2. Summary of Material accounting policies
The standalone financial statements have been prepared using
the accounting policies and measurement basis summarized
below:
a. Functional currency
The financial statements are presented in Indian Rupee ('I NR')
which is also the functional and presentation currency of the
Company. All financial information presented in Indian Rupees
has been rounded to the nearest lakhs, unless otherwise stated.
b. Current and non-current classification
All the assets and liabilities have been classified as current and
non-current as per the Company's normal operating cycle and
other criteria set out in the Division II- Ind AS Schedule III to the
Act. The Company presents assets and liabilities in the balance
sheet based on current/ non-current classification.
An asset is classified as current when it is:
i. Expected to be realised or intended to be sold or consumed in
normal operating cycle.
ii. Held primarily for the purpose of trading.
iii. Expected to be realised within twelve months after the
reporting period, or
iv. Cash and cash equivalent unless restricted from being
exchanged or used to settle a liability for at least twelve
months after the reporting period.
A liability is classified as current when:
i. It is expected to be settled in normal operating cycle.
ii. It is held primarily for the purpose of trading.
iii. It is due to be settled within twelve months after the reporting
period, or
iv. There is no unconditional right to defer the settlement of the
liability for at least twelve months after the reporting period.
Current assets/ liabilities include the current portion of non¬
current assets/liabilities respectively. All other assets/ liabilities
including deferred tax assets and liabilities are classified as non¬
current.
c. Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less
accumulated depreciation and accumulated impairment losses,
if any. The cost comprises purchase price, taxes (other than those
subsequently recoverable from tax authorities), borrowing cost
if capitalisation criteria are met and directly attributable cost of
bringing the asset to its working condition for the intended use,
and estimated costs of dismantling and removing the item and
restoring the site on which it is located.
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. If significant 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.
An item of property, plant and equipment and any significant
part initially recognised is derecognised upon disposal or
when no future economic benefits are expected from its use or
disposal. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds
and the carrying amount of the asset) is included in the income
statement when the asset is derecognised.
Advances paid towards the acquisition of property, plant and
equipment outstanding at each balance sheet date is classified
as capital advances. Capital work-in-progress includes cost
of property, plant and equipment under installation/ under
development as at the balance sheet date.
Depreciation on property, plant and equipment is calculated on
pro-rata basis on written down value method using the useful
lives of the assets estimated by management. The useful life is
as follows:
Depreciation on addition to property plant and equipment is
provided on pro-rata basis from the date of the asset being ready
for use. Depreciation on sale/deduction from property plant and
equipment is provided up to the date preceding the date of sale,
deduction as the case may be. Gains and losses on disposals
are determined by comparing proceeds with carrying amount.
These are included in Statement of Profit and Loss under 'Other
Income'/ 'Other expenses' With respect to the assets costing
less than Rs. 5,000 based on an internal assessment and
materiality, the management has estimated that the same shall
be depreciated in the year of purchase. The residual values are
not more than 5% of the original cost of the asset.
Depreciation methods, useful lives and residual values are
reviewed periodically at each financial year end and adjusted
prospectively, as appropriate.
d. Impairment
Impairment of non-financial assets
The carrying amounts of the Company's tangible and intangible
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 in order
to determine the extent of the impairment loss, if any.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are
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 asset or the cash-generating
unit for which the estimates of future cash flows have not been
adjusted. For the purpose of impairment testing, assets are
grouped together into the smallest group of assets that generates
cash inflows from continuing use that are largely independent of
the cash inflows of other assets or groups of assets.
An impairment loss is recognised in the statement of profit
or loss if the estimated recoverable amount of an asset or its
cash generating unit is lower than its carrying amount. If, at the
reporting date there is an indication that a previously assessed
impairment loss no longer exists, the recoverable amount
is reassessed and reversed 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 previously recognised.
e. Leases:
Company as a lessee
The Company recognises a right-of-use asset and a lease liability
at the lease commencement date. The right-of-use asset is
initially measured at cost, which comprises the initial amount
of the lease liability adjusted for any lease payments made at
or before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove
the underlying asset or to restore the underlying asset or the
site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the
earlier of the end of the useful life of the right-of-use asset or
the end of the lease term. The estimated useful lives of right-
of-use assets are determined on the same basis as those of
property and equipment. In addition, the right-of-use asset
is periodically reduced by impairment losses, if any, and
adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of
the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, company's
incremental borrowing rate. Generally, the Company uses its
incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease
liability comprise the following: -
i. Fixed payments, including in-substance fixed payments;
ii. Variable lease payments that depend on an index or a
rate, initially measured using the index or rate as at the
commencement date;
iii. Amounts expected to be payable under a residual value
guarantee; and
iv. The exercise price under a purchase option that the Company
is reasonably certain to exercise, lease payments in an
optional renewal period if the Company is reasonably certain
to exercise an extension option, and penalties for early
termination of a lease unless the Company is reasonably
certain not to terminate early.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a
change in future lease payments arising from a change in an
index or rate, if there is a change in the Company's estimate
of the amount expected to be payable under a residual value
guarantee, or if company changes its assessment of whether it
will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the right-of use
asset, or is recorded in profit or loss if the carrying amount of the
right-of-use asset has been reduced to zero.
