2. Significant accounting policies
2.1 Statement of compliance
These standalone financial statements of the Company have been
prepared in accordance with Indian Accounting Standards (Ind
AS) notified under the Companies (Indian Accounting Standards)
Rules, 2015 (as amended) read with Section 133 of the Companies
Act, 2013 ("the Act") and presentation requirements of Division II
of Schedule III of the Act and other relevant provisions of the Act
as applicable.
The financial statements have been prepared on the assumption
that the Company is a going concern and will continue its
operations for the foreseeable future.
2.2 Basis of preparation and presentation
The Standalone financial statements have been prepared on the
historical cost basis except for certain financial instruments that
are measured at fair values at the end of each reporting period, as
explained in the accounting policies below.
Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.
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. Fair value for measurement and / or disclosure purposes in
these financial statements is determined on such a basis, except
for share-based payment transactions that are within the scope
of Ind AS 102, leasing transactions that are within the scope of
Ind AS 116, and measurements that have some similarities to fair
value but are not fair value, such as value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value
measurements are categorised 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
measurements 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 assets
or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or
liability.
All assets and liabilities have been classified as current or non¬
current as per the Company's normal operating cycle and other
criteria as set out in the Division II of Schedule III to the Companies
Act, 2013. Based on the nature of products and services and
the time between acquisition of assets for processing and
their realisation in cash and cash equivalents, the Company has
ascertained its operating cycle as twelve (12) months for the
purpose of current or non-current classification of assets and
liabilities.
The Company's standalone financial statements are presented in
Indian Rupees ('), which is its functional currency and all values are
rounded to the nearest crore.
2.3 Use of Estimates:
The preparation of standalone financial statements requires the
Management to make estimates and assumptions considered in
the reported amounts of assets and liabilities (including contingent
liabilities) and the reported income and expenses during the year.
The Management believes that the estimates used in preparation
of the financial statements are prudent and reasonable. Future
results could differ due to these estimates and the differences
between the actual results and the estimates are recognised in
the periods in which the results are known/materialise.
2.4 Revenue recognition
Revenue is measured at the transaction price received or
receivable for the sale of services. Revenue is shown net of
applicable taxes.
The Company derives revenues from fixed price contracts,
property rental income and management service. The revenue
recognised on these contracts is recognised on completion of
delivery of the services.
Unbilled revenue is included within 'other financial assets' and
billing in advance is included as deferred revenue in 'Other current
liabilities'.
Dividend and interest income
Dividend income from investments is recognised when the
shareholder's right to receive payment has been established
(provided that it is probable that the economic benefits will flow to
the Company and the amount of income can be measured reliably).
Interest income from a financial asset is recognised when it is
probable that the economic benefits will flow to the Company and
the amount of income can be measured reliably. Interest income is
accrued on a time basis by reference to the principal outstanding
and the effective interest rate applicable, which is the rate that
exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset's net carrying
amount on initial recognition.
2.5 Leasing
2.5.1 The Company as lessor
Leases under which the Company is a lessor are classified as
finance or operating leases. Lease contracts where all the risks
and rewards are substantially transferred to the lessee, the lease
contracts are classified as finance leases. All other leases are
classified as operating leases.
For leases under which the Company is an intermediate lessor, the
Company accounts for the head-lease and the sub-lease as two
separate contracts. The sub-lease is further classified either as
a finance lease or an operating lease by reference to the right-to-
use asset arising from the head-lease.
In respect of assets provided on finance leases, amounts due
from lessees are recorded as receivables at the amount of the
Company's net investment in the leases. Finance lease income is
allocated to accounting periods to reflect a constant periodic rate
of return on the Company's net investment outstanding in respect
of the leases. In respect of assets given on operating lease, lease
rentals are accounted in the Statement of Profit and Loss, on
accrual basis in accordance with the respective lease agreements.
2.5.2 The Company as lessee
The Company enters into an arrangement for lease of buildings,
plant and machinery including computer software. Such
arrangements are generally for a fixed period but may have
extension or termination options. The Company assesses, whether
the contract is, or contains, a lease, at its inception. A contract is,
or contains, a lease if the contract conveys the right to -
a) Control the use of an identified asset,
b) Obtain substantially all the economic benefits from use of
the identified asset, and
c) Direct the use of the identified asset
The Company determines the lease term as the non-cancellable
period of a lease, together with periods covered by an option to
extend the lease, where the Company is reasonably certain to
exercise that option.
The Company at the commencement of the lease contract
recognizes a Right-to-Use asset at cost and corresponding lease
liability, except for leases with term of less than twelve months
(short term leases) and low-value assets. For these short term and
low value leases, the Company recognizes the lease payments as
an operating expense on a straight-line basis over the lease term.
The cost of the right-to-use asset comprises the amount of the
initial measurement of the lease liability, any lease payments
made at or before the inception date of the lease, plus any initial
direct costs, less any lease incentives received.
