1.11 Provisions and contingent liabilities and Contingent Assets
A provision is recognized 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. If the effect of the time value of
money is material, provisions are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the liability. When discounting is used, the increase in the provision due to the
passage of time is recognized as a finance costs.
The amount recognized as a provision is the best estimate of the consideration required to settle
the present obligation at reporting date, taking into account the risks and uncertainties
surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to be
recovered from a third party, the receivable is recognized as an asset if it is virtually certain that
reimbursement will be received and the amount of the receivable can be measured reliably. The
expense relating to a provision is presented in the statement of profit and loss net of any
reimbursement.
Contingent liabilities are possible obligations that arise from past events and whose existence
will only be confirmed by the occurrence or non-occurrence of one or more future events not
wholly within the control of the Company. Where it is not probable that an outflow of economic
benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed
as a contingent liability, unless the probability of outflow of economic benefits is remote.
Contingent liabilities are disclosed on the basis of judgment of the management/independent
experts. These are reviewed at each balance sheet date and are adjusted to reflect the current
management estimate.
Contingent assets are possible assets that arise from past events and whose existence will be
confirmed only by the occurrence or non-occurrence of one or more uncertain future events not
wholly within the control of the Company. Contingent assets are disclosed in the financial
statements when inflow of economic benefits is probable on the basis of judgment of
management. These are assessed continually to ensure that developments are appropriately
reflected in the financial statements.
1.12 Foreign currency transactions and translation
Transactions in foreign currencies are initially recorded at the functional currency spot rates at
the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional
currency spot rates of exchange at the reporting date. Exchange differences arising on
settlement or translation of monetary items are recognized in profit or loss in the year in which it
arises.
Non-monetary items are measured in terms of historical cost in a foreign currency are translated
using the exchange rate at the date of the transaction.
1.13 Other income
Interest income is recognized, when no significant uncertainty as to measurability or collectability
exists, on a time proportion basis taking into account the amount outstanding and the applicable
interest rate, using the effective interest rate method (EIR).
When calculating the EIR, the Company estimates the expected cash flows by considering all the
contractual terms of the financial instrument (for example, prepayment, extension, call and
similar options) but does not consider the expected credit losses. Interest income is included in
other income in the statement of profit and loss.
Dividend income is recognized in profit or loss on the date that the Company's right to receive
payment is established, which in the case of quoted securities is the ex-dividend date.
1.14 Material Prior Period Errors
Material prior period errors are corrected retrospectively by restating the comparative amounts
for the prior periods presented in which the error occurred. If the error occurred before the
earliest prior period presented, the opening balances of assets, liabilities and equity for the
earliest prior period presented, are restated.
1.15 Equity share capital
An equity instrument is a contract that evidences residual interest in the assets of the company
after deducting all of its liabilities. Par value of the equity shares is recorded as share capital.
Costs directly attributable to the issue of ordinary shares are recognised as a deduction from
equity, net of any tax effects.
1.16 Earnings per share
Basic earnings per equity share is computed by dividing the net profit or loss attributable to
equity shareholders of the Company by the weighted average number of equity shares
outstanding during the financial year.
Diluted earnings per equity share is computed by dividing the net profit or loss attributable to
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.
1.17 Statement of Cash Flows
Cash flow statement is prepared in accordance with the indirect method prescribed in Ind AS 7
'Statement of Cash Flows' for operating activities.
1.18 Segment Reporting
Operating Segments are identified and reported taking into account the different risk and return,
organisation structure and internal reporting system.
1.19 Fair value measurement
The Company measures financial instruments, such as, derivatives at fair value at each balance
sheet date. 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 principal market for the asset or liability, or
• 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 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 recognized in the 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.
This note summarises accounting policy for fair value only and applicable fair value disclosures,
to the extent required and applicable, are given elsewhere in the notes.
2. Use of Estimates and Judgements
The preparation of the Standalone financial statements in conformity with Ind AS requires the
Management to make estimates, judgments and assumptions. These estimates, judgments and
assumptions affect the application of accounting policies and the reported amounts of assets
and liabilities, the disclosures of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the period. The application
of accounting policies that require critical accounting estimates involving complex and subjective
judgments and the use of assumptions in these financial statements have been disclosed below.
Accounting estimates could change from period to period. Actual results could differ from those
estimates. Appropriate changes in estimates are made as the Management becomes aware of
changes in circumstances surrounding the estimates. Changes in estimates are reflected in the
financial statements in the period in which changes are made and, if material, their effects are
disclosed in the notes to the Standalone financial statements.
