2 Material accounting policies and critical
accounting estimate and judgments
2.1 Basis of preparation, measurement and significant
accounting policies
The material accounting policies applied in the preparation
of these financial statements are set out below. These
policies have been consistently applied to all the years
presented, unless otherwise stated.
(a) Basis of preparation
Compliance with Ind AS
The 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 and relevant provisions of the Companies
Act, 2013 (“the Act”).
Historical cost convention
The financial statements have been prepared
under the historical cost convention, as modified
by the following:
• Certain financial assets and financial
liabilities at fair value;
• Assets held for sale - measured at fair value
less cost to sell;
• Defined benefit plans - plan assets that are
measured at fair value;
• Equity instruments in subsidiaries at fair value.
• Equity settled share based payment at fair value.
Fair value measurement
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 on the
measurement date. The Company uses valuation
techniques that are appropriate in the circumstances
for which sufficient data is 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 financial statements are
categorised 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
Current vis-a-vis non-current classification
The assets and liabilities reported in the balance
sheet are classified on a “current/non-current basis”,
with separate reporting of assets held for sale and
liabilities. Current assets, which include cash and
cash equivalents, are assets that are intended to
be realized, sold or consumed during the normal
operating cycle of the Company or in the 12 months
following the balance sheet date; current liabilities are
liabilities that are expected to be settled during the
normal operating cycle of the Company or within the
12 months following the close of the financial year.
Offsetting financial instruments
Financial assets and liabilities are offset and the net
amount is reported in the balance sheet where there
is a legally enforceable right to offset the recognised
amounts and there is an intention to settle on a
net basis or realise the asset and settle the liability
simultaneously. The legally enforceable right must
not be contingent on future events and must be
enforceable in the normal course of business and in
the event of default, insolvency or bankruptcy of the
Company or the counterparty.
(b) Recent accounting pronouncements:
Ministry of Corporate Affairs (“MCA”) notifies new
standards or amendments to the existing standards
under the Companies (Indian Accounting Standards)
Rules from time to time. For the year ended March 31,
2026, MCA has notified amendments to Ind AS 21 -
The Effects of Changes in Foreign Exchange Rates,
clarifying the accounting treatment when a currency
is not exchangeable; Ind AS 1 - Presentation of
Financial Statements, revising the requirements
for classification of liabilities as current or non¬
current, including liabilities with covenants; Ind AS
7 - Statement of Cash Flows, introducing additional
disclosure requirements for supplier finance
arrangements; Ind AS 107 - Financial Instruments:
Disclosures, requiring enhanced disclosures on
supplier finance arrangements and related liquidity
risks; and Ind AS 12 - Income Taxes, introducing
guidance and disclosure requirements relating to
the OECD Pillar Two global minimum tax rules w.e.f.
April 1, 2025. The Company has reviewed the new
pronouncements and based on its evaluation has
determined that it does not have any significant
impact in its financial statements.
(c) Property, plant and equipment
The Company has changed its accounting policy,
w.e.f. January 01, 2025, in respect of freehold
land from cost model to revaluation model. Fair
value of freehold land to be ascertained at regular
intervals. A revaluation surplus will be recorded in
other comprehensive income and credited to the
revaluation reserve in equity. However, to the extent
that it reverses a revaluation deficit of the same asset
previously recognised in the Statement of Profit and
Loss, the increase is recognised in the Statement of
Profit and Loss. A revaluation deficit is recognised in
the statement of profit and loss, except to the extent
that it offsets an existing surplus on the same asset
recognised in the asset revaluation reserve. All other
items of property, plant and equipment are stated at
cost which includes capitalised borrowing cost, less
accumulated depreciation and impairment loss, if any.
Cost includes expenditure that is directly attributable
to the acquisition of the items. 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. The carrying
amount of any component accounted for as a separate
asset is derecognised when replaced. All other
repairs and maintenance are charged to statement
of profit and loss during the reporting period in which
they are incurred.
Expenditure incurred on assets which are not ready
for their intended use comprising direct cost, related
incidental expenses and attributable borrowing cost
are disclosed under Capital Work-in-Progress.
Depreciation methods, estimated useful life and
residual value
Depreciation is provided to the extent of depreciable
amount on Straight Line Method (SLM) based on
useful life of the following class of assets as prescribed
in Part C of Schedule II to the Companies Act, 2013
except in case of motor vehicles where the estimated
useful life has been considered as five years based
on a technical evaluation by the management.
Estimated useful life, residual values and depreciation
methods are reviewed annually, taking into account
commercial and technological obsolescence as well
as normal wear and tear and adjusted prospectively,
if appropriate.
(d) Lease
The Company is the lessee
The Company lease assets primarily consists of office
premises which are of short term lease with the term
of twelve months or less and low value leases. For
these short term and low value leases, the Company
recognizes the lease payments as an expense in the
Statement of Profit and Loss on a straight line basis
over the term of lease.