Subsequently, the right-to-use assets are measured at cost less
any accumulated depreciation and accumulated impairment
losses, if any. The right-to-use assets are depreciated using the
straight-line method from the commencement date over the
shorter of lease term or useful life of right-to-use asset. The
estimated useful life of right-to-use assets are determined on the
same basis as those of property, plant and equipment.
The Company applies Ind AS 36 to determine whether a right-to-
use asset is impaired and accounts for any identified impairment
loss.
For lease liabilities at the commencement of the lease, the
Company measures the lease liability at the present value of
the lease payments that are not paid at that date. The lease
payments are discounted using the interest rate implicit in the
lease, if that rate can be readily determined, if that rate is not
readily determined, the lease payments are discounted using
the incremental borrowing rate that the Company would have to
pay to borrow funds, including the consideration of factors such
as the nature of the asset and location, collateral, market terms
and conditions, as applicable in a similar economic environment.
After the commencement date, the amount of lease liabilities is
increased to reflect the accretion of interest and reduced for the
lease payments made.
The Company recognizes the amount of the re-measurement of
lease liability as an adjustment to the right-to-use assets. Where
the carrying amount of the right-to-use asset is reduced to zero
and there is a further reduction in the measurement of the lease
liability, the Company recognizes any remaining amount of the re¬
measurement in statement of profit and loss.
Lease liability payments are classified as cash used in financing
activities in the cash flow statement.
2.6 Foreign currencies
In preparing the standalone financial statements, transactions in
currencies other than the Company's functional currency (foreign
currencies) are recognised at the rates of exchange prevailing
at the dates of the transactions. At the end of each reporting
period, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at that date. Non-monetary
items carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing at the date
when the fair value was determined. Non-monetary items that are
measured in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences on monetary items are recognised in profit
or loss in the period in which they arise except for:
• Exchange differences on foreign currency borrowings
relating to assets under construction for further
productive use, which are included in the cost of those
assets when they are regarded as an adjustment to
interest costs on those foreign currency borrowings;
• Exchange differences on transactions entered into in
order to hedge certain foreign currency risks.
2.7 Employee benefits
2.7.1 Retirement benefit costs and termination benefits
Payments to defined contribution retirement benefit plans are
recognised as an expense when employees have rendered service
entitling them to the contributions.
For defined benefit retirement plans, the cost of providing
benefits is determined using the projected unit credit method,
with actuarial valuation being carried out at the end of each annual
reporting period. Re-measurement, comprising actuarial gains
and losses, is reflected immediately in the balance sheet with a
charge or credit recognised in other comprehensive income in
the period in which they occur. Re-measurement recognised in
other comprehensive income is reflected immediately in retained
earnings and is not reclassified to profit or loss. Past service cost
is recognised in profit or loss in the period of a plan amendment.
Net interest is calculated by applying the discount rate at the
beginning of the period to the net defined benefit liability or asset.
Defined benefit costs are categorised as follows:
• Service cost (including current service cost, past service
cost, as well as gains and losses on curtailments and
settlements);
• Net interest expense or income; and
• Re-measurement
The Company presents the first two components of defined
benefit costs in profit or loss in the line item 'Employee benefits
expense. Curtailment gains and losses are accounted for as past
service costs.
A liability for termination benefit is recognised at the earlier
of when the Company can no longer withdraw the offer of the
termination benefit and when the Company recognises any related
restructuring costs.
2.7.2 Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in
respect of wages and salaries, annual leave and sick leave in the
period the related service is rendered at the undiscounted amount
of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits
are measured at the undiscounted amount of the benefits
expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long-term employee
benefits are measured at the present value of the estimated
future cash outflows expected to be made by the Company in
respect of services provided by employees up to the reporting
date.
2.8 Share-based payment arrangements
Equity-settled share-based payments to employees and others
providing similar services are measured at the fair value of the
equity instruments at the grant date.
The fair value determined at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis over
the vesting period, based on the Company's estimate of equity
instruments that will eventually vest, with a corresponding
increase in equity. At the end of each reporting period, the Company
revises its estimate of the number of equity instruments expected
to vest. The impact of the revision of the original estimates, if any,
is recognised in profit or loss such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment to
the share option outstanding reserve.
2.9 Taxation
Income tax expense represents the sum of current tax and
deferred tax.
2.9.1 Current tax
The tax currently payable is based on taxable profit for the year.
Taxable profit differs from 'profit before tax' as reported in the
Statement of Profit and Loss because of items of income or
expense that are taxable or deductible in other years and items
that are never taxable or deductible. The Company's current tax is
calculated using tax rates that have been enacted or substantively
enacted by the end of the reporting period.