2.1 Critical Accounting Estimates and Judgements
The key judgments, made by the management, in applying the Company's accounting policies
having an effect on these financial statements are around the amount of provisions and
contingencies that have been recognized in accordance with Ind AS 37-'Provisions, Contingent
Liabilities and Contingent Assets' as the evaluation of the likelihood of the contingent events
requires best judgment by management regarding the probability of exposure to potential loss.
Key source of estimation uncertainty
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 has 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.
Useful lives of property, plant and equipment
The estimated useful lives of property, plant and equipment are based on a number of factors
including the effects of obsolescence, demand, competition, internal assessment of user experience
and other economic factors (such as the stability of the industry, and known technological advances)
and the level of maintenance expenditure required to obtain the expected future cash flows from the
asset. The Company reviews the useful life of property, plant and equipment at the end of each
reporting date.
Recoverable amount of property, plant and equipment
The recoverable amount of property plant and equipment is based on estimates and assumptions
regarding in particular the expected market outlook and expected future cash flows. Any changes in
these assumptions may have a material impact on the measurement of the recoverable amount and
could result in impairment.
Fair value measurement of financial instrum ents
When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be
measured based on quoted prices in active markets, their fair value is measured using valuation
techniques including the Discounted Cash Flow model. The inputs to these models are taken from
observable markets where possible, but where this is not feasible, a degree of judgement is required
in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit
risk and volatility. Changes in assumptions about these factors could affect the reported fair value of
financial instruments.
Provision for income tax and deferred tax assets
The Company uses estimates and judgements based on the relevant rulings in the areas of allocation
of revenue, costs, allowances and disallowances which is exercised while determining the provision for
income tax. 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. Accordingly, the Company exercises its judgement to reassess the carrying amount of
deferred tax assets at the end of each reporting period.
Provisions and contingent liabilities
The Company estimates the provisions that have present obligations as a result of past events and it
is probable that outflow of resources will be required to settle the obligations. These provisions are
reviewed at the end of each reporting period and are adjusted to reflect the current best estimates
The Company uses significant judgements to assess contingent liabilities. Contingent liabilities are
recognised when there is a possible obligation arising from past events, the existence of which will be
confirmed only by the occurrence or non-occurrence of one or more uncertain future events not
wholly within the control of the Company or a present obligation that arises from past events where it
is either not probable that an outflow of resources will be required to settle the obligation or a reliable
estimate of the amount cannot be made. Contingent assets are neither recognised nor disclosed in
the standalone financial statements.
Post-retirement benefit plans
Employee benefit obligation (gratuity) 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.
b) Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity shares having a par value of ? 5/- per share. Each
shareholder is entitled to one vote per equity share. The dividend, if any, proposed by the Board of
Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting,
except in case of interim dividend.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive
remaining assets of the Company, after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the shareholder.
No member shall be entitled to exercise any voting rights either personally or by proxy at any
meeting of the company in respect of any shares registered in his name on which any calls or other
sums presently payable by him have not been paid or in regard to which the company has, and has
exercised, any right of lien.
[ii) Retained Earnings
Retained earnings are the profits that Company has earned till date, less dividends or other
distributions paid to shareholders. Retained earnings includes re-measurement loss / (gain) on
defined benefit plans (net of taxes) that will not be reclassified to Profit and Loss. Retained
earnings is a free reserve available to the Company.
The Company has exercised the option of availing lower tax rate of 25.17% (inclusive of surcharge and
cess) under section 115BBA of The Income Tax Act, 1961 introduced by The Taxation Laws (Amendment)
ordinance, 2019 effective from 01st April, 2019.
27 Disclosure of Corporate social responsibility (CSR)
As per Section 135 of the Companies Act, 2013, 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, healthcare, destitute
care and rehabilitation, environment sustainability, disaster relief, COVID-19 relief and rural
development projects. A CSR committee has been formed by the company as per the Act. The
funds were primarily utilized through the year on these activities which are specified in Schedule
VII of the Companies Act, 2013
28 Employee Benefits
a) Defined Contribution plan
The Company has defined contribution plan for its employees' retirement benefits comprising
Provident Fund & Family Pension Fund. The contribution of Rs. 279.19 Lakhs (Pr. Yr. Rs. 204.61
Lakhs) towards provident fund are charged to Profit & loss account. The contributions payable to
the plan by the company are at a rate specified in rules to the schemes of GOI.
b) Defined benefit plan
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972.
