in value. Bank overdrafts are shown as borrowings in current liabilities in the balance sheet.
i) Trade receivables
Trade receivables are recognised initially at transaction price and subsequently adjusted for expected credit loss using the effective interest
method.
j) Inventories
Traded goods are stated at the lower of cost or net realisable value. Cost of traded goods comprises cost of purchases and all other costs
incurred in bringing the inventories to their present location and condition. Costs are assigned to individual items of inventory on the basis
of weighted average method. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is
the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to
make the sale.
k) Derivatives and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their
fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is
designated as a hedging instrument, and if so, the nature of the item being hedged and the type of hedge relationship designated.
Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a
recognised asset or liability or a highly probable forecast transaction.
At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company
wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes
the Company’s risk management objective and strategy for undertaking hedge, the hedging/ economic relationship, the hedged item or
transaction, the nature of the risk being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging
instrument’s fair value in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk.
Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing
basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is
more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.
Cash flow hedges that qualify for hedge accounting
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in the other
comprehensive income in cash flow hedging reserve within equity, limited to the cumulative change in fair value of the hedged item on a
present value basis from the inception of the hedge. The gain or loss relating to the ineffective portion, if any, is recognised immediately in
profit or loss, within other gains/(losses).
Forward contracts are used to hedge forecast transactions, the Company generally designates only the change in fair value of the forward
contract related to the spot component as the hedging instrument. Gains or losses relating to the effective portion of the change in the spot
component of the forward contracts are recognised in other comprehensive income in cash flow hedging reserve within equity. The change
in the forward element of the contract that relates to the hedged item (‘aligned forward element’) is recognised within other comprehensive
income in the costs of hedging reserve within equity. In some cases, the entity may designate the full change in fair value of the forward
contract (including forward points) as the hedging instrument. In such cases, the gains and losses relating to the effective portion of the
change in fair value of the entire forward contract are recognised in the cash flow hedging reserve within equity.
Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss (for example, when
the forecast sale that is hedged takes place).
When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains in equity until the forecast transaction occurs.
When the forecast transaction is no longer expected to occur, the cumulative gain or loss and deferred costs of hedging that were reported
in equity are immediately reclassified to profit or loss within other gains/(losses).
If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains unchanged and the
hedge continues to qualify for hedge accounting, the hedge relationship will be rebalanced by adjusting either the volume of the hedging
instrument or the volume of the hedged item so that the hedge ratio aligns with the ratio used for risk management purposes. Any hedge
ineffectiveness is calculated and accounted for in profit or loss at the time of the hedge relationship rebalancing.
l) Property, plant and equipment
The Company had applied for the one-time transition exemption of considering the carrying cost on the transition date i.e. April 01,2016 as
the deemed cost under Ind AS, regarded thereafter as historical cost.
All other items of property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment, if
any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
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.
Depreciation methods, estimated useful lives and residual value
Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives
as follows:
Depreciation is provided on a pro-rata basis on the straight-line method over the useful lives of the assets. The depreciation charge for each
period is recognised in the Statement of Profit and Loss. The residual values is considered as nil.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss within other
income/ (expenses).
m) Intangible assets
Computer software - Acquired
These Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses.
Software tools, Platforms, Content and Courseware-Internally generated including intangible assets under development
Expenditure on research activities is recognised as an expense in the period in which it is incurred. Development costs that are directly
attributable to the design and testing of identifiable and unique software products controlled by the Company are recognised as intangible
assets when the following criteria are met:
• it is technically feasible to complete the development so that it will be available for use;
• management intends to complete the content / products and use or sell it;
• there is an ability to use or sell the content / products;
• it can be demonstrated how the content / products will generate probable future economic benefits;
• adequate technical, financial and other resources to complete the development and to use or sell the content / products are available,
and
• the expenditure attributable to the content / products during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the intangible include employee costs and an appropriate portion of relevant
overheads.
Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is available for use.
n) Impairment testing of intangible assets
Other assets are tested annually 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).
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is
made only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.
o) Financial liabilities
All financial liabilities are recognized initially at fair value.
The subsequent measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of
recognition, and only if the criteria in Ind AS 109 are satisfied. Changes in fair value of such liability are recognized in the statement of profit
or loss.
Financial liabilities at amortized cost
The Company’s financial liabilities at amortized cost are initially recognized at net of transaction costs and includes trade payables,
borrowings and other payables.
After initial recognition, financial liabilities are subsequently measured at amortized cost using the effective interest rate (EIR) method except
for deferred consideration recognized in a business combination which is subsequently measured at fair value through profit and loss. Gains
and losses are recognized in the statement of profit and loss when the liabilities are derecognized as well as through the EIR amortization
process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the
EIR. The EIR amortization is included as finance costs in the statement of profit and loss.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
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