(1) Company Background
Silverline Technologies Limited (the 'Company') is a public limited Company domiciled and incorporated
in India under the Companies Act. The registered office of the Company is located at Unit no 509, 5th
Floor, Centrum IT Park, Wagle Industrial Estate, Thane West, Wagle I.E., Thane, Thane, Maharashtra, India,
400604 IN,
(2) Significant accounting policies and key accounting estimates and judgements
2.1 Basis of preparation of financial statements
These financial statements are the separate financial statements of the Company (also called
standalone financial statements) prepared in accordance with Indian Accounting Standards ('Ind AS')
notified under Section 133 of the Companies Act, 2013, read together with the Companies (Indian
Accounting Standards) Rules, 2015 (as amended).
These financial statements have been prepared and presented under the historical cost convention,
on the accrual basis of accounting except for certain financial assets and financial liabilities that are
measured at fair values at the end of each reporting period, as stated in the accounting policies set out
below. The accounting policies have been applied consistently over all the periods presented in these
financial statements.
The financial statements are presented in Indian rupee and all values are rounded to the nearest
rupee,except when otherwise indicated.
2.2 Current / Non-Current Classification
Any asset or liability is classified as current if it satisfies any of the following conditions:
> the asset/liability is expected to be realized/settled in the Company's normal operating cycle;
> the asset is intended for sale or consumption;
> the asset/liability is held primarily for the purpose of trading;
> the asset/liability is expected to be realized/settled within twelve months after the reporting period;
> t he asset 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;
> i n the case of a liability, the Company does not have an unconditional right to defer settlement of the
liability for at least twelve months after the reporting date.
All other assets and liabilities are classified as non-current.
Operating cycle
Operating cycle of the Company is the time between the acquisition of assets for processing and
their realisation in cash or cash equivalents. As the Company's normal operating cycle is not clearly
identifiable, it is assumed to be twelve months.
2.3 Summary of significant accounting policies
a) Property, Plant and Equipment
Measurement at recognition:
An item of property, plant and equipment that qualifies as an asset is measured on initial recognition
at cost. Following initial recognition, items of property, plant and equipment are carried at its cost less
accumulated depreciation and accumulated impairment losses.
The Company identifies and determines cost of each part of an item of property, plant and equipment
separately, if the part has a cost which is significant to the total cost of that item of property, plant and
equipment and has useful life that is materially different from that of the remaining item.
The cost of an item of property, plant and equipment comprises of its purchase price including import
duties and other non refundable purchase taxes or levies, directly attributable cost of bringing the asset
to its working condition for its intended use and the initial estimate of decommissioning, restoration
and similar liabilities, if any. Any trade discounts and rebates are deducted in arriving at the purchase
price. Cost includes cost of replacing a part of a plant and equipment if the recognition criteria are met.
Expenses directly attributable to new manufacturing facility during its construction period are capitalized
if the recognition criteria are met. Expenditure related to plans, designs and drawings of buildings
or plant and machinery is capitalized under relevant heads of property, plant and equipment if the
recognition criteria are met.
Items such as spare parts, stand-by equipment and servicing equipment that meet the definition of
property, plant and equipment are capitalized at cost and depreciated over their useful life. Costs in
nature of repairs and maintenance are recognized in the Statement of Profit and Loss as and when
incurred.
Capital work in progress and Capital advances:
Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as capital work in
progress. Advances given towards acquisition of fixed assets outstanding at each Balance Sheet date
are disclosed as Other Non-Current Assets
Depreciation:
Depreciation on each part of an item of property, plant and equipment is provided using the Straight
Line Method based on the useful life of the asset as estimated by the management and is charged to
the Statement of Profit and Loss as per the requirement of Schedule II of the Companies Act, 2013. The
estimate of the useful life of the assets has been assessed based on technical advice which considers
the nature of the asset, the usage of the asset, expected physical wear and tear, the operating conditions
of the asset, anticipated technological changes, manufacturers warranties and maintenance support,
etc.The estimated useful life of items of property, plant and equipment is mentioned below:
Freehold land is not depreciated.
