2 Basis of preparation and material accounting policies

2.01 Basis of preparation

These standalone financial statements have been prepared in accordance with the Indian Accounting
Standards (Ind AS) as prescribed under Section 133 of the Companies Act, 2013 (“the Act”) read with
Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued
thereafter. The financial statements have also been prepared in accordance with the provisions of the Act,
guidelines issued by the Securities and Exchange Board of India (SEBI), and other applicable regulatory
requirements.These financial statements have been prepared under the historical cost convention on an
accrual basis, except for the following i) Defined benefit liabilities/(assets), which are recognized at the
present value of the defined benefit obligations less the fair value of plan assets ii) Certain Financial Assets
and Liabilities iii) share based payment transactionsThe financial statements are presented in Indian Rupees
(INR), which is the functional currency of the Company. All values are rounded off to the nearest lakh,
unless otherwise indicated.Accounting policies have been applied consistently to all periods presented in
the financial statements, except where a new accounting standard has been adopted or a revision to an
existing standard requires a change in accounting policy.

2.02 Significant accounting judgements, estimates and assumptions

The preparation of the Company's standalone financial statements requires management to make
judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets
and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty
about these assumptions and estimates could result in outcomes that require a material adjustment to the
carrying amount of assets or liabilities affected in future periods.

Critical accounting estimates

i. Taxes

Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available
against which the same can be utilised. Significant management judgement is required to determine the
amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future
taxable profits together with future tax planning strategies.

ii. Provisions and Contingent Liability

The timing of recognition and quantification of the liability (including litigations) requires the application
of judgement to existing facts and circumstances, which can be subject to change. The carrying amounts
of provisions and liabilities are reviewed regularly and revised to take account of changing facts and
circumstances.

iii.Impairment of Goodwill

Goodwill is tested for impairment annually. The recoverable amount of the cash-generating unit to which
goodwill is allocated is determined based on value-in-use calculations, which require the use of assumptions
including estimated future cash flows, growth rates and discount rates

2.03 Current versus non-current classification

The Company presents assets and liabilities in the standalone balance sheet based on current/ non¬
current classification.An asset is treated as current when it is:i.Expected to be realised or intended to be
sold or consumed in normal operating cycle,ii.Held primarily for the purpose of trading,iii.Expected to be
realised within twelve months after the reporting period, or iv.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 current when:i. It is expected to be settled in the company's normal operating cycle;ii. It is
held primarily for the purpose of being traded;iii.It is due to be settled within twelve months after the
reporting date; or iv. The company does not have an unconditional right to defer settlement of the liability
for at least twelve months after the reporting date. Terms of a liability that could, at the option of the
counter party, result in its settlement by the issue of equity instruments do not affect its classification. All
other liabilities are classified as non-current.Deferred tax assets and liabilities are classified as non current
assets and liabilities.

Operating cycle for current and non-current classification

Operating cycle is the time between the acquisition of assets for processing and their realisation in cash
or cash equivalents. The company has taken Operating cycle to be twelve months.

2.04 Fair value measurement of financial instruments

The Company measures financial instruments, such as, Investments at fair value at each balance sheet date
using valuation techniques. 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:

a) In the principal market for the asset or liability, or

b) 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 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.

For assets and liabilities that are recognised in the standalone financial statements on a recurring basis, the
Company determines whether transfers have occurred between levels in the hierarchy by re-assessing
categorisation (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.

2.05 Property, Plant and Equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment
losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met, directly
attributable cost of bringing the asset to its working condition for the intended use and initial estimate of
decommissioning, restoring and similar liabilities. Any trade discounts and rebates are deducted in arriving
at the purchase price. Such cost includes the cost of replacing part of the plant and equipment. When
significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates
them separately based on their specific useful lives. Likewise, when a major inspection is performed, its
cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition
criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.
In case an item of property, plant and equipment is acquired on deferred payment basis, interest expenses
included in deferred payment is recognized as interest expense and not included in cost of asset. Gains
or losses arising from derecognition of Property, plant and equipment 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.

2.06 Intangible asset

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible
assets acquired in a business combination is their fair value at the date of acquisition. Following initial
recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated
impairment losses. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible
assets with finite lives are amortised over the useful economic life and assessed for impairment whenever
there is an indication that the intangible asset may be impaired. The amortisation period and the
amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each
reporting period with the effect of any change in the estimate being accounted for on a prospective basis.
Changes in the expected useful life or the expected pattern of consumption of future economic benefits
embodied in the asset are considered to modify the amortisation period or method, as appropriate, and
are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite
lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value
of another asset.

