1.2. Material Accounting policies
i. Basis of preparation of standalone financial
statements
a) Statement of compliance
The standalone financial statements
("standalone financial statements") of the
Company have been prepared in accordance
with the Indian Accounting Standards (Ind
AS) as prescribed under section 133 of the
Companies Act, 2013 read with Companies
(Indian Accounting Standards) Rules as
amended from time to time.
The figures of last quarter ending 31 March
2025 are the balancing figures between
audited figures in respect of the full financial
year and the published year-to-date figures
upto the third quarter ending 31 December
2024.
The standalone financial statements were
approved for issue by the Board of Directors
on 16 May 2025.
b) Functional and presentation currency
The standalone financial statements are
presented in Indian I (INR), which is also the
Company's functional currency. All amounts
have been rounded-off to the nearest lacs
unless otherwise indicated. Further, amounts
below INR 50,000 have been rounded off to
"-" in the standalone financial statements
while rounding off to the nearest lacs unless
otherwise indicated.
c) Current and non-current classification
All assets and liabilities are classified into
current and non-current.
Assets
An asset is classified as current when it
satisfies any of the following criteria:
• It is expected to be realized in, or is
intended for sale or consumption in, the
company's normal operating cycle;
• It is held primarily for the purpose of
being traded;
• It is expected to be realized within 12
months after the reporting date; or
• It is cash or cash equivalent unless it
is restricted from being exchanged or
used to settle a liability for at least 12
months after the reporting date.
Current assets include current portion of the
non-current financial assets.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it
satisfies any of the following criteria:
• It is expected to be settled in the
company's normal operating cycle;
• It is held primarily for the purpose of
being traded;
• It is due to be settled within 12 months
after the reporting date; or
• The company does not have an
unconditional right to defer settlement
of the liability for at least 12 months
after the reporting date.
Terms of a liability that could, at the option of
the counterparty, result in its settlement by
the issue of equity instruments do not affect
its classification.
Current liabilities include current portion of
the non-current financial liabilities.
All other liabilities are classified as non¬
current.
Deferred tax assets and liabilities (if any)
are classified as non-current assets and
liabilities.
Operating cycle
Operating cycle is the time between the
acquisition of assets for processing and
their realisation in cash or cash equivalents.
The Company has ascertained its operating
cycle, being a period within 12 months for
the purpose of classification of assets and
liabilities as current and non-current.
d) Basis of measurement
The standalone financial statements have
been prepared on the historical basis except
for the following items:
e) Use of estimates and judgements
In preparing these standalone financial
statements, management has made
judgements, estimates and assumptions
that affect the application of accounting
policies and the reported amounts of assets,
liabilities, income and expenses. Actual
result may differ from these estimates.
Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions
to accounting estimates are recognised
prospectively.
Judgements
Information about judgments made in
applying accounting policies that have
the most significant effect on the amounts
recognised in the standalone financial
statements is included in the following notes:
• Lease classification - Note 2.2
• Estimates of expected contract costs
to be incurred to complete contracts-
Note 2.2
Assumptions and estimation uncertainties
Information about assumptions and
estimation uncertainties that have a
significant risk of resulting in a significant
adjustment in the subsequent period
financial statements is included in the
following notes:
• Estimation of deferred tax expense and
payable - Note 2.18
• Estimated useful life of property, plant
and equipment and Intangible assets -
Note 2.1
• Estimation of defined benefit
obligations-- Note 2.38
• Impairment of trade receivables- Note
2.9
• Impairment of unbilled revenue and
income accrued but not due - 2.14
• Impairment loss on preference shares
carried at amortised cost- Note 2.8
f) Measurement of fair values
The Company's accounting policies and
disclosures require the measurement of fair
values, for both financial and non-financial
assets and liabilities.
The Company has an established control
framework with respect to the measurement
of fair values. This includes a treasury team
that has overall responsibility for overseeing
all significant fair value measurements,
including Level 3 fair values, and reports
directly to the Chief Financial Officer.