The Company presents right-of-use assets that do not meet
the definition of investment property in 'property, plant and
equipment' and lease liabilities in 'Financial Liabilities' in the
statement of financial position. (Refer note 5).
The Company has elected not to recognise right-of-use assets
and lease liabilities for short term leases of real estate properties
that have a lease term of 12 months. The Company recognises
the lease payments associated with these leases as an expense
on a straight-line basis over the lease term.
f. Financial Instruments
Initial Recognition and measurement
All other financial assets and financial liabilities are initially
recognised when the Company becomes a party to the
contractual provisions of the instrument.
A financial asset or financial liability is initially measured at fair
value and, for an item not at fair value through profit and loss
(FVTPL), transaction costs that are directly attributable to its
acquisition or issue.
Classification and subsequent measurement
Financial Assets
On initial recognition, a financial asset is classified as
i. amortised cost;
ii. fair value through other comprehensive income (“FVTOCI'') -
debt investment;
iii. FVTOCI - equity investment; or
iv. 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.
Amortised cost
A financial asset is measured at amortised cost if it meets both
of the following conditions and is not designated as at FVTPL:
i. the asset is held within a business model whose objective is to
hold assets 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.
After initial measurement, such financial assets are subsequently
measured at amortised cost using the effective interest rate (EIR)
method. Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included in Other
Income in the statement of profit or loss. The losses arising from
impairment are recognised in the statement of profit or loss.
FVTOCI - debt investment
A debt investment is measured at FVTOCI if it meets both of the
following conditions and is not designated as at FVTPL:
i. the 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.
Debt instruments included within the FVTOCI category are
measured initially as well as at each reporting date at fair value.
Fair value movements are recognised in the other comprehensive
income (OCI). However, the Company recognises interest
income, impairment losses & reversals and foreign exchange
gain or loss in the statement of profit or loss. On derecognition of
the asset, cumulative gain or loss previously recognised in OCI is
reclassified from the equity to statement of profit or loss. Interest
earned whilst holding FVTOCI debt instrument is reported as
interest income using the EIR method.
Equity investment
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 FVTOCI - equity investment). This election is
made on an investment by- investment basis.
If the Company decides to classify an equity instrument as at
FVTOCI, then all fair value changes on the instrument, including
foreign exchange gain or loss and excluding dividends, are
recognised in the OCI. There is no recycling of the amounts
from OCI to profit or loss, even on sale of investment. However,
the Company may transfer the cumulative gain or loss within
equity. Equity instruments included within the FVTPL category
are measured at fair value with all changes recognised in the
statement of profit or loss.
FVTPL
All financial assets not classified as measured at amortised cost
as described above are measured at FVTPL. This includes all
derivative financial assets. On initial recognition, the Company
may irrevocably designate a financial asset that otherwise meets
the requirements to be measured at amortised cost or at FVTOCI
as at FVTPL if doing so eliminates or significantly reduces an
accounting mismatch that would otherwise arise.
Financial liabilities
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 statement of
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 statement of profit or loss. Any gain or loss on derecognition is
also recognised in statement of profit or loss.
De-recognition
Financial assets
A financial asset is primarily de-recognised when the rights to
receive cash flows from the asset have expired or the Company
has transferred its rights to receive cash flows from the asset.
Financial liabilities
A financial liability is de-recognised 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 de-recognition of the original liability and the
recognition of a new liability. The difference in the respective
carrying amounts is recognised 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.
Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash
at banks and on hand and short-term deposits with an original
maturity of three months or less that are readily convertible to
a known amount of cash and subject to an insignificant risk of
changes in value. For the purpose of presentation in the statement
of cash flows, cash and cash equivalents includes cash on hand,
deposit 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.
g. Foreign currency transactions
Transactions in foreign currencies are translated to the functional
currency of the Company at exchange rates at the dates of the
transactions. Monetary assets and liabilities denominated in
foreign currencies at the reporting period are translated into
the functional currency at the exchange rate at that date. Non¬
monetary items denominated in foreign currencies which are
carried at historical cost are reported using the exchange rate at
the date of the transaction; and non-monetary items which are
carried at fair value or any other similar valuation denominated in
a foreign currency are reported using the exchange rates at the
date when the fair value was measured.