The Company, based on technical assessment made by technical expert and management estimate,
depreciates certain items of property plant and equipment (as mentioned below) over estimated useful
lives which are different from the useful lives prescribed under Schedule II to the Companies Act, 2013
(Schedule III). 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.
Information Technology Hardware are depreciated over the estimated useful lives of 10 years, which is
higher than the life prescribed in Schedule II
The useful lives, residual values of each part of an item of property, plant and equipment and the
depreciation methods are reviewed at the end of each financial year. If any of these expectations differ
from previous estimates, such change is accounted for as a change in an accounting estimate.
Derecognition:
The carrying amount of an item of property, plant and equipment is derecognized on disposal or when
no future economic benefits are expected from its use or disposal. The gain or loss arising from the
Derecognition of an item of property, plant and equipment is measured as the difference between the
net disposal proceeds and the carrying amount of the item and is recognized in the Statement of Profit
and Loss when the item is derecognized.
b) Intangible assets
Measurement at recognition:
I ntangible assets acquired separately are measured on initial recognition at cost. Intangible assets
arising on acquisition of business are measured at fair value as at date of acquisition. Internally
generated intangibles including research cost are not capitalized and the related expenditure is
recognized in the Statement of Profit and Loss in the period in which the expenditure is incurred.
Following initial recognition, intangible assets are carried at cost less accumulated amortization and
accumulated impairment loss, if any
Amortization:
Intangible Assets with finite lives are amortized on a Straight Line basis over the estimated useful
economic life. The amortization expense on intangible assets with finite lives is recognized in the
Statement of Profit and Loss. The estimated useful life of intangible assets is mentioned below:
The Company, based on technical assessment made by technical expert and management estimate,
depreciates Information Technology Software (as mentioned below) over estimated useful lives
which are different from the useful lives prescribed under Schedule II to the Companies Act, 2013
(Schedule III). 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.
Information Technology Software are depreciated over the estimated useful lives of 10 years, which is
higher than the life prescribed in Schedule II
The amortization period and the amortization method for an intangible asset with finite useful life is
reviewed at the end of each financial year. If any of these expectations differ from previous estimates,
such change is accounted for as a change in an accounting estimate.
Derecognition:
The carrying amount of an intangible asset is derecognized on disposal or when no future economic
benefits are expected from its use or disposal. The gain or loss arising from the Derecognition of an
intangible asset is measured as the difference between the net disposal proceeds and the carrying
amount of the intangible asset and is recognized in the Statement of Profit and Loss when the asset is
derecognized.
c) Impairment
Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are
tested for impairment annually and whenever there is an indication that the asset may be impaired.
Assets that are subject to depreciation and amortization are reviewed for impairment, whenever events
or changes in circumstances indicate that carrying amount may not be recoverable. Such circumstances
include, though are not limited to, significant or sustained decline in revenues or earnings and material
adverse changes in the economic environment.
An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit
(CGU) exceeds its recoverable amount. The recoverable amount of an asset is the greater of its fair
value less cost to sell and value in use. To calculate value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market rates and
the risk specific to the asset. For an asset that does not generate largely independent cash inflows, the
recoverable amount is determined for the CGU to which the asset belongs. Fair value less cost to sell
is the best estimate of the amount obtainable from the sale of an asset in an arm's length transaction
between knowledgeable, willing parties, less the cost of disposal.
Impairment losses, If any, are recognized in the Statement of Profit and Loss and included in depreciation
and amortization expenses. Impairment losses are reversed in the Statement of Profit and Loss only to
the extent that the asset's carrying amount does not exceed the carrying amount that would have been
determined if no impairment loss had previously been recognized.
d) Revenue
Effective April,1 2018, The Company adopted Ind AS 115 "Revenue from Contract with Customer". Ind
AS 115 supersedes Ind AS 11, Construction Contract and Ind AS 18, Revenue.
