3.14 Provisions
A provision is recognised if, as a result of a
past event, the Company has a present legal or
constructive obligation that can be estimated
reliably, and it is probable that an outflow of
economic benefits will be required to settle
the obligation. Provisions are determined by
discounting the expected future cash flows
(representing the best estimate of the expenditure
required to settle the present obligation at the
balance sheet date) at a pre-tax rate that reflects
current market assessments of the time value of
money and the risks specific to the liability. The
unwinding of the discount is recognised as finance
cost. Expected future losses are not provided for.
3.15 Contingent liabilities
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 standalone financial statements.
3.16 Income tax
Income tax comprises current and deferred tax. It
is recognised in profit and loss except to the extent
that it relates to an item recognised directly in
equity or other comprehensive income.
Current tax
Current tax comprises the expected tax payable
or receivable on the taxable income or loss for
the year and any adjustment to the tax payable in
respect of previous year. The amount of current
tax reflects the best estimate of the tax amount
expected to be paid or received after considering
the uncertainty, if any, related to income taxes. It is
measured using tax rates enacted or substantially
enacted by the reporting date.
Current tax assets and current tax liabilities are
offset only if there is a legally enforceable right to
set off the recognised amounts, and it is intention
to realize the asset and settle the liability on a net
basis, or simultaneously.
Deferred tax
Deferred tax is recognised for all temporary
differences arising between the tax base of assets
and liabilities and their carrying amounts in the
standalone financial statements. Deferred tax
assets are recognised for deductible temporary
differences and unused tax losses to the extent
that it is probable that future taxable profit will be
available against which they can be used. Deferred
tax assets and liabilities are measured using
tax rate and tax laws that have been enacted or
substantially enacted by the balance sheet date
and are expected to apply to taxable income in
the year in which those temporary differences are
expected to be recovered or settled. The effect
of change in tax rate on deferred tax assets and
liabilities is recognised as income or expense in
the period that includes the enactment or the
substantive enactment date. A deferred tax asset
is recognised to the extent that it is probable that
future taxable profit will be available against which
the deductible temporary differences and tax
losses 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 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 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.
3.17 Earnings per share
The basic earnings per share are calculated
by dividing the net profit attributable to equity
shareholders by the weighted average number
of equity shares outstanding during the year. For
the purpose of calculating diluted earnings per
share, net profit attributable to equity shareholders
during the year and the weighted average number
of shares outstanding during the year are adjusted
for the effect of all dilutive potential equity shares.
The dilutive potential equity shares are deemed
converted as of the beginning of the year unless
they have been issued at a later date. The dilutive
potential equity shares are adjusted for the
proceeds receivable had the shares been actually
issued at fair value (i.e. average market value of
the outstanding shares). Anti dilutive effect of
any potential equity shares are ignored in the
calculation of diluted earnings per share.
3.18 Segment reporting
An operating segment is a component of the
Company that engages in business activities from
which it may earn revenues and incur expenses,
including revenues and expenses that relate to
transactions with any of the Company's other
components, and for which discrete financial
information is available. Operating segments
are reported in a manner consistent with the
internal reporting provided to the Chief Operating
Decision Maker ("CODM"). Revenues, expenses,
assets and liabilities, which are common to the
enterprise as a whole and are not allocable to
segments on a reasonable basis, have been treated
as "unallocated revenues/ expenses/ assets/
liabilities", as the case may be.
The Company is primarily engaged in the business
of Rating, research and other services.
3.19 Recent accounting pronouncements
Ministry of Corporate Affairs ("MCA") notifies
new standards or amendments to the existing
standards under Companies (Indian Accounting
Standards) Rules as issued from time to time.
For the year ended March 31, 2025, MCA has not
notified any new standards or amendments to the
existing standards applicable to the Company.
Nature of reserves:
(a) Capital reserve
Capital reserves represents amount of long term incentive plan ('LTIP') funded by ICRA Employees Welfare
Trust (”ESOP Trust") to the employees of the Company. (refer note 35).
