2 ACCOUNTING POLICIES
The material accounting policies applied in the
preparation of these financial statements are set
out below. These policies have been consistently
applied to all the years presented, unless
otherwise stated.
2.1 Basis Of Preparation
(i) Compliance with Ind AS
The financial statements comply in all significant
aspects with Indian Accounting Standards
(Ind AS) notified under Section 133 of the
Companies Act, 2013 (the Act) [Companies
(Indian Accounting Standards) Rules, 2015] and
other relevant provisions of the Act as amended
from time to time . The financial statements have
been prepared on accrual and going concern
basis. The accounting policies are applied
consistently to all the periods presented in the
financial statements.
(ii) Historical cost convention
The 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. Certain financial assets and liabilities
b. Defined benefit plans - plan assets and
c. Equity Settled share based payments at
grant date fair value
2.2 Property Plant and Equipment
All items of property, plant and equipment
are stated at historical cost less depreciation.
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 recognized 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 derecognized when replaced.
All other repairs and maintenance are charged
to profit or loss during the reporting period in
which they are incurred.
Property, plant & Equipment which are significant
to total cost of that item of Property plant &
Equipment and having different useful life are
accounted separately
Depreciation methods, estimated useful lives
& residual value:
Depreciation is calculated using the straight-line
method to allocate their cost, net of their residual
values, over their estimated useful lives or, in
the case of certain leased furniture, fittings and
equipment, the shorter lease term as follows:
The estimated useful lives for the different types
of assets are:
Leasehold improvements are amortised over the
primary period of the lease on straight-line basis
or useful life of asset, whichever is lower
The asset's 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 and
are recognized in the statement of profit or loss.
The Company provides pro-rata depreciation
from the day the asset is put to use and for any
asset sold, till the date of sale.
2.3 Intangible Assets
Intangible assets are stated at cost of acquisition
net of recoverable taxes, accumulated
amortization and impairment losses, if any. Such
costs include purchase price, borrowing cost,
and any cost directly attributable to bringing the
asset to its working condition for the intended
use, net charges on foreign exchange contracts
and adjustments arising from exchange rate
variations attributable to the intangible 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 entity and cost can be
measured reliably.
Gains or losses arising from derecognition 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.
Acquisition of rights to manage and administer
the schemes of Goldman Sachs Mutual Fund
have been stated at cost net of impairment
losses, if any.
The estimated useful lives for computer software
is as follows:
2.4 Impairment of assets
Goodwill and intangible assets that have an
indefinite useful life are not subject to amortization
and are tested annually for impairment, or more
frequently if events or changes in circumstances
indicate that they might be impaired. Other
assets are tested for impairment whenever
events or changes in circumstances indicate that
the carrying amount may not be recoverable. An
impairment loss is recognized 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.
The Company assesses at each balance sheet
date whether there is any indication that an
asset may be impaired. If any such indication
exists, the Company estimates the recoverable
amount of the asset. If such recoverable amount
of the asset or the recoverable amount of the
cash-generating unit to which the asset belongs
is less than its carrying amount, the carrying
amount is reduced to its recoverable amount.
The reduction is treated as an impairment loss
and is recognized in the statement of profit and
loss. If at the balance sheet date there is an
indication that a previously assessed impairment
loss no longer exists, the recoverable amount
is reassessed and the asset is reflected at the
recoverable amount subject to a maximum of
depreciable historical cost.
2.5 Leases
As a lessee
The Company assesses at contract inception
whether a contract is, or contains, a lease. That
is, 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 applies a single recognition
and measurement approach for all leases,
except for short-term leases and leases of low-
value assets. The Company recognizes lease
liabilities to make lease payments and right-
of-use assets representing the right to use the
underlying assets.
Right of use assets
The Company recognizes 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 recognized, 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.
Lease Liabilities
At the commencement date of the lease, the
Company recognizes 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.
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.
2.6 Segment Reporting
Operating segments are reported in a manner
consistent with the internal reporting provided to
the Chief Operating Decision Maker. The power to
assess the financial performance and position
of the Company and make strategic decisions
is vested in the Executive Director & CEO who
has been identified as the Chief Operating
Decisions Maker.