The treasury team regularly reviews
significant unobservable inputs and valuation
adjustments. If third party information, such
as broker quotes or pricing services, is used
to measure fair values, then the valuation
team assesses the evidence obtained from
the third parties to support the conclusion
that these valuations meet the requirements
of Ind AS, including the level in the fair value
hierarchy in which the valuations should be
classified.
Fair values are categorised into different
levels in a fair value hierarchy based on the
inputs used in the valuation techniques as
follows.
- Level 1: quoted prices (unadjusted) in
active markets for identical assets or
liabilities.
- Level 2: inputs other than quoted prices
included in Level 1 that are observable
for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived
from prices).
- Level 3: inputs for the asset or liability
that are not based on observable
market data (unobservable inputs).
When measuring the fair value of an asset
or a liability, the Company uses observable
market data as far as possible. If the inputs
used to measure the fair value of an asset
or a liability fall into different levels of the
fair value hierarchy, then the fair value
measurement is categorised in its entirety
in the same level of the fair value hierarchy
as the lowest level input that is significant to
the entire measurement.
The Company recognises transfers between
levels of the fair value hierarchy at the end
of the reporting period during which the
change has occurred.
ii. Revenue recognition
The Company earns revenue primarily from
software product development and providing
support services mainly for corporate business
entities in the banking and financial services
sector. The Company applied Ind AS 115 which
establishes a comprehensive framework for
determining whether, how much and when
revenue is to be recognised.
Company is recognizing Revenue upon transfer
of control of promised products or services
('performance obligations') to customers in
an amount that reflects the consideration the
Company has received or expects to receive
in exchange for these products or services
(Transaction price). A contract is accounted when
it is legally enforceable. Revenue is measured
based on the transaction price as per the contract
with a customer net of variable consideration
like, volume discounts, service level credits, price
concessions and incentives, if any. Further, when
there is uncertainty as to collectability, revenue
recognition is postponed until such uncertainty
is resolved. To recognize revenues, the following
five step approach is applied:
(1) Identify the contract with a customer,
(2) Identify the performance obligations in the
contract,
(3) Determine the transaction price.
(4) Allocate the transaction price to the
performance obligations in the contract,
(5) Recognize revenues when a performance
obligation is satisfied.
- Revenue from fixed price contracts and sale
of license and related customisation and
implementation is recognised in accordance
with the percentage completion method
calculated based on output method which
is measured based on satisfaction of
milestones defined by the company for
successful completion of performance
obligations mentioned in the contract with
customer. Output method is used to align
the revenue recognised in line with the work
performed for the customer. Provision for
estimated losses, if any, on uncompleted
contracts are recorded in the year in which
such losses become certain based on the
current estimates. The contract cost used
in computing the revenues include cost of
fulfilling warranty obligations, if any.
- Revenue from sale of licenses, where no
customisation is required, is recognised upon
delivery of these licenses which constitute
transfer of all risks and rewards. Revenue
from licenses where the customer obtains a
"right to use" the licenses is recognized at
the time the license is made available to the
customer.
- Revenue from time and material contracts is
recognised as the services are rendered.
- Revenue from annual technical service
contracts is recognised after identification
of performance obligations in AMC contracts
and revenue is recognized on a pro rata
basis over the period in which such services
are rendered.
- The solutions offered by the Company may
include supply of third-party equipment or
software. In such cases, revenue for supply
of such third party products are recorded at
gross basis as the Company is acting as the
principal.
- Any reimbursement of expenses as term
of contract i.e. reimbursements of out-of¬
pocket expenses, Ticket, Hotel Expenses,
etc. are recognized as revenue if incurred in
relation to performance obligation under the
contract.
Contract assets are recognised when there
is excess of revenue earned over billings on
contracts. Contract assets are classified as
Service income accrued but not due.
Advances from customers/ Advance billing
and Deferred revenue ("contract liability") is
recognised when there is billing in excess of
revenues.