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.

2.07 Goodwill

Goodwill arising on acquisition is recognized in the financial statement. Goodwill is not amortised but
it is tested for impairment annually, or more frequently if events or changes in circumstances indicate
that it might be impaired, and is carried at cost less accumulated impairment losses. On disposal of a
cash-generating unit or a business to which goodwill relates, the goodwill associated with the disposed
operation is included in the carrying amount of the operation when determining the gain or loss on
disposal.

2.08 Depreciation and Amortization

Depreciation on Property, plant and equipment is provided on the straight-line basis over the useful lives
of assets specified in Schedule II to the Companies Act, 2013.

Software being intangible asset is amortised on straight-line basis over a period of life of the asset as
estimated by the management

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. The amortization period and the
amortization method are reviewed at least at each financial year end.

2.09 Impairment of Financial and Non-Financial Assets

The impairment provisions for Financial Assets are based on assumptions about risk of default and
expected cash loss rates. The Company uses judgement in making these assumptions and selecting the
inputs to the impairment calculation, based on Company's past history, existing market conditions as well
as forward looking estimates at the end of each reporting period.

In case of non-financial assets, assessment of impairment indicators involves consideration of future
risks. Further, the company estimates asset's recoverable amount, which is higher of an asset's or Cash
Generating Units (CGU's) fair value less costs of disposal and its value in use.

In assessing value in use, the estimated future cash flows are discounted to their present value using
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 of disposal, recent market transactions are taken
into account, if no such transactions can be identified, an appropriate valuation model is used.

2.10 Revenue Recognition

The Company derives revenues primarily from IT services comprising software development and its
related services.

Revenue from operation

Revenue from IT and software development services is recognised as the related services are performed.
Revenue from time-and-material contracts is recognised over time as the services are rendered. Revenue
from fixed-price software development contracts is recognised over time using the input method, based
on efforts or costs expended to date relative to the total estimated efforts or costs to complete the
contract, as this best depicts the transfer of control of services to the customer.Revenue is measured
at the transaction price allocated to the performance obligation, net of variable consideration such as
discounts, if any.

Contract balances

i.Trade receivables

The amounts billed on customer for work performed and are unconditionally due for payment i.e. only
passage of time is required before payment falls due, are disclosed in the balance sheet as trade receivables.

ii. Contract liabilities

A contract liability is the obligation to transfer goods or services to a customer for which the Company
has received consideration or is due from the customer. If a customer pays consideration before the
Company transfers goods or services to the customer, a contract liability is recognised when the payment
is made or the payment is due (whichever is earlier).

Contract liabilities are recognised as revenue when the Company performs under the contract.

iii. Contract assets

A contract asset (unbilled revenue) is the right to consideration in exchange for services transferred
to the customer, where the right is conditioned on something other than the passage of time. Contract
assets are reclassified to trade receivables when the right to consideration becomes unconditional (i.e.,
on billing).

Interest income

Interest income from a financial asset is recognised using effective interest rate method wherever
applicable.

Dividend

Dividend from investments is recognised when the right to receive the payment is established and when
no significant uncertainty as to measurability or collectability exists.

2.11 Taxes on income

Current income tax

Tax expense for the year comprises current and deferred tax.The tax currently payable is based on taxable
profit for the year. Taxable profit differs from net profit as reported in the standalone statement of profit
and loss because it excludes items of income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The Company's liability for current tax is
calculated using the tax rates and tax laws that have been enacted or substantively enacted by the end of
the reporting period.

Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss
(either in other comprehensive income or in equity). Current tax items are recognised 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 establishes provisions where appropriate.

Deferred tax

Deferred tax is provided using the liability method 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 recognised for all taxable temporary differences, except:

i. 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.

ii. In respect of taxable temporary differences associated with investments in subsidiary and interests in
joint ventures, 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 recognised for all deductible temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax assets are recognised 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 utilised, except:

i. 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.

ii. In respect of deductible temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, deferred tax assets are recognised 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 utilised.

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 utilised. Unrecognised deferred tax assets are re-assessed at each reporting date
and are recognised 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 realised 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 recognised outside profit or loss is recognised outside profit or loss (either
in other comprehensive income or in equity). Deferred tax items are recognised 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 entity and the same taxation authority.All other acquired
tax benefits realised are recognised in profit or loss.