Ind AS 115 requires an entity to report information regarding nature, amount, timing and uncertainty of
revenue and cash flows arising from a contract with customers.
Revenue is recognized upon transfer of control of promised products or services to customers in an
amount that reflects the consideration we expect to receive in exchange for those products or services.
The impact of application of the Standard is not material.
Revenue is measured at the fair value of the consideration received or receivable, net of returns, trade
discounts and volume rebates allowed by the Company.
Revenue includes only the gross inflows of economic benefits received and receivable by the Company,
on its own account. Amounts collected on behalf of third parties such as GST are excluded from revenue.
Sale of products:
Revenue from sale of products is recognized when the Company transfers all significant risks and
rewards of ownership to the buyer, while the Company retains neither continuing managerial involvement
nor effective control over the products sold.
Rendering of services:
Revenue from services is recognized when the stage of completion can be measured reliably. Stage
of completion is measured by the services performed till Balance Sheet date as a percentage of total
services contracted.
Interest, royalties and dividends:
Interest income is recognized using effective interest method. DEPB licence income / MEIS licence
income / FPS income is recognized on an accrual basis in accordance with the substance of the
relevant agreement. Dividend income is recognized when the right to receive payment is established.
e) Inventory
Raw materials, work-in-progress, finished goods, packing materials, stores, spares, components and
consumables are carried at the lower of cost and net realizable value. However, materials and other
items held for use in production of inventories are not written down below cost if the finished goods in
which they will be incorporated are expected to be sold at or above cost. The comparison of cost and
net realizable value is made on an item-by item basis.
In determining the cost of raw materials, packing materials, stores, spares, components and
consumables, first in first out cost method is used. Cost of inventory comprises all costs of purchase,
duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs
incurred in bringing the inventory to their present location and condition.
Cost of finished goods and work-in-progress includes the cost of raw materials, packing materials, an
appropriate share of fixed and variable production overheads, excise duty as applicable and other costs
incurred in bringing the inventories to their present location and condition. Fixed production overheads
are allocated on the basis of normal capacity of production facilities.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated
costs of completion and the estimated costs necessary to make the sale.
f) Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
> Financial Assets
Initial recognition and measurement:
The Company recognizes a financial asset in its Balance Sheet when it becomes party to the contractual
provisions of the instrument. All financial assets are recognized initially at fair value, plus in the case
of financial assets not recorded at fair value through profit or loss (FVTPL), transaction costs that are
attributable to the acquisition of the financial asset.
Where the fair value of a financial asset at initial recognition is different from its transaction price,
the difference between the fair value and the transaction price is recognized as a gain or loss in the
Statement of Profit and Loss at initial recognition if the fair value is determined through a quoted market
price in an active market for an identical asset (i.e. level 1 input) or through a valuation technique that
uses data from observable markets (i.e. level 2 input).
In case the fair value is not determined using a level 1 or level 2 input as mentioned above, the difference
between the fair value and transaction price is deferred appropriately and recognized as a gain or loss
in the Statement of Profit and Loss only to the extent that such gain or loss arises due to a change in
factor that market participants take into account when pricing the financial asset.
However, trade receivables that do not contain a significant financing component are measured at
transaction price.
Subsequent measurement:
For subsequent measurement, the Company classifies a financial asset in accordance with the below
criteria:
i. The Company's business model for managing the financial asset and
ii. The contractual cash flow characteristics of the financial asset.
Based on the above criteria, the Company classifies its financial assets into the following categories:
i. Financial assets measured at amortized cost
ii. Financial assets measured at fair value through other comprehensive income (FVTOCI)
iii. Financial assets measured at fair value through profit or loss (FVTPL)
i. Financial assets measured at amortized cost:
A financial asset is measured at the amortized cost if both the following conditions are met:
a) The Company's business model objective for managing the financial asset is to hold financial
assets in order to collect contractual cash flows, and
b) 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.