Contracts are subject to modification to
account for changes in contract specification
and requirements. The Company reviews
modification to contract in conjunction
with the original contract, basis which the
transaction price could be allocated to a
new performance obligation, or transaction
price of an existing obligation could undergo
a change. In the event transaction price is
revised for existing obligation a cumulative
adjustment is accounted for.
Unbilled revenue is recognised when there
is excess of revenue earned over billings on
contracts. Unbilled revenue is classified as
other financial asset (only act of invoicing is
pending) when there is unconditional right
to receive cash, and only passage of time is
required, as per contractual terms
iii. Other income
Profit on sale of investments is determined as
the difference between the sales price and the
carrying value of the investment upon disposal of
investments.
Dividend income is recognised in profit or loss on
the date on which the Company's right to receive
payment is established.
Interest income or expense is recognised using
the effective interest method.
The 'effective interest rate' is the rate that exactly
discounts estimated future cash payments or
receipts through the expected life of the financial
instrument to:
- the gross carrying amount of the financial
asset ; or
- the amortised cost of the financial liability
In calculating interest income and expense, the
effective interest rate is applied to the gross
carrying amount of the asset (when the asset
is not credit-impaired) or to the amortised cost
of the liability. However, for financial assets that
have become credit- impaired subsequent to
initial recognition, interest income is calculated
by applying the effective interest rate to the
amortised cost of the financial asset. If the asset
is no longer credit-impaired, then the calculation
of interest income reverts to the gross basis.
iv. Property, plant and equipment
Property, plant and equipment are carried at cost
less accumulated depreciation and impairment
losses, if any. Cost of an item of property, plant
and equipment includes its purchase price, any
directly attributable expenditure on making the
asset ready for its intended use. Property, plant
and equipment under construction and cost of
assets not ready to use before the year end, are
disclosed as capital work-in-progress.
Depreciation on property, plant and equipment,
except leasehold land and leasehold
improvements, is provided on the straight-line
method based on useful lives of respective
assets as estimated by the management taking
into account nature of the asset, the estimated
usage of the asset and the operating conditions
of the asset. Leasehold land is amortised over
the period of lease. The leasehold improvements
are amortised over the remaining period of lease
or the useful lives of assets, whichever is shorter.
Depreciation is charged on a pro-rata basis for
assets purchased / sold during the year.
If material parts of an item of property, plant
and equipment have different useful lives, then
they are accounted for as separate items (major
components) of property, plant and equipment.
Any gain or loss on disposal of an item of
property, plant and equipment is recognised
in the standalone statement of profit and loss
account.
Subsequent expenditure is capitalized only if
it is probable that the future economic benefits
associated with the expenditure will flow to the
Company.
The management's estimates of the useful lives
of the various property, plant and equipment are
as follows:
*Based on a technical evaluation, the useful lives
as given above represent the period over which
the management expects to use these assets;
hence these lives are different from the useful
lives prescribed under Part C of schedule II of the
Companies Act, 2013.
v. Intangible assets
Intangible assets are carried at cost less
accumulated amortisation and impairment losses,
if any. The cost of an intangible asset comprises
its purchase price, including any import duties
and other taxes (other than those subsequently
recoverable from the tax authorities), and any
directly attributable expenditure on making the
asset ready for its intended use and net of any
trade discounts and rebates.
Subsequent expenditure on an intangible asset
after its purchase / completion is recognised as
an expense when incurred unless it is probable
that such expenditure will enable the asset to
generate future economic benefits in excess of
its originally assessed standards of performance
and such expenditure can be measured and
attributed to the asset reliably, in which case such
expenditure is added to the cost of the asset.
The management's estimates of the useful lives
of the software are 3 years.
vi. Financial instruments
a) Recognition and initial measurement
Trade receivables are initially recognised
when they are originated. All other financial
assets and financial liabilities are initially
recognised when the Company becomes
a party to the contractual provision of the
instrument.
A financial asset or financial liability is
initially measured at fair value plus, for an
item not at fair value through profit and loss
(FVTPL), transaction costs that are directly
attributable to its acquisition or issue.
b) Classification and subsequent
measurement
Financial assets
On initial recognition, a financial asset is
classified as measured at
- amortised cost;
- Fair value through other comprehensive
income (FVOCI)-equity investment; or
- Fair value through profit and loss
(FVTPL)
Financial assets are not reclassified
subsequent to their initial recognition, except
if and in the period the Company changes
its business model for managing financial
assets.