(e) Impairment of non-financial assets
Assets which are subject to depreciation or
amortisation are tested for impairment whenever
events or changes in circumstances indicate that
the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an
asset’s fair value less costs of disposal and value
in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which
there are separately identifiable cash inflows which
are largely independent of the cash inflows from other
assets or groups of assets (cash-generating units).
Non-financial assets that suffered an impairment are
reviewed for possible reversal of the impairment at
the end of each reporting period.
(f) Trade Receivable
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 consideration is due and the amount is billable.
(g) Financial instruments
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability
or equity instruments of another entity.
Investments and other financial assets
(i) Classification
The Company classifies its financial assets in
the following measurement categories:
• those to be measured subsequently at fair
value (either through Other Comprehensive
Income or through profit or loss) and
• those measured at amortised cost.
The classification depends on the entity’s
business model for managing the financial assets
and the contractual terms of the cash flows.
For assets measured at fair value, gains and
losses will either be recorded in Statement
of Profit and Loss or Other Comprehensive
Income. For investments in debt instruments,
this will depend on the business model in
which the investment is held. For investments
in equity instruments in subsidiaries, the
Company has made an irrevocable election at
the time of initial recognition to account for the
equity investment at fair value through Other
Comprehensive Income.
The Company reclassifies debt investments
when and only when its business model for
managing those assets changes.
(ii) Measurement
At initial recognition, the Company measures
financial assets at its fair value plus, in the case
of a financial assets not at fair value through
profit or loss, transaction costs that are directly
attributable to the acquisition of the financial
assets. Transaction costs of financial assets
carried at fair value through profit or loss are
expensed in Statement of Profit and Loss.
However, trade receivables that do not contain
a significant financing component are measured
at transaction price.
Debt instruments
Subsequent measurement of debt instruments
depends on the Company’s business model
for managing the asset and the cash flow
characteristics of the asset. There are three
measurement categories into which the
Company classifies its debt instruments:
Amortised cost
Assets that are held for collection of contractual
cash flows where those cash flows represent
solely payments of principal and interest are
measured at amortised cost. A gain or loss on a
debt investment that is subsequently measured
at amortised cost is recognised in Statement of
Profit and Loss when the asset is derecognised
or impaired. Interest income from these financial
assets is included in other income using the
effective interest rate method.
Fair value through Other Comprehensive
Income (FVOCI)
Assets that are held for collection of contractual
cash flows and for selling the financial assets,
where the assets’ cash flows represent solely
payments of principal and interest, are measured
at FVOCI. Movements in the carrying amount
are taken through OCI, except for the recognition
of impairment gains or losses, interest revenue
and foreign exchange gains and losses which
are recognised in Statement of Profit and Loss.
When the financial asset is derecognised, the
cumulative gain or loss previously recognised
in OCI is reclassified from equity to profit or
loss and recognised in other gains / (losses).
Interest income from these financial assets
is included in other income using the effective
interest rate method.
Fair Value through Profit or Loss (FVTPL)
Assets that do not meet the criteria for amortised
cost or FVOCI are measured at FVTPL.
A gain or loss on a debt investment that is
subsequently measured at fair value through
profit or loss is recognised in Statement of Profit
and Loss in the period in which it arises. Interest
income from these financial assets is included
in other income.
Equity investments
The Company subsequently measures all
equity investments in subsidiaries at fair value.
The Company’s management has elected to
present fair value gains and losses on equity
investments in Other Comprehensive Income,
there is no subsequent reclassification of fair
value gains and losses to Statement of Profit
and Loss. Dividends from such investments
are recognised in Statement of Profit and Loss
as other income when the Company’s right to
receive payments is established.
Changes in the fair value of financial assets at
FVTPL are recognised in the Statement of Profit
and Loss. Impairment losses (and reversal
of impairment losses) on equity investments
measured at FVOCI are not reported separately
from other changes in fair value.
(iii) Impairment of financial assets
The Company assesses on a forward looking
basis the expected credit losses associated
with its assets carried at amortised cost. The
impairment methodology applied depends on
whether there has been a significant increase
in credit risk.
For trade receivables only, the Company applies
the simplified approach permitted by Ind AS
109 - ‘Financial Instruments’, which requires
expected lifetime losses to be recognised from
initial recognition of the receivables.
(iv) Derecognition of financial assets
A financial asset is derecognised only when:
• the Company has transferred the
rights to receive cash flows from the
financial asset, or
• the rights to receive cash flows from the
financial asset have expired, or
• retains the contractual rights to receive
the cash flows of the financial asset, but
assumes a contractual obligation to pay
the cash flows to one or more recipients.