This category applies to cash and bank balances, trade receivables, loans and other financial assets of
the Company. Such financial assets are subsequently measured at amortized cost using the effective
interest method.
Under the effective interest method, the future cash receipts are exactly discounted to the initial
recognition value using the effective interest rate. The cumulative amortization using the effective
interest method of the difference between the initial recognition amount and the maturity amount is
added to the initial recognition value (net of principal repayments, if any) of the financial asset over
the relevant period of the financial asset to arrive at the amortized cost at each reporting date. The
corresponding effect of the amortization under effective interest method is recognized as interest
income over the relevant period of the financial asset. The same is included under other income in the
Statement of Profit and Loss.
The amortized cost of a financial asset is also adjusted for loss allowance, if any.
ii. Financial assets measured at FVTOCI:
A financial asset is measured at FVTOCI if both of the following conditions are met:
a) The Company's business model objective for managing the financial asset is achieved both by
collecting contractual cash flows and selling the financial assets, and
b) 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.
iii. Financial assets measured at FVTPL:
A financial asset is measured at FVTPL unless it is measured at amortized cost or at FVTOCI as
explained above. This is a residual category. Such financial assets are subsequently measured at fair
value at each reporting date. Fair value changes are recognized in the Statement of Profit and Loss.
Derecognition:
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is derecognized (i.e. removed from the Company's Balance Sheet) when any of the following
occurs:
i. The contractual rights to cash flows from the financial asset expires;
ii. The Company transfers its contractual rights to receive cash flows of the financial asset and has
substantially transferred all the risks and rewards of ownership of the financial asset;
iii. The Company retains the contractual rights to receive cash flows but assumes a contractual
obligation to pay the cash flows without material delay to one or more recipients under a 'pass¬
through' arrangement (thereby substantially transferring all the risks and rewards of ownership of
the financial asset);
iv. The Company neither transfers nor retains substantially all risk and rewards of ownership and
does not retain control over the financial asset.
In cases where Company has neither transferred nor retained substantially all of the risks and rewards
of the financial asset, but retains control of the financial asset, the Company continues to recognize
such financial asset to the extent of its continuing involvement in the financial asset. In that case, the
Company also recognizes an associated liability. The financial asset and the associated liability are
measured on a basis that reflects the rights and obligations that the Company has retained.
On Derecognition of a financial asset, (except as mentioned in ii above for financial assets measured
at FVTOCI), the difference between the carrying amount and the consideration received is recognized
in the Statement of Profit and Loss.
Impairment of financial assets:
The Company applies expected credit losses (ECL) model for measurement and recognition of loss
allowance on the following:
i. Trade receivables
ii. Financial assets measured at amortized cost (other than trade receivables)
iii. Financial assets measured at fair value through other comprehensive income (FVTOCI)
In case of trade receivables and lease receivables, the Company follows a simplified approach wherein
an amount equal to lifetime ECL is measured and recognized as loss allowance.
In case of other assets (listed as ii and iii above), the Company determines if there has been a significant
increase in credit risk of the financial asset since initial recognition. If the credit risk of such assets
has not increased significantly, an amount equal to 12-month ECL is measured and recognized as
loss allowance. However, if credit risk has increased significantly, an amount equal to lifetime ECL is
measured and recognized as loss allowance.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/
expense in the Statement of Profit and Loss under the head 'Other expenses'.
> Financial Liabilities
Initial recognition and measurement:
The Company recognizes a financial liability in its Balance Sheet when it becomes party to the contractual
provisions of the instrument. All financial liabilities are recognized initially at fair value minus, in the case
of financial liabilities not recorded at fair value through profit or loss (FVTPL), transaction costs that are
attributable to the acquisition of the financial liability.
Where the fair value of a financial liability at initial recognition is different from its transaction price,
the difference between the fair value and the transaction price is recognized as a gain or loss in the
Statement of Profit and Loss at initial recognition if the fair value is determined through a quoted market
price in an active market for an identical asset (i.e. level 1 input) or through a valuation technique that
uses data from observable markets (i.e. level 2 input).