A financial asset is measured at amortised
cost if it meets both of the following
conditions and is not designated as at
FVTPL:
- the asset is held within a business
model whose objective is to hold assets
to collect contractual cash flows; and
- the contractual terms of the financial
asset give rise on specified dates to
cash flows that are solely for payments
of principal and interest on the principal
amount outstanding.
On initial recognition of an equity investment
that is not held for trading, the Company
may irrevocably elect to present subsequent
changes in the investment's fair value in OCI
(designated as FVOCI-equity investment).
This election is made on an investment-by¬
investment basis.
All financial assets not classified as
measured at amortised cost or FVOCI as
described above are measured at FVTPL.
This includes all derivatives financial assets.
On initial recognition, the Company may
irrevocably designate a financial asset that
otherwise meets the requirement to be
measured at amortised cost or at FVOCI as at
FVTPL if doing so eliminates or significantly
reduces an accounting mismatch that would
otherwise arise.
Investment in subsidiaries
Investment in subsidiaries is carried at cost.
Financial assets: Business model assessment
The Company makes an assessment of the
objective of the business model in which
a financial asset is held at a portfolio level
because this best reflects the way the
business is managed, and information is
provided to management. The information
considered includes:
- the stated policies and objectives for
the portfolio and the operation of those
policies in practice. These include
whether management's strategy
focuses on earning contractual interest
income, maintaining a particular interest
rate profile, matching the duration of
the financial assets to the duration of
any related liabilities or expected cash
outflows or realising cash flows through
the sale of the assets;
- how the performance of the portfolio
is evaluated and reported to the
Company's management;
- the risks that affect the performance of
the business model (and the financial
assets held within that business model)
and how those risks are managed;
- how managers of the business
are compensated - e.g. whether
compensation is based on the fair
value of the assets managed or the
contractual cash flows collected; and
- the frequency, volume and timing
of sales of financial assets in prior
periods, the reasons for such sales and
expectations about future sales activity.
Financial assets: Assessment whether
contractual cash flows are solely payments
of principal and interest
For the purposes of this assessment,
'principal' is defined as the fair value of the
financial asset on initial recognition. 'Interest'
is defined as consideration for the time value
of money and for the credit risk associated
with the principal amount outstanding during
a particular period of time and for other
basic lending risks and costs (e.g. liquidity
risk and administrative costs), as well as a
profit margin.
In assessing whether the contractual cash
flows are solely payments of principal
and interest, the Company considers the
contractual terms of the instrument. This
includes assessing whether the financial
asset contains a contractual term that could
change the timing or amount of contractual
cash flows such that it would not meet this
condition. In making this assessment, the
Company considers:
- contingent events that would change
the amount or timing of cash flows;
- terms that may adjust the contractual
coupon rate, including variable interest
rate features;
- prepayment and extension features;
and
- terms that limit the Company's claim to
cash flows from specified assets (e.g.
non- recourse features).
A prepayment feature is consistent with
the solely payments of principal and
interest criterion if the prepayment amount
substantially represents unpaid amounts of
principal and interest on the principal amount
outstanding, which may include reasonable
additional compensation for early termination
of the contract. Additionally, for a financial
asset acquired at a significant discount or
premium to its contractual par amount, a
feature that permits or requires prepayment
at an amount that substantially represents
the contractual par amount plus accrued (but
unpaid) contractual interest (which may also
include reasonable additional compensation
for early termination) is treated as consistent
with this criterion if the fair value of the
prepayment feature is insignificant at initial
recognition.