Exchange differences arising on monetary items on settlement,
or restatement as at reporting date, at rates different from those
at which they were initially recorded, are recognized in the
statement of profit and loss in the year in which they arise.
h. Investments in the nature of equity in subsidiaries
The Company has elected to recognise its investments in equity
instruments in subsidiaries at cost in the separate financial
statements in accordance with the option available in Ind AS 27,
'Separate Financial Statements!
The Company regardless of the nature of its involvement with
an entity (the investee), determines whether it is a parent
by assessing whether it controls the investee. The Company
controls an investee when it is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee. Thus,
the Company controls an investee if and only if it has all the
following:
(a) power over the investee;
(b) exposure, or rights, to variable returns from its involvement
with the investee and
(c) the ability to use its power over the investee to affect the
amount of the returns.
Investments are accounted in accordance with Ind AS 105 when
they are classified as held for sale. On disposal of investment,
the difference between its carrying amount and net disposal
proceeds is charged or credited to the statement of profit and
loss.
i. Revenue recognition
The Company has adopted Ind AS 115- Revenue from Contracts
with customers, using modified retrospective application method
with effect from April 01, 2018 and accordingly these financial
statements are prepared in accordance with the recognition and
measurement principles laid down in Ind AS 115. The application
of Ind AS 115 did not have any significant impact on recognition
and measurement of revenue and related items in the financial
statements of the Company as the Company is yet to identify the
business opportunities in the areas of IT Solutions and services.
Revenue is recognized on satisfaction of performance obligation
upon transfer of control of promised products or services to
customers in an amount that reflects the consideration the
Company expects to receive in exchange for those products or
services.
Other income - Interest income
Interest income is recognized on time proportion basis taking
into account the amount outstanding and rate applicable. For all
debt instruments measured at amortised cost, interest income
is recorded using the effective interest rate (EIR) method. EIR
is the rate that exactly discounts the estimated future cash
payments or receipts over the expected life of the financial
instrument or a shorter period, where appropriate, to the gross
carrying amount of the financial asset or to the amortised cost
of a financial liability. When calculating the effective interest rate,
the Company estimates the expected cash flows by considering
all the contractual terms of the financial instrument (for example,
prepayment, extension, call and similar options) but does not
consider the expected credit losses.
j. Employee benefits
Defined contribution plan
The Company's contributions to defined contribution plans are
recognised as an expense as and when the services are received
from the employees entitling them to the contributions.
Defined benefit plan
The liability in respect of defined benefit plans is calculated
using the projected unit credit method with actuarial valuations
being carried out at the end of each annual reporting period.
The Company recognises the net obligation of a defined benefit
plan as a liability in its balance sheet. Gains or losses through
remeasurement of the net defined benefit liability are recognised
in other comprehensive income and are not reclassified to
profit and loss in the subsequent periods. The effect of any
plan amendments are recognised in the statement of profit and
loss.
Short-term employee benefits
Short-term employee benefits comprise of employee costs such
as Salaries, bonus etc. is recognized on an undiscounted and
accrual basis during the period when the employee renders
service of the benefit.
k. Taxes
Tax expense recognized in statement of profit or loss consists
of current and deferred tax except to the extent that it relates to
items recognised in OCI or directly in equity, in which case it is
recognised in OCI or directly in equity respectively.
Current income tax, assets and liabilities are measured at the
amount expected to be paid to or recovered from the taxation
authorities in accordance with the Income Tax Act, 1961 and the
Income Computation and Disclosure Standards (ICDS) enacted
in India by using tax rates and the tax laws that are enacted at
the reporting date. Current tax assets and tax liabilities are offset
where the Company has a legally enforceable right to offset and
intends either to settle on a net basis, or to realise the asset and
settle the liability simultaneously.
Management periodically evaluates positions taken in the
tax returns with respect to situations in which applicable
tax regulations are subject to interpretation and establishes
provisions where appropriate.
Deferred tax is recognised on temporary differences between
the carrying amounts of assets and liabilities in the financial
statements. Deferred tax is measured at the tax rates that are
expected to be applied to the temporary differences when
they reverse, based on the laws that have been enacted or
substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to set off corresponding current tax assets
against current tax liabilities and the deferred tax assets and
deferred tax liabilities relate to income taxes levied by the same
tax authority on the Company.
A deferred tax asset is recognised to the extent that it is probable
that future taxable profits will be available against which the
temporary difference can be utilised. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be
realised. Withholding tax arising out of payment of dividends
to shareholders under the Indian Income tax regulations is not
considered as tax expense for the Company and all such taxes
are recognised in the statement of changes in equity as part of
the associated dividend payment.
As at March 31, 2025 and March 31, 2024, the Company has
deferred tax asset on account of unabsorbed business loss,
unabsorbed tax depreciation and other items, which have not
been recognised on the grounds of prudence. Consequently,
there is no deferred tax asset (net of liabilities) recorded in the
financial statements as at reporting periods presented.
|