2.9.2 Deferred tax
Deferred tax is recognised on temporary differences between
the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences. Deferred tax
assets are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable profits
will be available against which those deductible temporary
differences can be utilised. Such deferred tax assets and liabilities
are not recognised if the temporary differences arise from the
initial recognition (other than in a business combination) of assets
and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit. In addition, deferred tax liabilities
are not recognised if the temporary differences arises from the
initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at the end
of each reporting period and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to
allow all or part of the asset to be recovered.
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 realised, based on the tax rates (and tax laws)
that have been enacted or substantively enacted by the end of the
reporting period.
The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in which
the Company expects at the end of the reporting period, to recover
or settle the carrying amount of its assets and liabilities.
2.9.3 Current and deferred tax for the year
Current and deferred tax are recognised in profit or 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 equity respectively. Where current tax
or deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the
business combination.
2.10 Property, plant and equipment (PPE)
PPE are stated at cost of acquisition or construction. They are
stated at historical cost less accumulated depreciation and
impairment loss, if any. The cost comprises the purchase price and
any directly attributable cost of bringing the asset to its working
condition for its intended use. Any trade discounts and rebates are
deducted in arriving at the purchase price.
Subsequent expenditure related to an item of PPE is added to its
book value only if it increases the future benefits from the existing
asset beyond its previously assessed standards of performance.
All other expenses on existing PPE, including day-to-day repair
and maintenance expenditure and cost of replacing parts, are
charged to the Statement of Profit and Loss for the period during
which such expenses are incurred.
Depreciation is recognised so as to write off the cost of assets
(other than freehold land and properties under construction) less
their residual values using the straight-line method over their
useful lives estimated by Management, which are similar to useful
life prescribed under Schedule II of the Companies Act, 2013. The
estimated useful lives, residual values and depreciation method
are reviewed at the end of each reporting period, with the effect of
any changes in estimate accounted for on a prospective basis.
Cost of Leasehold improvements and Leasehold building is
amortised over a period of lease.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to
arise from the continued use of the asset. Any gain or loss arising
on the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised
in profit or loss.
2.11 Investment properties
Property which is held for long-term rental yields or for capital
appreciation or both, and that is not occupied by the Company,
is classified as an investment property. Investment property is
measured initially at its cost, including related transaction costs.
Though the Company measures investment property using
cost-based measurement, the fair value of investment property
is disclosed in the notes. Fair values are determined based
on an annual evaluation performed by an accredited external
independent valuer applying a valuation model recommended by
the International Valuation Standards Committee.
Subsequent expenditure is capitalized to the asset's carrying
amount only when it is probable that future economic benefits
associated with the expenditure will flow to the Company and the
cost of the item can be measured reliably. Repairs and maintenance
costs are expensed when incurred.
Depreciation on investment property is provided on a pro rata
basis on a straight line method over the estimated useful lives.
Useful life of assets, as assessed by the Management, corresponds
to those prescribed by Schedule II- Part 'C' of the Companies Act,
2013.
Investment properties are derecognised either when they have
been disposed of or when they are permanently withdrawn
from use and no future economic benefit is expected from their
disposal. The difference between the net disposal proceeds and
the carrying amount of the asset is recognized in Statement of
Profit and Loss in the period of derecognition.
2.12 Intangible assets
2.12.1 Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired
separately are carried at cost less accumulated amortisation and
accumulated impairment losses. Amortisation is recognised on a
straight-line basis over their estimated useful lives. The estimated
useful lives and amortisation method are reviewed at the end of
each reporting period, with the effect of any changes in estimate
being accounted for on a prospective basis. Intangible assets with
indefinite useful lives are acquired separately are carried at cost
less accumulated impairment losses.
2.12.2 Useful lives of intangible assets
Software is amortised on straight line basis over the estimated
useful life of up to six years.
De-recognition of intangible assets
An intangible asset is de-recognised on disposal, or when no
future economic benefits are expected from use or disposal.
Gains or losses arising from de-recognition of an intangible asset,
measured as the difference between the net disposal proceeds
and the carrying amount of the asset, are recognised in profit or
loss when the asset is de-recognised.
2.13 Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the
carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered
an impairment loss. If any such indication exists, the recoverable
amount of asset is estimated in order to determine the extent of
the impairment loss (if any). When it is not possible to estimate
the recoverable amount of an individual asset, the Company
estimates the recoverable amount of the cash-generating unit to
which the asset belongs. When a reasonable and consistent basis
of allocation can be identified, corporate assets are allocated to
individual cash-generating units, or otherwise they are allocated
to the smallest of the cash-generating units for which a reasonable
and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment at least
annually, and whenever there is an indication that the asset may be
impaired.
Recoverable amount is the higher of fair value less costs of
disposal and value in use. 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 for which
the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount
of the asset (or cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised immediately in profit or
loss.
When an impairment loss subsequently reverses, the carrying
amount of the asset (or a cash-generating unit) is increased to the
revised estimate of its recoverable amount, so that the increased
carrying amount does not exceed the carrying amount that would
have been determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A reversal of
an impairment loss is recognised immediately in profit or loss.
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