2.7 Foreign Currency Translation
Transactions in foreign currencies are recorded
at the exchange rate prevailing on the date
of transaction. Monetary assets and liabilities
denominated in foreign currencies are translated
at the functional currency closing rates of
exchange at the reporting date.
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 year end
exchange rates are generally recognized in profit
or loss.
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 measured. 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(i.e. translation differences on items
whose fair value gain or loss is recognized in
Other Comprehensive Income or Statement
of Profit and Loss are also recognized in Other
Comprehensive Income or Statement of Profit
and Loss, respectively).
2.8 Financial Assets
A. Initial Recognition and Measurement
All Financial Assets are initially recognized at
fair value. Transaction Costs that are directly
attributable to the acquisition or issue of Financial
Assets, which are not at Fair Value Through Profit
or Loss (FVTPL), are adjusted to the fair value on
initial recognition. However, trade receivable that
do not contain a significant financial component
are measure at transaction price. Purchase and
sale of financial assets are recognized using
trade date accounting.
B. Subsequent Measurement
Financial Assets measured at Amortized
cost: Assets that are held for collection of
contractual cash flows where those cash flows
represent solely payments of principal and
interest ('SPPI'), and that are not designated
at FVTPL, are measured at amortized cost. The
carrying amount of these assets is adjusted by
any expected credit loss allowance recognized
and measured as described in note 6. Interest
income from these financial assets is recognized
using the effective interest rate method.
Financial Assets measured at Fair value through
other comprehensive income: Financial assets
that are held for collection of contractual cash
flows and for selling the assets, where the assets'
cash flows represent solely payments of principal
and interest, and that are not designated at
FVPL, are measured at fair value through other
comprehensive income. Movements in the
carrying amount are taken through OCI, except
for the recognition of impairment gains or losses,
interest revenue and foreign exchange gains and
losses on the instrument's amortized cost which
are recognized in profit or loss. When the financial
asset is derecognized, the cumulative gain or
loss previously recognized in OCI is reclassified
from equity to profit or loss. Interest income from
these financial assets is included in 'Interest
income' using the effective interest rate method.
Financial Assets measures at Fair value through
profit or loss: Assets that do not meet the criteria
for amortized cost or FVOCI are measured at fair
value through profit or loss. 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 recognized in profit or
loss in the period in which it arises, unless it arises
from debt instruments that were designated
at fair value or which are not held for trading.
Interest income from these financial assets is
included in 'Interest income' using the effective
interest rate method.
C. Equity Instruments
All equity investments are measured at fair
value with value changes recognized in
statement of profit and loss, except for those
equity investments for which the Company has
elected to present the value changes in 'Other
Comprehensive Income' .
Changes in the fair value of financial assets at fair
value through profit or loss are recognized in net
gain/loss on fair value changes in the statement
of profit or loss. Impairment losses (and reversal
of impairment losses) on equity investments
measured at FVOCI are not reported separately
from other changes in fair value.
D. Impairment of Financial Asset
The Company assesses on a forward looking
basis the expected credit losses (ECL) associated
with its debt instruments carried at amortized
cost and with the exposure arising from
loan commitments and financial guarantee
contracts. The Company recognizes a loss
allowance for such losses at each reporting date.
The measurement of ECL reflects:
- An unbiased and probability-weighted
amount that is determined by evaluating a
range of possible outcomes;
- The time value of money; and
- Reasonable and supportable information
that is available without undue cost or
effort at the reporting date about past
events, current conditions and forecasts of
future economic conditions.
The Company recognizes loss allowance using
the expected credit loss (ECL) model for the
financial assets which are not fair valued through
profit or loss. ECL is measured at an amount
equal to the 12 months ECL, unless there has been
a significant increase in credit risk from initial
recognition in which case those are measured at
lifetime ECL. The amount of expected credit losses
(or reversal) that is required to adjust the loss
allowance at the reporting date to the amount
that is required to be recognized, is recognized
as an expense in the statement of profit or loss.
2.9 Financial Liabilities
A. Initial Recognition
All Financial liabilities are recognized at fair
value and in case of borrowing, net of directly
attributable cost. Fees of recurring nature are
directly recognized in the statement of profit and
loss as finance cost.
B. Subsequent measurement
Financial liabilities are carried at amortized cost
using the effective interest method. For trade and
other payables maturing within one year from
the balance sheet date, the carrying amounts
approximate fair value due to the short maturity
of these instruments.
