Note 2: Material accounting policies:
2.1 Statement of compliance:
The financial statements have been prepared in accordance with the Indian Accounting Standards
(referred to as “Ind AS”) prescribed under section 133 of the Companies Act, 2013 read with the
Companies (Indian Accounting Standards) Rules as amended from time to time and other relevant
provisions of the Act and presentation requirements of Division II of Schedule III of Companies Act,
2013.
2.2 Basis of preparation of financial statements:
The financial statements have been prepared on historical cost convention with the exception of
Certain assets and liabilities that are required to be carried at fair value by Ind AS.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date.
The Financial Statements have been prepared on historical cost convention on accrual basis of
accounting except for certain financial instruments that are measured at fair value. GAAPs of
Indian Accounting Standards as specified in Section 133 of the Act read together with Rule 4 of
Companies (Indian Accounting Standard) Amendment Rules, 2016 to the extent applicable,
pronouncements of regulatory bodies applicable to the Company and other provisions of the Act.
Accounting Policies have been consistently applied except where a newly issued Indian Accounting
Standards is initially adopted or revision to existing Indian Accounting Standards requires a change
in the accounting policy hitherto in use. Management evaluates all recently issued or revised Indian
Accounting Standards on an on-going basis.
The material accounting policy information related to preparation of the standalone financial
statements have been discussed in the respective notes.
2.3 Basis of measurement:
All assets and liabilities are classified into current and non-current based on the operating cycle of
twelve months or based on the criteria of realisation/ settlement within twelve months period from
the reporting balance sheet date.
Assets: An asset is classified as current when it satisfies any of the following criteria:
a. It is expected to be realized in, or is intended for sale or consumption in, the Company's
normal operating cycle;
b. It is held primarily for the purpose of being traded;
c. It is expected to be realized within twelve months after the reporting date; or
d. It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a
liability for at least twelve months after the reporting date.
Liabilities: A liability is classified as current when it satisfies any of the following criteria:
a. It is expected to be settled in the Company's normal operating cycle;
b. It is held primarily for the purpose of being traded;
c. It is due to be settled within twelve months after the reporting date; or
d. The Company does not have an unconditional right to defer settlement of the liability for at least
twelve 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 assets/ liabilities include the current portion of non-current assets/ liabilities respectively.
All other assets/ liabilities are classified as non-current. Deferred tax assets and liabilities are
always disclosed as non-current.
2.4 Operating cycle:
Operating cycle is the time between the acquisition of assets for processing and their in cash and
cash equivalents. The Company has ascertained its operating cycle as twelve months for the
purpose of current/ non-current classification of assets and liabilities.
2.5 Accounting estimates:
The preparation of the financial statements, in conformity with the recognition and measurement
principles of Ind AS, requires the management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of
financial statements and the results of operation during the reported period. Although these estimates
are based upon management's best knowledge of current events and actions, actual results could
differ from these estimates which are recognized in the period in which they are determined.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to the
accounting estimates are recognized in the period in which the estimates is revised if the revision
effects only that period or in the period of the revision and future periods in the revision effects
both current and future periods.
a. Depreciation and amortization: Depreciation and amortization is based on Schedule II to the
Companies Act, 2013, which describes useful lives of property, plant and equipment and
intangible assets.
b. Provisions and contingencies: Provisions and contingencies are based on the Management's
best estimate of the liabilities based on the facts known at the balance sheet date.
c. Fair valuation: Fair value is the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date, regardless
of whether that price is directly observable or estimated using another valuation technique. In
estimating the fair value of an asset or a liability, the Company takes into account the characteristics
of the asset or liability if market participants would take those characteristics into account when
pricing the asset or liability at the measurement date.
In addition, for financial reporting purposes, fair value measurements are categorized into Level
1,2 or 3 based on the degree to which the inputs to the fair value measurements are observable
and the significance of the inputs to the fair value measurement in its entirety, which are
described as follows: Level 1: Inputs are quoted prices (unadjusted) in active markets for
identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs
are inputs, other than quoted prices included within Level 1, that are observable for the asset
or liability, either directly or indirectly; and Level 3: Inputs are unobservable inputs for the asset
or liability. For assets and liabilities that are recognized in the Financial Statements on a recurring
basis, the Company determines whether transfers have occurred between levels in the hierarchy
by reassessing categorization (based on the lowest level input that is significant to the fair
value measurement as a whole) at the end of each reporting period.
At each reporting date, the Company analyses the movements in the values of assets and
liabilities which are required to be re-measured or reassessed in line with the Company's
Accounting Policies. For this analysis, the Company verifies the major inputs applied in the latest
valuation by agreeing the information in the valuation computation to contracts and other relevant
documents. For the purpose of fair value disclosures, the Company has determined classes of
assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability
and the level of the fair value hierarchy as explained above.
2.6 Critical accounting judgements and key source of estimation uncertainty operating cycle:
In the application of the Company's accounting policies, the management of the Company is
required to make judgments, estimates and assumptions about the carrying amounts of the assets
and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to the accounting estimates are recognized in the
period in which the estimates is revised if the revision effects only that period or in the period of
the revision and future periods if the revision effects both current and future periods.The following
are the areas of estimation of uncertainty and critical judgements that the management has made
in the process of applying the Company's accounting policies and that have the most significant
effects on the amounts recognized in the financial statements.
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