WU SUMMARY OF MATERIAL ACCOUNTING POLICIES
The following are the material accounting policies applied
by the Company in preparing its standalone financial
statements:
a) Current versus Non-Current classification
The Company presents assets and liabilities in
the balance sheet based on current/non-current
classification.
An asset is treated as current when it is:
• expected to be realized or intended to be sold or
consumed in the normal operating cycle;
• held primarily for the purpose of trading;
• expected to be realized within twelve months after
the reporting period; or
• cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is treated as current when it is:
• expected to be settled in the normal operating
cycle;
• held primarily for the purpose of trading;
• due to be settled within twelve months after the
reporting period; or
• no unconditional right to defer the settlement of
the liability for at least twelve months after the
reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non¬
current assets and liabilities.
Operating cycle of the Company is the time between
the acquisition of assets for processing and their
realization in cash or cash equivalents. The Company’s
normal operating cycle has been considered to be
twelve months.
b) Foreign currencies
Functional and presentation currency
The Company’s standalone financial statements are
presented in Indian Rupees, which is also the functional
currency of the Company and the currency of the
primary economic environment in which the Company
operates.
Transaction and balances
On initial recognition, all foreign currency transactions
are recorded by applying to the foreign currency
amount the exchange rate between the functional
currency and the foreign currency at the date of the
transaction. Gains/Losses arising out of fluctuation
in foreign exchange rate between the transaction date
and settlement date are recognized in the Statement of
Profit and Loss.
All monetary assets and liabilities in foreign currencies
are restated at the year end at the exchange rate
prevailing at the year end and the exchange differences
are recognized in the Statement of Profit and Loss.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial
transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the
exchange rates at the date when the fair value is
determined. 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 ('OCI’) or
statement of profit and loss are also recognized in OCI
or statement of profit and loss, respectively.
c) Fair value measurement
The Company measures financial instruments such
as investments in equity shares (other than those in
subsidiaries) at fair value at each balance sheet date.
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 fair value measurement is
based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:
• in the principal market for the asset or liability, or
• in the absence of a principal market, in the most
advantageous market for the asset or liability.
The principal or the most advantageous market must
be accessible by the Company.
The fair value of an asset or a liability is measured
using the assumptions that market participants would
use when pricing the asset or liability, assuming that
market participants act in their economic best interest.
A fair value measurement of a non-financial asset
takes into account a market participant’s ability to
generate economic benefits by using the asset in its
highest and best use or by selling it to another market
participant that would use the asset in its highest and
best use.
The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured
or disclosed in the standalone financial statements are
categorized within the fair value hierarchy, described
as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active
markets for identical assets or liabilities;
Level 2 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement
is directly or indirectly observable;
Level 3 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement
is unobservable.
For assets and liabilities that are recognized in the
standalone financial statements on a recurring
basis, the Company determines whether transfers
have occurred between levels in the hierarchy by re¬
assessing 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.
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.
This note summarizes accounting policy for fair value.
Other fair value related disclosures are given in the
relevant notes.
• Significant accounting judgements, estimates
and assumptions (Refer note 4)
• Quantitative disclosures of fair value measurement
hierarchy (Refer note 44 )
• Financial instruments risk management
objectives and policies (Refer note 45)
d) Revenue from Contract with Customer
Revenue is recognized upon transfer of control of
promised products or services are transferred to
customers in an amount that reflects the consideration
expected to be received in exchange for those products
or services.
Sale of security software products:
Revenue from the sale of security software products is
recognized when control of the goods are transferred
to the customer at an amount that reflects the
consideration to which the Company expects to be
entitled in exchange for those goods. Revenue from
the sale of products is measured at the fair value of
the consideration received or receivable, net of returns
and allowances, trade discounts, volume rebates, value
added tax, goods and services tax (GST) and amounts
collected on behalf of third parties.
In arrangements for sale of security software products,
the Company has applied the guidance as per Ind AS
115, Revenue, by applying the revenue recognition
criteria for each separately identifiable component of a
single transaction. The arrangements generally meet
the criteria for considering sale of security software and
related services as separate performance obligation.