Employees who are in continuous service for a period of 5 years are eligible for gratuity. The
amount of gratuity payable on retirement/termination is the employees last drawn basic salary per
month computed proportionately for 15 days salary multiplied for the number of years of service.
* These Sensitivities have been calculated to show the movement in defined benefit obligation in
isolation and assuming there are no other changes in market conditions at the accounting date. There
have been no changes from the previous periods in the methods and assumptions used in preparing
the sensitivity analyses. This analysis may not be representative of the actual change in the defined
benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one
another as some of the assumptions may be correlated.
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As
such company is exposed to various risks as follow :
a. Changes in Discount rate - Reduction in discount rate in subsequent valuations can increase the
plan's liability.
b. Salary increase risk - Actual salary increases will increase the Plan's liability. Increase in salary
increase rate assumption in future valuations will also increase the liability.
c. Life expectancy - Actual deaths & disability cases proving lower or higher than assumed in the
valuation can impact the liabilities.
d. Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change
of withdrawal rates at subsequent valuations can impact Plan's liability.
31 Operating Segments
A. The Company operates mainly in one segmet i.e. the business of software development
services,which constitutes a primary segment.The secondary segment is geographical,
information related to which is given as under:
B. Geographical Information
The Company operates in geographical areas - India (country of domicile) and others (outside
India).
32 Financial Risk Managment
Risk management framework
The Company's activities are exposed to a variety of financial risks. The key financial risks includes
market risk, credit risk and liquidity risk. The Company's focus is to foresee the unpredictability of
financial markets and seek to minimize potential adverse effects on its financial performance. The
risks are governed by appropriate policies and procedures and accordingly financial risks are
identified, measured and managed with the Company's policies and risk objectives. The Board of
Directors reviews and agree to policies for managing each of these risks which are summarized as
below:
(i) Credit risk management
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial
loss. The maximum exposure to the credit risk at the reporting date is primarily from trade
receivables amounting to ?2108.32 and ?1599.36 Lakhs as at March 31, 2025 and March 31, 2024
respectively. Trade receivables and unbilled revenue are typically unsecured and are derived from
revenue from customers majorly located in US. Credit risk has always been managed by the
Company through credit approvals, establishing credit limits and continuously monitoring the
creditworthiness of the customers to which the Company grants credit terms in the normal course
of business. The Company uses the expected credit loss model to assess any required allowances;
and uses a provision matrix to compute the expected credit loss allowance for trade receivables
and unbilled revenues. This matrix takes into account credit reports and other related credit
information to the extent available.
The Company's exposure to credit risk is influenced mainly by the individual characteristic of each
customer and the concentration of risk from the top few customers. Exposure to customers is
diversified and there is no single customer contributing more than 10% of outstanding trade
receivables and unbilled revenues.
Provision for Expected Credit or Loss
i. Financial assets for which loss allowance is measured using 12 month expected credit losses.
The Company has assets where the counter-parties have sufficient capacity to meet the
obligations and where the risk of default is very low. Accordingly, no loss allowance for
impairment has been recognised.
ii. Financial assets for which loss allowance is measured using life time expected credit losses.
The Company provides loss allowance on trade receivables using life time expected credit loss
and as per simplified approach.
Financial instrum ents and bank deposits
Cash and cash equivalents and deposits with banks are neither past due nor impaired. Cash and
cash equivalents with banks are held with reputed and credit worthy banking institutions.
(ii) Liquidity Risk Management
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its
obligations on time.The Company's principal sources of liquidity are cash and cash equivalents
and the cash flow that is generated from operations.The Company has no outstanding
borrowings. The Company believes that the working capital is sufficient to meet its current
requirements.
(iii) Market Risk Management
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result
from a change in the price of a financial instrument. The value of a financial instrument may
change as a result of changes in the interest rates, foreign currency exchange rates, commodity
prices, equity prices and other market changes that affect market risk sensitive instruments.
Market risk is attributable to all market risk sensitive financial instruments including investments
and deposits, foreign currency receivables, payables and borrowings. The objective of market
risk management is to manage and control market risk exposures within acceptable parameters,
while optimising the return.
a) Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rate. In order to optimize the Company's
position with regards to interest income and interest expenses and to manage the interest rate
risk, treasury performs a comprehensive corporate interest rate risk management by maximising
the use of fixed rate instruments.
b) Foreign Currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in foreign exchange rates. The Company's exposure to the
risk of changes in foreign exchange rates relates primarily to the Company's operating and
financing activities (when revenue or expense and borrowing is denominated in foreign
currency). The Company evaluates exchange rate exposure arising from foreign currency
transactions and follows established risk management policies.