Financial assets: Subsequent measurement
and gains and losses
In the case of target maturity funds (TMFs),
the Company intends to hold its investment
in open ended target maturity funds till
maturity. These funds have a pre-determined
maturity date, which follow a passive buy-
and-hold strategy. This strategy is expected
to mitigate market volatility, and the
company believes it aligns with the SPPI test
requirements under Ind AS 109
Financial liabilities: Classification,
subsequent measurement and gains and
losses
Financial liabilities are classified as measured
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.
c) Derecognition
Financial assets
The Company derecognises a financial asset
when the contractual rights to the cash flows
from the financial asset expire, or it transfers
the rights to receive the contractual cash
flows in a transaction in which substantially
all of the risks and rewards of ownership of
the financial asset are transferred or in which
the Company neither transfers nor retains
substantially all of the risks and rewards of
ownership and does not retain control of the
financial asset.
If the Company enters into transactions
whereby it transfers assets recognised on
its balance sheet, but retains either all or
substantially all of the risks and rewards
of the transferred assets, the transferred
assets are not derecognized.
Financial liabilities
The Company derecognises a financial
liability when its contractual obligations are
discharged or cancelled, or expire.
The Company also derecognises a financial
liability when its terms are modified and the
cash flows under the modified terms are
substantially different. In this case, a new
financial liability based on the modified terms
is recognised at fair value. The difference
between the carrying amount of the financial
liability extinguished and the new financial
liability with modified terms is recognised in
profit or loss.
d) Offsetting
Financial assets and financial liabilities are
offset and the net amount presented in the
balance sheet when, and only when, the
Company currently has a legally enforceable
right to set off the amounts and it intends
either to settle them on a net basis or to
realise the asset and settle the liability
simultaneously.
e) Derivative financial instruments and hedge
accounting
The Company holds derivative financial
instruments such as foreign exchange
forward contracts to mitigate the risk of
changes in exchange rates on foreign
currency exposures. The counterparty
for these contracts is generally a bank.
Embedded derivatives are separated
from the host contract and accounted for
separately if the host contract is not a
financial asset and certain criteria are met.
Derivatives are initially measured at fair
value. Subsequent to initial recognition,
derivatives are measured at fair value, and
changes therein are generally recognised in
profit or loss.
The Company designates certain derivatives
as hedging instruments to hedge the
variability in cash flows associated with
highly probable forecast transactions arising
from changes in foreign exchange rates.
At inception of designated hedging
relationships, the Company documents the
risk management objective and strategy
for undertaking the hedge. The Company
also documents the economic relationship
between the hedged item and the hedging
instrument, including whether the changes
in cash flows of the hedged item and
hedging instrument are expected to offset
each other.
Cash flow hedges
The Company recognizes derivative
instruments and hedging activities as either
assets or liabilities in its balance sheet and
measures them at fair value. Gains and
losses resulting from changes in fair value
are accounted for depending on the use of
the derivative and whether it is designated
and qualifies for hedge accounting.
Changes in the fair values of the derivatives
designated as cash flow hedges are
deferred and recorded as a component of
other comprehensive income (loss) reported
under accumulated other comprehensive
income (loss) until the hedge transaction
occurs and are then recognized in the
standalone statements of income along with
underline hedge items and disclosed as
part of total net revenues. Changes in the
fair value of the derivatives not designated
as hedging instruments and the ineffective
portion of the derivatives designated as cash
flows hedges are recognized in standalone
statement of income and are included in
foreign exchange gains (losses), net, and
other income (expense), net, respectively.
When a derivative is designated as a cash
flow hedging instrument, the effective
portion of changes in the fair value of
the derivative is recognized in OCI and
accumulated in the other equity under
'effective portion of cash flow hedges'. The
effective portion of changes in the fair value
of the derivative that is recognized in OCI
is limited to the cumulative change in fair
value of the hedged item, determined on a
present value basis, from inception of the
hedge. Any ineffective portion of changes in
the fair value of the derivative is recognized
immediately in profit or loss.
The Company designates only the
change in fair value of the spot element
of forward exchange contracts as the
hedging instrument in cash flow hedging
relationships. The change in fair value of
the forward element of forward exchange
contracts ('forward points') is separately
accounted for as a cost of hedging and
recognised separately within equity.