In case the fair value is not determined using a level 1 or level 2 input as mentioned above, the difference
between the fair value and transaction price is deferred appropriately and recognized as a gain or loss
in the Statement of Profit and Loss only to the extent that such gain or loss arises due to a change in
factor that market participants take into account when pricing the financial liability.
Subsequent measurement
All financial liabilities of the Company are subsequently measured at amortized cost using the effective
interest method
Derecognition:
A financial liability is derecognized 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 Derecognition of the original liability and the recognition of a new liability.
The difference between the carrying amount of the financial liability derecognized and the consideration
paid is recognized in the Statement of Profit and Loss.
g) Fair value
The Company measures financial instruments at fair value in accordance with the accounting policies
mentioned above. 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 pricipal market for the assest or liability, or
> In the absence of principal market, in the most advantageous market for the assets or liability
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorized within the fair value hierarchy that categorizes into three levels, described as follows, the
inputs to valuation techniques used to measure value. The fair value hierarchy gives the highest priority
to quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority
to unobservable inputs (Level 3 inputs).
Level 1 — quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 — inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly
Level 3 — inputs that are unobservable for the asset or liability
For assets and liabilities that are recognized in the financial statements at fair value on a recurring
basis, the Company determines whether transfers have occurred between levels in the hierarchy by
re-assessing categorization at the end of each reporting period and discloses the same.
h) Foreign Currency Translation
Initial Recognition:
On initial recognition, transactions in foreign currencies entered into by the Company are recorded
in the functional currency (i.e. Indian Rupees), by applying to the foreign currency amount, the spot
exchange rate between the functional currency and the foreign currency at the date of the transaction.
Exchange differences arising on foreign exchange transactions settled during the year are recognized
in the Statement of Profit and Loss.
Measurement of foreign currency items at reporting date:
Foreign currency monetary items of the Company are translated at the closing exchange rates. Non¬
monetary items that are measured at historical cost in a foreign currency, are translated using the
exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a
foreign currency, are translated using the exchange rates at the date when the fair value is measured.
Exchange differences arising out of these translations are recognized in the Statement of Profit and
Loss.
i) Income Taxes
Tax expense is the aggregate amount included in the determination of profit or loss for the period in
respect of current tax and deferred tax.
Current tax:
Current tax is the amount of income taxes payable in respect of taxable profit for a period. 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
under the Income Tax Act, 1961.
Current tax is measured using tax rates that have been enacted by the end of reporting period for the
amounts expected to be recovered from or paid to the taxation authorities.
Deferred tax:
Deferred tax is recognized 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 under Income Tax Act, 1961
Deferred tax liabilities are generally recognized for all taxable temporary differences. However, in case
of temporary differences that arise from initial recognition of assets or liabilities in a transaction (other
than business combination) that affect neither the taxable profit nor the accounting profit, deferred tax
liabilities are not recognized. Also, for temporary differences if any that may arise from initial recognition
of goodwill, deferred tax liabilities are not recognized.
Deferred tax assets are generally recognized for all deductible temporary differences to the extent it is
probable that taxable profits will be available against which those deductible temporary difference can
be utilized. In case of temporary differences that arise from initial recognition of assets or liabilities in a
transaction (other than business combination) that affect neither the taxable profit nor the accounting
profit, deferred tax assets are not recognized.
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 the
benefits of part or all of such deferred tax assets to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively
enacted by the Balance Sheet date and are expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
Presentation of current and deferred tax:
Current and deferred tax are recognized as income or an expense in the Statement of Profit and Loss,
except when they relate to items that are recognized in Other Comprehensive Income, in which case,
the current and deferred tax income/ expense are recognized in Other Comprehensive Income.
The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable
right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize
the asset and settle the liability simultaneously. In case of deferred tax assets and deferred tax liabilities,
the same are offset if the Company has 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.
|