Further, the Company measures the revenue in respect
of each separable component of a transaction at its
fair value, in accordance with principles given in Ind
AS 115. The Company allocates and defers revenue
for the undelivered component based on the fair value
of the undelivered components. In contracts, where
the arrangement is determined to constitute a single
performance obligation, revenue is recognised over
the license period, reflecting the continuous transfer of
control to the customer.
Revenue from software services:
The Company has applied the principle under Ind AS
115 to identify each performance obligation on licenses
sold to customer. Revenue for all identified performance
obligation pertaining to services is recognized over the
period of time, when such performance obligation is
rendered. In absence of standalone selling price of the
performance obligation, the contract price is allocated
to each performance obligation of the contract on the
basis of cost-plus margin approach.
Contract balances:
Contract assets
A contract asset is the right to consideration in
exchange for goods or services transferred to the
customer. If the Company transfers goods or services
to a customer before the customer pays consideration
or before payment is due, a contract asset is recognized
for the earned consideration that is conditional.
Trade receivables
A trade receivable represents the Company’s right to
an amount of consideration that is unconditional (i.e.,
only the passage of time is required before payment of
the consideration is due). Refer to accounting policies
of financial assets in section (q) financial instruments
- initial recognition and subsequent measurement.
Contract liabilities
A contract liability is the obligation to transfer goods
or services to a customer for which the Company has
received consideration (or an amount of consideration
is due) from the customer. If a customer pays
consideration before the Company transfers goods
or services to the customer, a contract liability is
recognized when the payment is made or the payment
is due (whichever is earlier). Contract liabilities are
recognized as revenue when the Company performs
under the contract.
e) Other income
Interest
Interest income is accrued on a time basis, by reference
to the principal outstanding and at the effective interest
rate ('EIR’) applicable. The EIR is the rate that exactly
discounts the estimated future cash receipts over the
expected life of the financial instrument or a shorter
period, where appropriate, to the net carrying amount
of the financial asset. When calculating the EIR, the
Company estimates the expected cash flows by
considering all the contractual terms of the financial
instrument but does not consider the expected credit
losses. Interest income is included under the head
"Other income" in the statement of profit and loss.
Rental income from investment property
Rental income is accounted on a straight-line basis
over the terms of the relevant lease.
f) Taxes
The tax expense/ (benefit) comprise of current tax &
deferred tax.
Current income tax
Current income tax assets and liabilities are measured
at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax laws
used to compute the amount are those that are enacted
or substantively enacted at the reporting date.
Current income tax relating to items recognized outside
profit or loss is recognized outside profit or loss (either
in OCI or in equity). Current tax items are recognized in
correlation to the underlying transaction either in OCI or
directly in equity. Management periodically evaluates
positions taken in the tax returns with respect to
situations in which applicable tax regulations are
subject to interpretation and established provisions
where appropriate.
Deferred tax
Deferred tax is provided using the balance sheet
approach on temporary differences between the
tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes at the
reporting date.
Deferred tax liabilities are recognized for all taxable
temporary differences, except:
• When the deferred tax liability arises from the
initial recognition of goodwill or an asset or
liability in a transaction that is not a business
combination and, at the time of the transaction,
affects neither the accounting profit nor taxable
profit or loss;
• In respect of taxable temporary differences
associated with investments in subsidiaries,
when the timing of the reversal of the temporary
differences can be controlled and it is probable
that the temporary differences will not reverse in
the foreseeable future.
Deferred tax assets are recognized for all deductible
temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax
assets are recognized to the extent that it is probable
that taxable profit will be available against which
the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses
can be utilized except:
• When the deferred tax asset relating to the
deductible temporary difference arises from
the initial recognition of an asset or liability in a
transaction that is not a business combination
and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss;
• In respect of deductible temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures, deferred
tax assets are recognized only to the extent that
it is probable that the temporary differences will
reverse in the foreseeable future and taxable profit
will be available against which the temporary
differences can be utilized.