The amount accumulated in other equity
is reclassified to profit or loss in the same
period or periods during which the hedged
expected future cash flows affect profit or
loss.
If a hedge no longer meets the criteria for
hedge accounting or the hedging instrument
is sold, expires, is terminated or is exercised,
then hedge accounting is discontinued
prospectively. When hedge accounting
for cash flow hedges is discontinued, the
amount that has been accumulated in other
equity remains there until, for a hedge
of a transaction resulting in recognition
of a non-financial item, it is included in
the non-financial item's cost on its initial
recognition or, for other cash flow hedges,
it is reclassified to profit or loss in the same
period or periods as the hedged expected
future cash flows affect profit or loss.
If the hedged future cash flows are no longer
expected to occur, then the amounts that
have been accumulated in other equity are
immediately reclassified to profit or loss.
vii. Impairment
a) Impairment of financial instruments
The Company recognises loss allowances
for expected credit losses on:
- financial assets measured at amortised
cost;
At each reporting date, the Company
assesses whether financial assets are
carried at amortised cost. A financial
asset is 'credit- impaired' when one or
more events that have a detrimental
impact on the estimated future cash
flows of the financial asset have
occurred.
The Company measures loss allowances
at an amount equal to lifetime expected
credit losses, except for the following,
which are measured as 12 month
expected credit losses:
- debt securities that are determined to
have low credit risk at the reporting
date; and
- other debt securities and bank balances
for which credit risk (i.e. the risk of
default occurring over the expected
life of the financial instrument) has
not increased significantly since initial
recognition.
Loss allowances for trade receivables are
always measured at an amount equal to
lifetime expected credit losses.
12-month expected credit losses are the
portion of expected credit losses that result
from default events that are possible within
12 months after the reporting date (or a
shorter period if the expected life of the
instrument is less than 12 months).
When determining whether the credit risk of
a financial asset has increased significantly
since initial recognition and when estimating
expected credit losses, the Company
considers reasonable and supportable
information that is relevant and available
without undue cost or effort. This includes
both quantitative and qualitative information
and analysis, based on the Company's
historical experience and informed credit
assessment and including forward- looking
information.
Measurement of expected credit losses
Expected credit losses are a probability-
weighted estimate of credit losses. Credit
losses are measured as the present value
of all cash shortfalls (i.e. the difference
between the cash flows due to the Company
in accordance with the contract and the cash
flows that the Company expects to receive).
Presentation of allowance for expected
credit losses in the balance sheet
Loss allowances for financial assets
measured at amortised cost are deducted
from the gross carrying amount of the
assets.
Write-off
The gross carrying amount of a financial
asset is written off (either partially or in
full) to the extent that there is no realistic
prospect of recovery. This is generally the
case when the Company determines that the
debtor does not have assets or sources of
income that could generate sufficient cash
flows to repay the amounts subject to the
write-off.
b) Impairment of non-financial assets
The Company's non-financial assets, other than
inventories and deferred tax assets, are reviewed
at each reporting date to determine whether
there is any indication of impairment. If any such
indication exists, then the asset's recoverable
amount is estimated.
For impairment testing, assets that do not
generate independent cash inflows are grouped
together into cash-generating units (CGUs). Each
CGU represents the smallest group of assets
that generates cash inflows that are largely
independent of the cash inflows of other assets
or CGUs.
The recoverable amount of a CGU (or an individual
asset) is the higher of its value in use and its fair
value less costs to sell. Value in use is based on
the estimated future cash flows, discounted to
their present value using a pre-tax discount rate
that reflects current market assessments of the
time value of money and the risks specific to the
CGU (or the asset).
An impairment loss is recognised if the carrying
amount of an asset or CGU exceeds its estimated
recoverable amount. Impairment losses are
recognised in the standalone statement of profit
and loss. Impairment loss recognised in respect
of a CGU is allocated first to reduce the carrying
amount of any goodwill allocated to the CGU, and
then to reduce the carrying amounts of the other
assets of the CGU (or group of CGUs) on a pro
rata basis.
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