NOTE 2 - MATERIAL ACCOUNTING POLICIES
a) Statement of Compliance:
The Company's financial statements have been prepared
in accordance with the provisions of the Companies
Act, 2013 and the Indian Accounting Standards (Ind
AS) notified under the Companies (Indian Accounting
Standards) Rules, 2015 and amendments thereof issued
by Ministry of Corporate Affairs in exercise of the powers
conferred by section 133 of the Companies Act, 2013.
In addition, the guidance notes/announcements issued
by the Institute of Chartered Accountants of India (ICAI)
are also applied except where compliance with other
statutory promulgations require a different treatment.
These financials statements have been approved for
issuance by the Board of Directors of the Company on
April 23,2025.
b) Basis of Preparation:
These financial statements have been prepared on a
historical cost basis and are presented in Indian Rupees
(INR). All values are rounded to the nearest crores,
except when otherwise indicated.
c) Presentation of Financial Statement:
The Company presents its balance sheet in order
of liquidity in compliance with the Division III of the
Schedule III to the Companies Act, 2013. An analysis
regarding recovery or settlement within 12 months after
the reporting date (current) and more than 12 months
after the reporting date (non-current) is presented in
Note 39.
d) Revenue recognition
Revenue is recognised when the promised goods and
services are transferred to the customer i.e. when
performance obligations are satisfied. Revenue is
measured based on the consideration specified in
a contract with a customer and excludes amounts
collected on behalf of third parties.
The Company applies the five-step approach for the
recognition of revenue as prescribed by Ind AS 115.
i. Identification of contracts with the customers: A
contract is defined as an agreement between two
or more parties that creates enforceable rights
and obligations and sets out the criteria for every
contract that must be met.
ii. Identification of the separate performance
obligation in the contract: A performance
obligation is a promise in a contract with a customer
to transfer a good or service to the customer.
iii. Determination of transaction price: The transaction
price is the amount of consideration to which
the Company expects to be entitled in exchange
for transferring promised goods or services to a
customer, excluding amounts collected on behalf
of third parties.
iv. Allocation of transaction price to separate
performance obligation: For a contract that
has more than one performance obligation, the
Company allocates the transaction price to each
performance obligation in an amount that depicts
the amount of consideration to which the Company
expects to be entitled in exchange for satisfying
each performance obligation.
v. Recognition of revenue when (or as) each
performance obligation is satisfied.
The following is a description of principal activities
from which the Company generates its revenue.
• Fees and commission income: Fees from
services provided are recognised at a point
in time when the service obligations are
completed and when the terms of contracts
are fulfilled.
• Lending / Investments related Income:
- Interest income on investments and loans
is accrued on a time basis by reference to
the principal outstanding and the effective
interest rate including interest on investments
that may be classified as fair value through
profit or loss or fair value through other
comprehensive income.
- Dividend income is accounted in the period
in which the right to receive the same is
established.
• Others: Revenue is recognised over time
when the outcome of a transaction can be
estimated reliably by reference to the stage of
completion of the transaction.
e) Property, plant and equipment
Measurement at recognition:
An item of property, plant and equipment that qualifies
as an asset is measured on initial recognition at cost.
Following initial recognition, items of property, plant
and equipment are carried at its cost less accumulated
depreciation and accumulated impairment losses.
The Company identifies and determines cost of each part
of an item of property, plant and equipment separately,
if the part has a cost which is significant to the total cost
of that item of property, plant and equipment and has
useful life that is materially different from that of the
remaining item. The cost of an item of property, plant
and equipment comprises of its purchase price including
import duties and other non-refundable purchase taxes
or levies, directly attributable cost of bringing the
asset to its working condition for its intended use and
the initial estimate of decommissioning, restoration
and similar liabilities, if any. Any trade discounts and
rebates are deducted in arriving at the purchase price.
Cost includes cost of replacing a part of a plant and
equipment if the recognition criteria are met. Expenses
related to plans, designs and drawings of buildings or
plant and machinery is capitalised under relevant heads
of property, plant and equipment if the recognition
criteria are met.