(b) Capital redemption reserve
The Company has bought back equity shares and as per the provisions of the Companies Act, 2013, has
created capital redemption reserve.
(c) Employees' stock options outstanding
Employees' stock options outstanding represents the fair value of equity-settled, share-based payment
transactions with certain categories of employees of the Company. (refer note 36).
(d) General reserve
The General reserve is used from time to time to transfer profits from retained earnings for appropriation
purposes. As the General reserve is created by a transfer from one component of equity to another and is
not an item of other comprehensive income, items included in the General reserve will not be reclassified
subsequently to the standalone statement of profit and loss.
(e) Retained earnings
This reserve represents undistributed accumulated earnings of the Company as on the balance sheet date.
(f) Other comprehensive income/(loss)
Other comprehensive income/(loss) comprises remeasurement of defined benefit plans, which represents
the following as per Ind AS 19, Employee Benefits:
(a) actuarial gains and losses
(b) the return on plan assets, excluding amounts included in net interest on the net defined benefit liability
(asset); and
(c) any change in the effect of the asset ceiling, excluding amounts included in net interest on the net
defined benefit liability (asset).
'Includes interest amount till the order issued by the department .
*The Company is contesting the demands and the management believes that its position will likely be upheld in the appellate process.
The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company's
financial position and results of operations.
Additionally, It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the pending resolution of
the respective proceedings as it is determinable only on receipt of judgements/ decisions pending with various forums/ authorities. The
Company does not expect any reimbursements in respect of the contingent liabilities.
9 Other matters
a) During the previous year, ICRA Limited ('Company') received an arbitral award in a case brought by an ex¬
employee against the Company. In April 2025, the Company entered into a voluntary settlement agreement
with the ex-employee, resolving the matter on mutually agreed terms.
b) The Securities and Exchange Board of India ("SEBI") had enhanced the penalty amount from ' 25 lakhs to ' 1
crore during the quarter ended September 30, 2020 in respect of an adjudication proceeding initiated by it
in relation to the credit ratings assigned to one of the Company's customer and the customer's subsidiaries.
The Company had deposited the enhanced penalty amount under protest and had filed an appeal with the
Securities Appellate Tribunal contesting the said order. The said appeal is under review.
34 Employee benefits
a) Defined contribution plans
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of
qualifying employees towards Provident Fund, which are the defined contribution plans. The Company has no
obligations other than to make the specified contributions. The contributions are charged to the standalone
statement of profit and loss as they accrue. The amount recognized as an expense towards contribution to these
schemes aggregate to ' 512.11 lakhs for the year ended March 31, 2025 (previous year ' 502.99 lakhs) and is
included in "Employee benefits expense".
b) Defined benefit plans
The Company has a defined benefit gratuity plan, governed by the Payment of Gratuity Act, 1972. Plan entitles
an employee, who has rendered at least five years of service to gratuity at the rate of fifteen days salary for every
completed year of service or part thereof in excess of six months, based on the rate of salary last drawn by
the employees.
The defined benefit plan for gratuity is administered by a gratuity fund trust that is legally separate from the
Company. The trustees of the gratuity fund comprises three employees. The trustees of the gratuity fund is
required to act in the best interests of the members and/or their beneficiaries in accordance with the provisions of
trust deed. This defined benefit plan exposes the Company to actuarial risks, such as interest rate risk and market
(investment) risk.
35 From the financial year 2018-19, the ESOP Trust introduced LTIP Plan as an incentive to reward a cash amount
to the eligible employees of the Company. Based on the estimation, expense of ' 769.87 lakhs (previous year
' 613.85 lakhs) has been recognized and correspondingly, accounted as an adjustment to the capital reserve
of the Company.
36 Share based payment
The Company's Employee Stock Option Schemes ("ESOSs") provide for the grant of stock options to eligible
employees and whole time directors of the Company and its subsidiaries. The ESOSs are administered through
ESOP Trust. The Trust transfers shares to the eligible employees upon exercise of the options by such employees.