The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred tax asset
to be utilized. Unrecognized deferred tax assets are re¬
assessed at each reporting date and are recognized
to the extent that it has become probable that future
taxable profits will allow the deferred tax asset to be
recovered.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the year when
the asset is realized or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date. Deferred
tax relating to items recognized outside profit or loss
is recognized outside profit or loss (either in other
comprehensive income or in equity). Deferred tax
items are recognized in correlation to the underlying
transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are
offset if a legally enforceable right exists to set off
current tax assets against current tax liabilities and
the deferred taxes relate to the same taxable Company
and the same taxation authority.
g) Property, plant and equipment
Property, plant and equipment and capital work in
progress are stated at cost, net of accumulated
depreciation and impairment losses, if any.
The cost comprises of the purchase price and directly
attributable costs of bringing the asset to its working
condition for the intended use. Any trade discounts and
rebates are deducted in arriving at the purchase price.
Each part of item of property, plant and equipment with
a cost that is significant in relation to the total cost of
the item is depreciated separately. This applies mainly
to components for machinery.
Advances paid towards the acquisition of property,
plant and equipment outstanding at each balance
sheet date is classified as 'Capital advances’ under
other non-current assets and the cost of assets not put
to use before such date are disclosed under 'Capital
work-in-progress’.
Depreciation methods, estimated useful lives
Depreciation on property, plant and equipment is
calculated on a written down value (WDV) basis using
the rates arrived at based on the useful lives estimated
by the management. The Company has used the
following rates to provide depreciation on its property,
plant and equipment.
Leasehold premises are amortized on a straight-line
basis over the period of lease.
An item of property, plant and equipment is
derecognized 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 statement of profit and loss
when the asset is derecognized.
The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.
h) 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 investment property.
Investment property is measured initially at its cost,
including related transaction costs. 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.
The Company depreciates building component of
investment property over 60 years from the date of
original purchase.
The Company, based on technical assessment made
by technical expert and management estimate,
depreciates the building over estimated useful lives
which are different from the useful life prescribed
in Schedule II to the Companies Act, 2013. The
management believes that these estimated useful lives
are realistic and reflect fair approximation of the period
over which the assets are likely to be used.
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.
i) Intangible assets
Intangible assets acquired separately are measured on
initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated
amortization and accumulated impairment losses, if
any.
Intangible assets with finite useful lives i.e. software’s
are amortized on a straight-line basis over the period of
expected future benefits i.e. over their estimated useful
lives of three years. Intangible assets are assessed for
impairment whenever there is an indication that the
intangible asset may be impaired.
The amortization period and the amortization method
for an intangible asset with a finite useful life are
reviewed at least at the end of each reporting period.
Changes in the expected useful life or the expected
pattern of consumption of future economic benefits
embodied in the asset is accounted for by changing
the amortization period or method, as appropriate,
and are treated as changes in accounting estimates.
The amortization expense on intangible assets with
finite lives is recognized in the statement of profit and
loss.
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 recognized in the statement of profit
and loss when the asset is derecognized.
Research and development costs
Research costs are expensed as incurred. Development
expenditure is expensed except for project where it is
recognized as an intangible asset when the recognition
criteria as per Ind AS 38 are met.
j) Leases:
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.
Company as a lessee
All leases are accounted for by recognising a right-of-
use asset and a lease liability except for:
• Leases of low value assets; and
• Leases with a duration of 12 months or less
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease
term, with the discount rate determined by reference to
the rate inherent in the lease unless this is not readily
determinable, in which case the entities incremental
borrowing rate on commencement of the lease is
used. Variable lease payments are only included in the
measurement of the lease liability if they depend on an
index or rate. In such cases, the initial measurement
of the lease liability assumes the variable element will
remain unchanged throughout the lease term. Other
variable lease payments are expensed in the period to
which they relate.
On initial recognition, the carrying value of the lease
liability also includes:
• amounts expected to be payable under any
residual value guarantee;
• the exercise price of any purchase option granted
in favour of the Company if it is reasonably certain
to assess option;
• any penalties payable for terminating the lease, if
the term of the lease has been estimated on the
basis of termination option being exercised.