Capital work in progress and Capital advances:
Cost of assets not ready for intended use, as on the
Balance Sheet date, is shown as capital work in progress.
Advances given towards acquisition of property, plant
and equipment outstanding at each Balance Sheet date
are disclosed as Other Non-Financial Assets.
Depreciation:
Depreciation on each item of property, plant and
equipment is provided using the Straight-Line Method
based on the useful lives of the assets as estimated
by the management and is charged to the Statement
of Profit and Loss. Significant components of assets
identified separately pursuant to the requirements under
Schedule II of the Companies Act, 2013 are depreciated
separately over their useful life. Freehold land is not
considered as depreciable assets having regard to its
infinite useful life. Individual assets/ group of similar
assets costing up to Rs. 5,000 has been depreciated in
full in the year of purchase. Leasehold Improvements
are to be amortised over the life of asset or period of
lease whichever is shorter.
* For these class of assets, based on internal assessment,
the management believes that the useful lives as given
above best represent the period over which management
expects to use these assets. Hence, the useful lives for
these assets is different from the useful lives as prescribed
under Part C of Schedule II of the Companies Act 2013.
# Furniture and fixtures include leasehold improvements,
which is depreciated on straight-line basis over the
period of lease.
The useful lives, residual values of each part of an item
of property, plant and equipment and the depreciation
methods are reviewed at the end of each financial
year. If any of these expectations differ from previous
estimates, such change is accounted for as a change in
an accounting estimate.
Derecognition:
The carrying amount of an item of property, plant and
equipment is derecognised on disposal or when no
future economic benefits are expected from its use or
disposal. The gain or loss arising from the derecognition
of an item of property, plant and equipment is measured
as the difference between the net disposal proceeds
and the carrying amount of the item and is recognised
in the Statement of Profit and Loss when the item is
derecognised.
) Intangible assets
Measurement at recognition:
Intangible assets acquired separately are measured
on initial recognition at cost. Intangible assets arising
on acquisition of business are measured at fair value
as at date of acquisition. Following initial recognition,
intangible assets with finite useful life are carried at
cost less accumulated amortisation and accumulated
impairment loss, if any. Intangible assets with indefinite
useful lives, that are acquired separately, are carried
at cost/fair value at the date of acquisition less
accumulated impairment loss, if any.
Amortisation:
Intangible Assets with finite lives are amortised on a
Straight-Line basis over the estimated useful economic
life. The amortisation expense on intangible assets with
finite lives is recognised in the Statement of Profit and
Loss. The amortisation period and the amortisation
method for an intangible asset with finite useful life
is reviewed at the end of each financial year. If any of
these expectations differ from previous estimates, such
change is accounted for as a change in an accounting
estimate.
Derecognition:
The carrying amount of an intangible asset is
derecognised on disposal or when no future economic
benefits are expected from its use or disposal. The gain
or loss arising from the derecognition of an intangible
asset is measured as the difference between the net
disposal proceeds and the carrying amount of the
intangible asset and is recognised in the Statement of
Profit and Loss when the asset is derecognised.
g) Impairment
Assets that have an indefinite useful life, such as
goodwill, are not subject to amortisation and are
tested for impairment annually and whenever there is
an indication that the asset may be impaired. Assets
that are subject to depreciation and amortisation are
reviewed for impairment, whenever events or changes in
circumstances indicate that carrying amount may not be
recoverable. Such circumstances include, though are not
limited to, significant or sustained decline in revenues or
earnings and material adverse changes in the economic
environment. An impairment loss is recognised whenever
the carrying amount of an asset or its cash generating unit
(CGU) exceeds its recoverable amount. The recoverable
amount of an asset is the greater of its fair value less
cost to sell and value in use. To calculate value in use,
the estimated future cash fiows are discounted to their
present value using a pre-tax discount rate that reflects
current market rates and the risk specific to the asset.
For an asset that does not generate largely independent
cash inflows, the recoverable amount is determined for
the CGU to which the asset belongs. Fair value less cost
to sell is the best estimate of the amount obtainable
from the sale of an asset in an arm's length transaction
between knowledgeable, willing parties, less the cost
of disposal. Impairment losses, if any, are recognised
in the Statement of Profit and Loss and included in
depreciation and amortisation expenses.
