m) Provisions, Contingent liabilities and Contingent
assets:
A provision is recognized when an enterprise has a
present obligation (legal or constructive) as result of past
event and it is probable that an outflow of embodying
economic benefits of resources will be required to
settle a reliably assessable obligation. Provisions are
determined based on best estimate required to settle
each obligation at each balance sheet date. If the effect
of the time value of money is material, provisions are
discounted using a current pre-tax rate that reflects,
when appropriate, the risks specific to the liability. When
discounting is used, the increase in the provision due
to the passage of time is recognised as a finance cost.
Provisions for onerous contracts, i.e. contracts
where the expected unavoidable costs of meeting
obligations under a contract exceed the economic
benefits expected to be received, are recognized
when it is probable that an outflow of resources
embodying economic benefits will be required to
settle a present obligation as a result of an obligating
event, based on a reliable estimate of such obligation.
A contingent liability is a possible obligation that arises
from past events whose existence will be confirmed by the
occurrence or non-occurrence of one or more uncertain
future events beyond the control of the Company or a
present obligation that is not recognized because it is not
probable that an outflow of resources will be required to
settle the obligation. A contingent liability also arises in
extremely rare cases where there is a liability that cannot
be recognized because it cannot be measured reliably.
The Company does not recognize a contingent liability
but discloses its existence in the financial statements. A
contingent asset is never recognised but only disclosed
in the financial statements.
n) Segment reporting policies:
Identification of segments:
Operating Segments are identified on the basis of
internal reports about components of the group that are
regularly reviewed by the chief operating decision maker
(CODM) in order to allocate resources to the segments
and to assess their performance in accordance with Ind
AS 108, Operating Segments. Since CODM evaluates
Company's performance at a geographic segment level,
operating segment information is accordingly given at
geographic level.
o) Financial Instruments:
Financial assets and liabilities are recognized when the
Company becomes a party to the contractual provisions
of the instrument. Financial assets and liabilities are
initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of financial
assets and financial liabilities (other than financial assets
and financial liabilities at fair value through profit or loss)
are added to or deducted from the fair value measured
on initial recognition of financial asset or financial liability.
i) Cash & Cash equivalents:
The Company considers all highly liquid financial
instruments, which are readily convertible into
known amounts of cash that are subject to an
insignificant risk of change in value and having
original maturities of three months or less from the
date of purchase, to be cash equivalents. Cash and
cash equivalents consist of balances with banks
which are unrestricted for withdrawal and usage.
ii) Financial assets at amortized cost:
Financial assets are subsequently measured at
amortized cost if these financial assets are held
within a business whose objective is to hold these
assets in order to collect contractual cash flows and
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 at fair value through other
comprehensive income:
Financial assets are measured at fair value through
other comprehensive income if these financial
assets are held within a business whose objective is
achieved by both collecting contractual cash flows
and selling financial assets and 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.
iv) Financial assets at fair value through profit or
loss:
Financial assets are measured at fair value through
profit or loss unless it is measured at amortized
cost or at fair value through other comprehensive
income on initial recognition. The transaction costs
directly attributable to the acquisition of financial
assets and liabilities at fair value through profit or
loss are immediately recognized in statement of
profit and loss.
v) Financial liabilities:
Financial liabilities are subsequently carried at
amortized cost using the effective interest method,
except for contingent consideration recognized
in a business combination which is subsequently
measured at fair value through profit or loss. For
trade and other payables maturing within one year
from the balance sheet date, the carrying amounts
approximate fair value due to the short maturity of
these instruments.
vi) De-recognition of financial instruments:
The Company derecognizes a financial asset when
the contractual rights to the cash flows from the
financial asset expire or it transfers the financial
asset and the transfer qualifies for de-recognition
under Ind AS 109. A financial liability (or a part
of a financial liability) is derecognized when the
obligation specified in the contract is discharged
or cancelled or expires.
vii) Fair value of financial instruments:
In determining the fair value of its financial
instruments, the Company uses following hierarchy
and assumptions that are based on market
conditions and risks existing at each reporting date.