Foreign currency risk sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in USD, EURO and
AED, with all other variables held constant. The impact on the Company profit before tax and equity
is due to changes in the fair value of monetary assets and liabilities. Foreign currency exposures
recognised by the Company that have not been hedged by a derivative instrument or otherwise are
as under:
Sensitivity analysis is computed based on the changes in the income and expenses in foreign currency
upon conversion into functional currency, due to exchange rate fluctuations between the previous
reporting period and the current reporting period.
33 Capital Management
For the purpose of Company's Capital Management, Capital includes issued equity share capital &
Borrowings. The primary objective of Company's Capital Management is to maximize shareholder's
value and to maintain an appropriate capital structure of debt and equity. The company manages
it's capital structure and makes adjustments in the light of changes in economic environment and
the requirements of financial covenants. The company manages it's capital using Debt to Equity
Ratio which is Net Debt/Total Equity. Net Debt is total borrowing (Non-current and current) less
cash and cash equivalent.
The carrying value of the financial asstes & liabilities are equivalent to fair value due to the nature of the
instruments.
Fair value hierarchy
The fair values of the financial assets and liabilities are included at the amount at which the instrument
could be exchanged in an orderly transaction in the principal (or most advantageous) market at
measurement date under the current market condition regardless of whether that price is directly
observable or estimated using other valuation techniques.
The Company has established the following fair value hierarchy that categorizes the values into 3
levels. The inputs to valuation techniques used to measure fair value of financial instruments are:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value
are observable, either directly or indirectly
Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not
based on observable market data.
The carrying amounts of all the financial instruments mentioned in the table above are considered to
be the same as their fair values due to the short term maturities or payable/receivable on demand and
are classified as Level 3 in the fair value hierarchy. There have been no transfers between Level 1,
Level 2 and Level 3 during the period.
35 Other Information in terms of the amendment in schedule III of the companies Act vide notification
dated 24th March, 2021
a. The Company does not have any Benami Property, and no proceeding has been initiated or
pending against the Company for holding any Benami Property.
b. The Company does not have any transactions with companies which are struck off.
c. The Company does not have any charges or satisfaction which is yet to be registered with
Registrar of Companies beyond the statutory period.
d. The Company have not traded or invested in crypto currency or virtual currency during the
financial year.
e. The Company has not advanced or loaned or invested funds to any other person(s) or entity(is),
including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
i. 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
ii. Provide any Guarantee, Security, or the like to or on behalf of the Ultimate Beneficiaries
f. The Company have not received any fund from any Person(s) or Entity(ies), including Foreign
Entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the
Company shall:
i. 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
ii. Provide any Guarantee, Security, or the like on behalf of the ultimate beneficiaries.
g. 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.
h. The Company have not been declared wilful defaulter by any Banks or any other Financial
Institution at any time during the financial year.
i. The company has utilized the borrowings from banks and financial institutions for the specific
purpose for which it was taken during the financial year.
j. There is no change in opening balance of other equity due to change in any accounting policy and
prior period errors.
36 Events occurring after the Balance Sheet Date
There are no material events occurred after the Balance sheet Date
37 Code on social security
The Code on Social Security, 2020 ('code') relating to employee benefits, during employment and
post-employment, received Presidential assent on September 28, 2020. The Ministry of Labour and
Employment has released draft rules for the Code on Social Security, 2020 on November 13, 2020,
and has invited suggestions from stakeholders. The Company will assess the impact on its financial
statements in the period in which the related rules to determine the financial impact are notified and
the Code becomes effective.
39 Detail of Employee Share based payment plans :
A. Shares issued by the company under Ksolves Employee Stock Option Scheme-I (KSOS-I) and
Ksolves Employees Stock Option Scheme-II (KSOS-II): Nil (As the no options are vested during the
year).
B. Details of the shares reserved for issue under options:
During the period under review, in order to reward, attract, motivate and retain its employees,
existing or future, in or outside India, for their performance and for their contribution to the growth
and profitability of the Company, it was proposed to carry out the Ksolves Employee Stock
Option Scheme-I (KSOS-I) and Ksolves Employee Stock Option Scheme-II (KSOS-II) in the
Company.
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