Right-of-use assets are initially measured at the
amount of the lease liability, reduced for any lease
incentives received, and increased for:
• lease payments made at or before commencement
of the lease;
• initial direct costs incurred; and
• the amount of any provision recognized where the
Company is contractually required to dismantle,
remove or restore the leased asset
Subsequent to initial measurement lease liabilities
increase as a result of interest charged at a constant
rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are
amortized on a straight-line basis over the remaining
term of the lease or over the remaining economic life of
the asset if, rarely, this is judged to be shorter than the
lease term.
When the Company revises its estimate of the term
of any lease, it adjusts the carrying amount of the
lease liability to reflect the payments to make over
the revised term, which are discounted at the same
discount rate that applied on lease commencement.
The carrying value of lease liabilities is similarly revised
when the variable element of future lease payments
dependent on a rate or index is revised. In both cases,
an equivalent adjustment is made to the carrying value
of the right-of-use asset, with the revised carrying
amount being amortized over the remaining (revised)
lease term.
Right-of-use assets are depreciated on a straight-line
basis over the lease term, i.e. 30 years.
Company as a lessor
Leases in which the Company does not transfer
substantially all the risks and rewards incidental
to ownership of an asset is classified as operating
leases. Rental income arising is accounted for on
a straight-line basis over the lease terms. Initial
direct costs incurred in negotiating and arranging an
operating lease are added to the carrying amount of
the leased asset and recognized over the lease term
on the same basis as rental income. Contingent rents
are recognized as revenue in the period in which they
are earned.
k) Inventories
Inventories are valued at the lower of cost and net
realizable value.
Cost of inventories have been computed to include all
cost of purchases, cost of conversion and other costs
incurred in bringing the inventories to their present
location and condition.
• Finished goods are valued at lower of cost and net
realizable value. Cost includes direct material and
labor and a proportion of manufacturing overhead
based on normal operating capacity. Cost is
determined on a weighted average basis.
Net realizable value is the estimated selling price in the
ordinary course of business, less estimated costs of
completion and estimated costs necessary to make
the sale.
The comparison of cost and net realizable value is
made on item by item basis.
l) Impairment of non-financial assets
The Company assesses at each reporting date whether
there is an indication that an asset may be impaired.
If any indication exists, or when annual impairment
testing for an asset is required, the Company estimates
the asset’s recoverable amount. An asset’s recoverable
amount is the higher of an asset’s or cash-generating
unit’s (CGU) fair value less costs to sell and its value
in use. It is determined for an individual asset, unless
the asset does not generate cash inflows that are
largely independent of those from other assets of
the Company. When the carrying amount of an asset
or CGU exceeds its recoverable amount, the asset
is considered impaired and is written down to its
recoverable amount.
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. In determining fair value less
costs to sell, recent market transactions are taken
into account, if available. If no such transactions can
be identified, an appropriate valuation model is used.
These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded
subsidiaries or other available fair value indicators.
The Company bases its impairment calculation on
detailed budgets and forecasts which are prepared
separately for each of the Company’s CGU to which
the individual assets are allocated. These budgets and
forecast calculations are generally covering a period of
five years. For longer periods, a long-term growth rate
is calculated and applied to project future cash flows
after the fifth year.
Impairment losses, including impairment on
inventories, are recognized in the statement of profit
and loss in those expense categories consistent with
the function of the impaired asset.
For assets excluding goodwill, an assessment is
made at each reporting date as to whether there is
any indication that previously recognized impairment
losses may no longer exist or may have decreased.
If such indication exists, the Company estimates the
asset’s or CGU’s recoverable amount. A previously
recognized impairment loss is reversed only if there
has been a change in the assumptions used to
determine the asset’s recoverable amount since the
last impairment loss was recognized. The reversal is
limited so that the carrying amount of the asset does
not exceed its recoverable amount, nor exceed the
carrying amount that would have been determined,
net of depreciation, had no impairment loss been
recognized for the asset in prior years. Such reversal is
recognized in the statement of profit and loss.
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