During financial year 2018-19, the Company had introduced a new stock option scheme namely ”ESOS 2018"
effective from June 28, 2018.
During the current year ended March 31, 2025, the Company has granted to the eligible employees of the
Company. The key terms and conditions related to the grants under these plans are as follows; all options are to be
settled by the delivery of shares.
39 Segment information
The Company's business activity falls within a single primary operating segment viz. "Rating, research and other
services". The operating segment has been defined based on regular review by the Company's Chief Operating
Decision Maker to assess the performance of the Company and to make decision about allocation of resources.
The Company renders its services to customers located in India and does not have any operations in economic
environment with different risks and returns. Hence, it is considered as operating in a single geographical segment.
The Company does not derive revenue from any customers which amount to 10% or more of the entity's revenues.
Management has assessed that fair value of trade receivables, cash and cash equivalents, other bank balances,
investments, trade payables, other financial liabilities approximate their carrying amounts largely due to the short¬
term maturities of these instruments and are valued at level 3.
40.2 Fair value hierarchy
All financial instruments for which fair value is recognized or disclosed 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 prices for identical instruments in active markets.
Level 2: Valuation techniques for which the lowest level input which has a significant effect on the fair value
measurement are observable, either directly or indirectly.
Level 3: Valuation techniques for which the lowest level input which has a significant effect on the fair value
measurement is not based on observable market data.
The following table provides the fair value measurement hierarchy of the Company's assets and liabilities:
40.3 Financial risk management
The Company's principal financial liabilities comprises of trade and other payables, employee liabilities, payable
for fixed assets and payable to related parties. The main purpose of these financial liabilities is to finance the
Company's operations and to provide guarantees to support its operations. The Company's principal financial
assets includes investments, loans, trade receivables, cash and cash equivalents and other bank balances.
The Company is exposed to various risks in relation to financial instruments. The Company's financial assets and
liabilities are summarised in note 40.1. The main types of financial risks are market risk (price risk), credit risk and
liquidity risk. The Company's senior management oversees the management of these risks.
a) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of
changes in market prices. Such changes may result from changes in foreign currency rate, interest rate, price and
other market changes. The Company's exposure to market risk is mainly due to price risk.
Price risk
The risk that the fair value or future cash flows of a financial instrument will fluctuate because changes in the
market prices, whether those changes are caused by factors specific to the individual financial instrument or
its issuer, or factors affecting all similar financial instruments traded in the market. The Company has adopted
disciplined practices including position sizing, diversification, valuation, loss prevention, due diligence and exit
strategies in order to mitigate losses as defined in Board approved investment policy.
The Company is exposed to price risk arising mainly from investment in equity shares and investment in mutual
funds recognised at fair value through profit or loss. The detail of such investments are given in note 40.1. If the
prices had been higher/ lower by 1% from the market prices exisiting as at the reporting date, profit would have
been increased/ decreased by ' 620.04 lakhs and ' 646.92 lakhs for the year ended March 31, 2025 and
March 31, 2024 respectively.
b) Credit risk
Credit risk is the risk of financial loss to the Company if customer or counterparty to financial instrument fails
to meet its contractual obligations, and arises principally from the Company's receivables from customer and
investment in mutual funds and deposits with banks.
To manage credit risk, the Company periodically reviews its receivables from customer for any non-recoverability
of the dues, taking in to account the inputs from business development team and ageing of trade receivables.
The management establishes an allowance for impairment that represents its expected credit losses in respect
of trade and other financial assets. The management uses a simplified approach for the purpose of computation
of expected credit loss. While computing expected credit loss, the management consider historical credit loss
experience adjusted with forward looking information.
c) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficultly in meeting the obligations associated
with its financial liabilities that are settled by delivering cash or another financial assets. For the Company,
liquidity risk arises from obligations on account of financial liabilities - lease liabilities, trade payables and other
financial liabilities.