2.12 Earnings Per Share

Basic earnings per equity share is computed by dividing the net profit attributable to the equity shareholders
of the Company by the weighted average number of equity shares outstanding during the period. The
weighted average number of equity shares outstanding during the period is adjusted for events such as
fresh issue and bonus issue, and for events that change the number of equity shares outstanding without a
corresponding change in resources, such as bonus element in a rights issue, share split and reverse share
split (consolidation of shares).

Diluted earnings per equity share is computed by dividing the net profit attributable to the equity
shareholders of the Company by the weighted average number of equity shares considered for deriving
basic earnings per equity share and also the weighted average number of equity shares that could have
been issued upon conversion of all dilutive potential equity shares. Potential equity shares are deemed
to be dilutive only if their conversion to equity shares would decrease the net profit per share from
continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the
beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined
independently for each period presented.

Where the number of equity shares outstanding changes as a result of a share split, consolidation of shares
or bonus issue after the reporting period but before the financial statements are approved for issue,
basic and diluted earnings per share for all periods presented are adjusted retrospectively, and that fact is
disclosed.

2.13 Leases

Where the Company is lessee

The Company applies a single recognition and measurement approach for all leases, except for short-term
leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and
right-of-use assets representing the right to use the underlying assets.

i) Right-of-use asset

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease
payments made at or before the commencement date less any lease incentives received. Right-of-use
assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful
lives of the assets.The right-of-use assets are also subject to impairment.

ii) Lease Liabilities

At the commencement date of the lease, the company recognises lease liabilities measured at the present
value of lease payments to be made over the lease term. The lease payments include fixed payments
(including in substance fixed payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The
lease payments also include the exercise price of a purchase option reasonably certain to be exercised by
the Company and payments of penalties for terminating the lease, if the lease term reflects the Company
exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are
recognised as expenses (unless they are incurred to produce inventories) in the period in which the event
or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the
lease commencement date because the interest rate implicit in the lease is not readily determinable. After
the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if
there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future
payments resulting from a change in an index or rate used to determine such lease payments) or a change
in the assessment of an option to purchase the underlying asset

iii) Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those
leases that have a lease term of 12 months or less from the commencement date and do not contain a
purchase option). It also applies the lease of low-value assets recognition exemption to leases of office
equipment that are considered to be low value. Lease payments on short-term leases and leases of low-
value assets are recognised as expense on a straight-line basis over the lease term.

2.14 Foreign currencies transactions and translation

The Company's financial statements are presented in Indian Rupee, which is also the Company's functional
currency.

In preparing the financial statements, transactions in the currencies other than the Company's functional
currency are recorded at the rates of exchange prevailing on the date of transaction. At the end of
each reporting period, monetary items denominated in the foreign currencies are re-translated at the
rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value
was determined. Non-monetary items are measured in terms of historical cost in a foreign currency are
not retranslated.

Exchange differences arising on the retranslation or settlement of other monetary items are included in
the statement of profit and loss for the period.

2.15 Cash and Cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term
deposits with an original maturity of three months or less, which are subject to an insignificant risk of
changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of
cash and short-term deposits, as defined above,as they are considered an integral part of the Company's
cash management.Cash flows are reported using the indirect method, whereby profit / (loss) before tax
is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or
future cash receipts or payments. The cash flows from operating, investing and financing activities of the
Company are segregated based on the available information.

2.16 Employee benefits
Defined contribution plans

Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no
obligation other than the contribution payable. Contributions are recognised as an expense in the period
in which the employee renders the related service.

Defined benefit plans

Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation on
Projected Unit Credit Method made at the end of the financial year. Actuarial gains and losses for defined
benefit plans are recognized in full in the period in which they occur in the statement of OCI.

Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts
included in net interest on the net defined benefit liability and the return on plan assets (excluding
amounts included in net interest on the net defined benefit liability), are recognised immediately in the
standalone balance sheet with a corresponding debit or credit to retained earnings through OCI in the
period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. Past
service costs are recognised in profit or loss on the earlier of:

• The date of the plan amendment or curtailment, and

• The date that the Company recognises related restructuring costs

Compensated Absences

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long¬
term employee benefit for measurement purposes. Such long-term compensated absences are provided
for based on the actuarial valuation using the projected unit credit method at the year-end. Remeasurement
gains/losses on other long-term employee benefits are immediately taken to the Statement of Profit &
Loss and are not deferred.