Fair value hierarchy:
All assets and liabilities for which fair value is
measured or disclosed in the 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 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.
viii) Investments in subsidiary:
Investments in subsidiary is carried at cost.
p) Impairment:
i) Financial assets:
The Company assesses at each date of balance
sheet whether a financial asset or a group of
financial assets is impaired. Ind AS 109 requires
expected credit losses to be measured through a
loss allowance. The Company recognises lifetime
expected losses for all contract assets and / or all
trade receivables that do not constitute a financing
transaction. For all other financial assets, expected
credit losses are measured at an amount equal
to the 12-month expected credit losses or at an
amount equal to the life time expected credit losses
if the credit risk on the financial asset has increased
significantly since initial recognition.
ii) Non-financial assets:
Tangible and Intangible assets: PPE, intangible
assets and investment property with finite life are
evaluated for recoverability whenever there is any
indication that their carrying amounts may not
be recoverable. If any such indication exists, the
recoverable amount (i.e. higher of the fair value less
cost to sell and the value-in-use) is determined on
an individual asset basis unless the asset does not
generate cash flows that are largely independent
of those from other assets. In such cases, the
recoverable amount is determined for the cash
generating unit (CGU) to which the asset belongs.
If the recoverable amount of an asset (or CGU) is
estimated to be less than its carrying amount, the
carrying amount of the asset (or CGU) is reduced
to its recoverable amount. An impairment loss is
recognised in the statement of profit and loss.
q) Cashflow Statement:
Cash flows are reported using the indirect method,
whereby profit for the period is adjusted for the effects
of transactions of a non-cash nature, any deferrals or
accruals of past or future operating cash receipts or
payments and item of income or expenses associated
with investing or financing cash flows. The cash flows
from operating, investing and financing activities of the
Company are segregated. The Company considers all
highly liquid investments that are readily convertible to
known amounts of cash to be cash equivalents.
2.3 Significant accounting judgements, estimates
and assumptions:
The preparation of the Company's 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.
a) Judgements:
I n the process of applying the Company's accounting
policies, management has made the following
judgements, which have the most significant effect on
the amounts recognized in the financial statements:
(b) Estimates and assumptions:
The key assumptions concerning the future and other
key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described
below. The Company based its assumptions and estimates
on parameters available when the financial statements
were prepared. Existing circumstances and assumptions
about future developments, however, may change due to
market changes or circumstances arising that are beyond
the control of the Company. Such changes are reflected
in the assumptions when they occur.
Defined benefit plans - Gratuity
The cost of the defined benefit gratuity plan and other
post-employment medical benefits and the present value
of the gratuity obligation are determined using actuarial
valuations. An actuarial valuation involves making various
assumptions that may differ from actual developments
in the future. These include the determination of the
discount rate, future salary increases and mortality
rates. Due to the complexities involved in the valuation
and its long-term nature, a defined benefit obligation
is highly sensitive to changes in these assumptions. All
assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount
rate. In determining the appropriate discount rate for
plans operated in India, the management considers the
interest rates of government bonds
The mortality rate is based on publicly available mortality
tables. Those mortality tables tend to change only at
interval in response to demographic changes. Future
salary increases are based on expected future inflation
rates and expected salary increase thereon.
2.4 Recent Accounting Pronouncements:
i. Ministry of Corporate Affairs ("MCA") notified new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards)
Rules as issued from time to time.
ii. In May 2025, MCA notified amendments to Ind AS
21 - The Effects of Changes in Foreign Exchange
Rates, applicable w.e.f. April 1, 2025. The Company
has reviewed the amendment and based on its
evaluation has determined that it does not have
any significant impact in its financial statements.
In August 2025, MCA notified the following
amendments to:
iii. 3. Ind AS 1, Presentation of Financial Statements,
applicable w.e.f. April 1,2025 - The amendment
relates to classification of liabilities as current
or non-current and non-current liabilities
with covenants. In the context of classifying a
liability as current, it removes the requirement
of existence of a right to defer settlement for
at least 12 months after the reporting date and
instead requires that the said right should exist
on the reporting date and have substance.
The amendment also introduces guidance on
classification of liabilities with covenants. The
Company has no impact of these amendments
in its classification criteria of current and non¬
current liabilities.
iv. Ind AS 7, Statement of Cash Flows and Ind AS 107,
Financial Instruments: Disclosures, applicable
w.e.f. April 1, 2025 - The amendment in Ind AS 7
requires to inform users of financial statements of
the existence of supplier finance arrangements and
explain the nature of the arrangements, the carrying
amount of liabilities and the range of payment
due dates. Ind AS 107 has been amended to add
supplier finance arrangements as a factor that may
cause concentration of liquidity risk. The Company
has reviewed the amendment and based on its
evaluation has determined that it does not have
any significant impact in its financial statements.
v. I nd AS 12 - International Tax Reform, Pillar Two
Model Rules (notified August 2025, applicable
immediately and retrospectively): Provides a
temporary mandatory relief from deferred tax
accounting for top-up tax.