C. Derecognition
Financial liabilities are derecognized when
they are extinguished i.e. when the obligation
specified in the contract is discharged, cancelled
or expires.
2.10 Revenue Recognition
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 Company 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:
i. Identification of contract(s) with customers;
ii. Identification of the separate performance
obligations in the contract;
iii. Determination of transaction price;
iv. Allocation of transaction price to the
separate performance obligations; and
v. Recognition of revenue when (or as) each
performance obligation is satisfied
Revenue Recognition for different heads of
Income are as under:
(i) Investment Management Fees (net of tax)
Investment Management fees are
recognized on an accrual basis in
accordance with Investment Management
Agreement based on average assets under
management (AUM).
(ii) Advisory Fees (net of tax)
Advisory fees are recognized on an accrual
basis in accordance with agreement entered
into with respective investment managers
/ advisors.
(iii) Portfolio Management Fees (net of tax)
Portfolio Management fees are recognized
on an accrual basis in accordance with
Portfolio Management Agreement entered
with respective clients.
(iv) Interest income
Interest income is recognized using the
effective interest rate.
(v) 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.
(vi) Gain on Investments (Including Mark to
Market)
The realised gains / losses from financial
instruments at FVTPL represents the
difference between the carrying amount of
a financial instrument at the beginning of
the reporting period, or the transaction price
if it was purchased in the current reporting
period, and its settlement price.
The unrealised gains / losses represents the
difference between the carrying amount of
a financial instrument at the beginning of
the period, or the transaction price if it was
purchased in the current reporting period,
and its carrying amount at the end of the
reporting period.
2.H Income Tax
The tax expense for the year comprises of current
tax and deferred income tax. Tax is recognized
in Statement of Profit and Loss, except to the
extent that it relates to items recognized in the
Other Comprehensive Income or in Equity. In
which case, the tax is also recognized in Other
Comprehensive Income or Equity.
Current Tax
Current tax assets and liabilities are measured
at the amount expected to be recovered from or
paid to the Income Tax authorities, based on tax
rates and laws that are enacted at the Balance
sheet date.
Deferred Tax
Deferred tax is recognized on temporary
differences arising between carrying
amounts of asset and liabilities in financial
statements and corresponding tax bases
used in the computation of taxable profit.
Deferred tax liabilities and assets are measured
at the tax rates that are expected to apply in the
period in which the liability is settled or the asset
realized, based on the tax rates (and tax laws)
that have been enacted or substantively enacted
by the end of the reporting period. The carrying
amount of deferred tax liabilities and assets are
reviewed at the end of each reporting period.
2.12 Cash & Cash Equivalents
For the purpose of presentation in the statement
of cash flows, 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 and
bank overdraft.
2.13 New fund offer expenses of mutual fund and
PMS schemes
Expenses relating to new fund offer of mutual
fund and PMS schemes are charged in the
statement of profit and loss in the year in which
such expenses are incurred.
2.14 Fund and commission expenses
Prior to 21st October 2018, certain scheme related
expenses and commission were being borne by
the Company in accordance with circulars and
guidelines issues by SEBI and the Association of
Mutual Funds in India (AMFI). Commission paid
for future period for the mutual fund schemes
(including for Equity Linked Savings Schemes)
until 21st October 2018 is treated as prepaid
expenses and is amortised on the contractual
period and charged to Statement of Profit and
Loss account unless considered recoverable
from schemes. Pursuant to circulars issued
by SEBI in this regard, after 21st October 2018,
these expenses, are being borne by the mutual
fund schemes.
Commission is paid to the brokers for Portfolio
Management services as per the terms of
agreement entered into with respective brokers.
Prior to 1st October 2020, Commission was paid
to the brokers for Portfolio Management services
on upfront basis. This commission is treated
as prepaid expenses and is amortised on the
contractual period and charge to statement
of profit and loss account. Pursuant to circular
issued by SEBI, in this regard, after 1st October
2020, the commission is being paid on trail basis
to the brokers. Unamortised brokerage is treated
as Non-financial Assets considering the normal
operating cycle of the Company.
2.15 Off-setting 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 recognized amounts and there is an
intention to settle on a net basis or realize the
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