Liquidity risk management
The Company continues to maintain adequate amount of liquidity to meet strategic and growth objectives. The
Company's finance department is responsible for liquidity and fund management. In addition, processes and
policies related to such risks are overseen by senior management. Management monitors the Company's liquidity
position through forecasts on the basis of expected cash flows.
40.4 Capital management
The Company's primary objective in managing capital is to enhance the shareholder value. Capital includes equity
capital share capital, share premium and all other reserves and surpluses attributable to equity shareholders.
Surplus fund is currently invested in income generating mutual funds and fixed deposits in line with its
investment policy.
No changes were made in the objectives, policies or processes for managing capital during the years ended
March 31, 2025 and March 31, 2024.
40.5 Foreign currency risk
Foreign currency risk is the risk that the fair value or future cashflows often exposure will fluctuate because of
change in foreign exchange rates. The Company's exposure to foreign currency changes is not material.
41 Transfer pricing
The Company has established a comprehensive system of maintenance of information and documents as
required by the transfer pricing legislation under sections 92-92F of the Income-tax Act, 1961. Since the law
requires existence of such information and documentation to be contemporaneous in nature, the Company
has maintained adequate documentation for the international transactions entered into with the associated
enterprises during the financial year and expect such records to be in existence in accordance with the
requirements of the law. The management is of the opinion that its international transactions are at arm's length
so that the aforesaid legislation will not have any impact on the standalone financial statements, particularly on the
amount of tax expense and that of provision for taxation.
44 Leases
A As a lessee
a) The Company's significant lease arrangements are in respect of office premises. The lease term for these leases
ranges between 11 months and 9 years which includes a lock-in period and in certain cases are renewable by
mutual consent on mutually agreeable terms. These options are negotiated by management and aligned with the
Company's business needs. Management exercises significant judgement in determining whether these extension
and termination options are reasonably certain to be exercised.
b) The Company has discounted lease payments using the applicable incremental borrowing rate, which is 10% for
measuring the lease liability.
47 Additional regulatory Information
(i) The Company has not entered into transactions with struck off companies during the current year.
(ii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the
statutory period.
(iii) The Company has not traded or invested in crypto currency or virtual currency during the financial year.
(iv) The Company has not advanced or loaned or invested funds to any other person(s) or entity(s), including foreign
entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the Company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(v) The Company has not received any fund from any person(s) or entity(s), including foreign entities (Funding Party)
with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(vi) The Company does not have any transaction which is not recorded in the books of account that has been
subsequently surrendered or disclosed as income during the year as part of the ongoing tax assessments under
the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(vii) The Company does not have any Benami property, where any proceeding has been initiated or pending against the
Company for holding any Benami property.
(viii) The Company has not been declared as willful defaulter by any bank or financial institution or government or any
government authority.
(ix) The Company has complied with the number of layers for its holding in downstream companies prescribed under
clause (87) of section 2 of the Companies Act, 2013 read with the Companies (Restriction on number of Layers)
Rules, 2017.
(x) The Company has not entered into any scheme of arrangement which has an accounting impact on current or
previous financial year.
(xi) The financial statements of the Company as at end for the year ended March 31, 2024 were audited by the
Predecessor Auditors. The Predecessor Auditors have expressed an unmodified opinion on those financial
statements on May 23, 2024.
(xii) Previous year figures have been re-grouped and reclassified wherever necessary to conform to current
period's presentations.
For and on behalf of the Board of Directors of ICRA Limited
CIN: L74999DL1991PLC042749
P. S. Jayakumar Ramnath Krishnan Venkatesh Viswanathan S. Shakeb Rahman
Chairman Managing Director & Group C.E.O. Chief Financial Officer Company Secretary
(DIN: 01 173236) (DIN: 09371341)
Place: Mumbai Place: Mumbai Place: Mumbai Place: Mumbai
Date: May 29, 2025 Date: May 29, 2025 Date: May 29, 2025 Date: May 29, 2025
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