2.5 Standards Issued not yet Effective:
The Government of India has issued an amendment
to Ind AS 1 removing the India-specific carve-outs on
classification of liabilities upon breach of covenants.
This is effective for annual periods beginning on or after
April 1, 2026. The Company will analyse the impact of this
amendment in due course of time.
27 Gratuity and other post-employment benefits
The Company has a defined benefit gratuity plan. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Every
employee who has completed five years or more of service is entitled to gratuity of 15 days salary (last drawn salary) for
each completed year of service. The scheme is funded with LIC.
The following tables summarize the components of net benefit expense recognized in the statement of profit and loss and
amounts recognized in the balance sheet for the gratuity plan:
29 Corporate Social Responsibility:
As per Section 135 of the Act, a company, meeting the applicability threshold, needs to spend at least 2% of its average
net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas
for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, promote rural and
nationally recognised sports, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and
rural development projects. A CSR committee has been formed by the Company as per the Act. The funds were primarily
allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of the Act.
(ii) During the financial year 2025-26, the Company filed its return of income after incorporating the merger of its wholly
owned subsidiary, ASM Digital Engineering Private Limited ("ADE"). Subsequently, the Company received an Intimation
order from the Centralized Processing Centre (CPC) amounting to 139.02 million, primarily on account of mismatch of TDS
credit of 137.38 million pertaining to ADE. The Company has filed an application to the Deputy Commissioner of Income Tax
requesting rectification of the demand by allowing the TDS credit relating to ADE and thereby nullifying the demand raised.
Based on the merits of the case, management is confident of receiving a favourable order and does not anticipate any
material liability arising from the said demand.
(iii) During the year, the Company has received transfer pricing assessment order for the Assessment Year 2023-24 for making
transfer pricing adjustment of 113.88 million. The Company is in process of filing appeal in this respect.
Pursuant to Taxation Loss (Amendment) Ordinance, 2019 dated September 20, 2019, the Company intends to exercise the
option permitted under Section 115BAA of the Income Tax Act, 1961 to compute income tax at the rate of 22% plus applicable
surcharge and cess.
The Company is in the process of making up to date documentation in pursuance of the Transfer Pricing study relating to
international transaction with Associated Enterprises for the year as required under the Income-tax Act, 1961. According
to the Company and based on the advice of its counsel the Company believes that the profit margins are comparable to
available market data and consequently no adjustments are required to these financial statements in respect of the same
notwithstanding the draft assessment order referred above.
37 Business combination of wholly owned subsidiary:
Pursuant to scheme of Arrangement filed between the Company ("Transfee Company") and its wholly owned Subsidiary
Company, ASM Digital Engineering Private Limited ("Transferor Company") in terms of provisions of Section 230 to 233 of
the Act, to merge the business of its wholly owned subsidiary with the Company (hereinafter referred to as "the Scheme")
with appointed date being April 1, 2023 and has been approved by National Company Law Tribunal ("NCLT") in November
2024. The Scheme has been filed with the Registrar of Companies, Karnataka on December 14, 2024.
In accordance with the provisions of the aforesaid scheme: -
a. The Scheme being a common control business combination, has been accounted for using the pooling of interests
method from the appointed date specified under the Scheme. As per Ind AS 103 - Business Combinations, common
control business combination should be accounted as per the pooling of interests method and the financial information
in the financial statements in respect of prior periods should be restated as if the business combination had occured
from the beginning of the preceeding period in the financial statements, irrespective of the actual date of the
combination. Therefore, the aforesaid accounting from the appointed date.
b. The assets and liabilities of the Transferor Company have been recognized at their existing carrying amounts.
c. No adjustments were made to reflect fair values or to recognize new assets and liabilities.
d. The identity of the reserves of the Transferor Company is preserved and appeared in the financial statements of the
Transferee Company in the same form and manner as they appeared previously.
e. The difference between the value of investments in the Transferor Company and the net assets taken over has been
adjusted in the reserves of the Transferee Company.
f. The Company is in the process of obtaining Form 42 form the Honarable High Court of Karnatka and pending payment
of requisite stamp duty
38 Financial risk management objectives and policies
The Company's principal financial liabilities comprise of trade and other payables. The main purpose of these financial
liabilities is to finance the Company's operations to support its operations. The Company's principal financial assets include
trade and other receivables, rental and bank deposits and cash and cash equivalents, that derive directly from its operations.