Where the entity has transferred an asset, the
Company evaluates whether it has transferred
substantially all risks and rewards of ownership
of the financial asset. In such cases, the
financial asset is derecognised. Where the entity
has not transferred substantially all risks and
rewards of ownership of the financial asset, the
financial asset is not derecognised. Where the
entity has neither transferred a financial asset
nor retains substantially all risks and rewards
of ownership of the financial asset, the financial
asset is derecognised if the Company has not
retained control of the financial asset. Where
the Company retains control of the financial
asset, the asset is continued to be recognised
to the extent of continuing involvement in the
financial asset.
(v) Income recognition
Interest income
Interest income from debt instruments is
recognised using the effective interest rate
method. The effective interest rate is the rate
that exactly discounts estimated future cash
receipts through the expected life of the financial
asset to the gross carrying amount of a financial
asset. 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.
Interest income is recognized on time proportion
basis/accrual basis.
Dividend
Dividend income is recognised in Statement of
Profit and Loss only when the right to receive
is established, it is probable that the economic
benefits associated with the dividend will flow to
the Company, and the amount of the dividend
can be measured reliably.
(h) Contributed equity
Equity shares are classified as equity. Incremental
costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of
tax from the proceeds.
(i) Financial liabilities
(i) Classification as debt or equity
Debt and equity instruments issued by the
Company are classified as either financial
liabilities or as equity in accordance with the
substance of the contractual arrangements
and the definition of a financial liability and an
equity instrument.
An equity instrument is any contract that
evidences a residual interest in the assets of an
entity after deducting all of its liabilities.
(ii) Initial recognition and measurement
All financial liabilities are recognised initially
at fair value and, in the case of loans and
borrowings and payables, net of directly
attributable transaction costs.
The Company’s financial liabilities include trade
and other payables, loans and borrowings
including bank overdrafts and financial
guarantee contracts.
(iii) Subsequent measurement
The measurement of financial liabilities depends
on their classification, as described below:
Borrowings
Borrowings are subsequently carried at amortised
cost; any difference between the proceeds (net
of transaction costs) and the redemption value
is recognised in the Statement of Profit and
Loss over the period of the borrowings using the
effective interest rate method.
Fees paid on the establishment of loan facilities
are recognised as transaction costs of the loan
to the extent that it is probable that some or all
of the facility will be drawn. In this case, the fee
is deferred until the drawdown occurs. To the
extent there is no evidence that it is probable
that some or all of the facility will be drawdown,
the fee is capitalised as a pre-payment for
liquidity services and amortised over the period
of the facility to which it relates.
Trade and other payables
These amounts represent obligations to pay for
goods or services that have been acquired in
the ordinary course of business from suppliers.
Those payable are classified as current
liabilities if payment is due within one year
or less otherwise they are presented as non¬
current liabilities. Trade and other payables are
subsequently measured at amortised cost using
the effective interest rate method.
Financial guarantee contracts
Financial guarantee contracts are recognised as
a financial liability at the time when guarantee
is issued. The liability is initially recognised at
fair value and subsequently at the higher of
the amount determined in accordance with Ind
AS 37 and the amount initially recognised less
cumulative amortisation, where appropriate.
Where guarantees in relation to loans of
subsidiaries are provided for no compensation,
the fair values are credited to the Statement of
Profit and Loss over the guarantee period using
the systematic method. Financial guarantee
contract issued by the Company are measured
at fair value at the time of issue of guarantee or
amendment in terms of guarantees.
(iv) Derecognition
Borrowings are removed from the Balance Sheet
when the obligation specified in the contract is
discharged, cancelled or expired. The difference
between the carrying amount of a financial
liability that has been extinguished or transferred
to another party and the consideration paid,
including any non-cash assets transferred or
liabilities assumed, is recognised in Statement
of Profit and Loss as other gains / (losses).
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 derecognition
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 and Loss.
Borrowings are classified as current liabilities
unless the Company has an unconditional right
to defer settlement of the liability for at least 12
months after the reporting period. Where there
is a breach of a material provision of a long-term
loan arrangement on or before the end of the
reporting period with the effect that the liability
becomes payable on demand on the reporting
date, the entity does not classify the liability as
current, if the lender agreed, after the reporting
period and before the approval of the financial
statements for issue, not to demand payment as
a consequence of the breach.
(j) Borrowing costs
General and specific borrowing costs that are
directly attributable to the acquisition, construction
or production of a qualifying asset are capitalised
during the period of time that is required to complete
and prepare the asset for its intended use or sale.
Qualifying assets are assets that necessarily take
a substantial period of time to get ready for their
intended use or sale.
Investment income earned on the temporary
investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the
borrowing costs eligible for capitalisation.
Other borrowing costs are expensed in the period in
which they are incurred.
|