The Company is exposed to credit and liquidity risk. The Company's senior management oversees the management of these
risks and the Board of Director's reviews these activities. "
i. Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument would fluctuate due to changes in
market prices. Market risk comprises three types of risks: interest rate risk, currency risk and other price risk, such as equity
price risk and commodity risk. Financial instruments affected by market risk include trade payables. The Company is not
exposed to price risk on the financial date.
The sensitivity analysis in the following sections relate to the positions as at March 31, 2025 and March 31, 2024.
The analysis exclude the impact of movements in market variables on: the carrying values of gratuity and other post¬
retirement obligations and provisions.
The following assumption has been made in calculating sensitivity analyses:
The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based
on the financial assets and financial liabilities held at March 31, 2026 and March 31, 2025.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes
in foreign exchange rates. The operations of the Company are both in India and overseas. Company has been providing
services to overseas customers. Hence, the Company is currently exposed to the currency risk arising from fluctuation of
these foreign currencies and Indian rupee exchange rates.
The following table presents foreign currency risk for the below financial liabilities:
ii. Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract,
leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables).
At the end of every financial year, the Company makes an assessment whether any loss allowance has to be provided for
using the lifetime Expected Credit Loss (ECL) method.
iii. Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company
manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities
when due.
The Company's board of directors are responsible for liquidity, funding as well as settlement management.
The table below provides details regarding the contractual maturities of significant financial liabilities
Fair Value Hierarchy
Level 1 - Quoted prices (unadjusted) 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
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
The following table presents fair value hierarchy of assets and liabilities as at March 31, 2026
The Company is predominantly equity financed which is evident from the capital structure table. Further, the Company
has always been a net cash Company with cash and bank balances along with current financial assets which is
predominantly receivables.
41 No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or
kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with
the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified
by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding
Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities
identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf
of the Ultimate Beneficiaries.
42 On November 21,2025, the Government ofIndia notified four new labour codes, subsuming 29 existing labour laws. The Ministry of
Labour and Employment has also issued FAQs to assist in assessing the financial implications arising from these regulatory changes.
Based on which, the Company has evaluated the impact and recognized the incremental effect as an exceptional item,
supported by an independent actuarial valuation report. Further, the Company has obtained a legal opinion regarding the
treatment of special allowance as reimbursement of special expenses. In line with this opinion, the actuarial valuation has
been carried out considering 50% of the Cost to Company (CTC) which is eligible for computation of Gratuity provision.
43 Dividends:
i) The Board of directors of the Company have proposed final dividend of 112/- (Previous Year: 13/-) per equity share
of 110/- fully paid up for the year ended March 31, 2026 which is subject to approval of the members in the ensuing
annual general meeting.
ii) The Board of Directors of the Company have paid an interim dividedn of 14.50 per equity share of 110/- each fully paid
up during the year.
44 Additional Disclosures:
(i) Transactions and balances with companies which have been removed from register of Companies [struck off companies]
as at the above reporting periods is Nil.
(ii) The Company has not traded / invested in Crypto currency.
(iii) The Company has no such transaction which is not recorded in the books of accounts that has been surrendered or
disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey
or any other relevant provisions of the Income Tax Act, 1961).
45 The Company holds investments in Eclectic IQ (formerly known as Polylogyx) whose cost is 18.03 million, its fair value is
112.65 million and Lavelle Networks Private Limited whose cost 155 million and its fair value is 164.25 million which is
disclosed in non current investments. The Company is in the process of obtaining valuation reports for these investments
as per Ind AS 109 - Financial Instruments. The management has made efforts to obtain the cash flows and other information
for valuation purposes due to certain restrictions, the Company was unable to obtain the necessary data for valuation as at
March 31,2026. However, there are certain fresh investments in those companies and expected to take place in the ensuring
year and in our opinion there is substantial increase in the value of investments and there is no impairment of the same.
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