Impairment losses are reversed in the Statement of
Profit and Loss only to the extent that the asset's
carrying amount does not exceed the carrying amount
that would have been determined if no impairment loss
had previously been recognised.
h) Financial Instruments
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.
• Financial assets
Initial recognition and measurement:
The Company recognises a financial asset in
its Balance Sheet when it becomes party to the
contractual provisions of the instrument. All
financial assets are recognised initially at fair value
plus, in the case of financial assets not recorded at
fair value through profit or loss (FVTPL), transaction
costs that are attributable to the acquisition of the
financial assets. However, trade receivables that do
not contain a significant financing component are
measured at transaction price.
Subsequent measurement:
For subsequent measurement, the Company
classifies a financial asset in accordance with
the Company's business model for managing
the financial asset and the contractual cash flow
characteristics of the financial asset.
Based on the above criteria, the Company is
classifying its financial assets into the following
categories:
i. Financial assets measured at amortised cost
ii. Financial assets measured at fair value through
other comprehensive income (FVTOCI)
iii. Financial assets measured at fair value
through profit or loss (FVTPL)
i. Financial assets measured at amortised
cost:
A financial asset is measured at the amortised cost
if both the following conditions are met:
• The Company's business model objective for
managing the financial asset is to hold financial
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.
ii. Financial assets measured at FVTOCI:
A Debt Instrument is measured at FVTOCI if both
of the following conditions are met:
• The Company's business model objective
for managing the financial asset is achieved
both by collecting contractual cash fiows and
selling the 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.
For the above category, income by way of interest
and dividend, provision for impairment are
recognised in the Statement of Profit and Loss
and changes in fair value (other than on account
of above income or expense) are recognised in
other comprehensive income and accumulated in
other equity. On disposal of such debt instruments
at FVTOCI financial assets, the cumulative gain
or loss previously accumulated in other equity is
reclassified to Statement of Profit and Loss.
Equity Instrument at FVTOCI: Equity instruments
are instruments that meet the definition of equity
from the issuer's perspective; that is, instruments
that do not contain a contractual obligation to pay
and that evidence a residual interest in the issuer's
net assets. On initial recognition, the Company can
make an irrevocable election (on an instrument-
by-instrument basis) to present the subsequent
changes in fair value in other comprehensive income
pertaining to investments in equity instruments.
This election is not permitted if the instrument is
held for trading. The cumulative gain or loss is not
reclassified to the Statement of Profit and Loss on
disposal of the investment.
iii. Financial assets measured at FVTPL:
A financial asset is measured at FVTPL unless
it is measured at amortised cost or at FVTOCI
as mentioned above. This is a residual category
applied to all other investments of the Company
excluding investments in associate. Such financial
assets are subsequently measured at fair value
at each reporting date. Fair value changes are
recognised in the Statement of Profit and Loss.
Derecognition:
A financial asset (or, where applicable, a part of
a financial asset or part of a Company of similar
financial assets) is derecognised (i.e. removed from
the Company's Balance Sheet) when any of the
following occurs:
• The contractual rights to cash flows from the
financial asset expires;
• The Company transfers its contractual rights
to receive cash flows of the financial asset and
has substantially transferred all the risks and
rewards of ownership of the financial asset;
• The Company retains the contractual rights to
receive cash flows but assumes a contractual
obligation to pay the cash flows without
material delay to one or more recipients
under a 'pass-through' arrangement (thereby
substantially transferring all the risks and
rewards of ownership of the financial asset);
• The Company neither transfers nor retains,
substantially all risk and rewards of ownership,
and does not retain control over the financial
asset.
On derecognition of a financial asset, (except
as mentioned in ii above for financial assets
measured at FVTOCI), the difference between the
carrying amount and the consideration received is
recognised in the Statement of Profit and Loss.
Impairment of financial assets:
The Company recognises loss allowances using
the expected credit loss (ECL) model for the
financial assets which are not measured at FVTPL.
Expected credit losses are measured at an amount
equal to the 12-month ECL, unless there has been
a significant increase in credit risk from initial
recognition in which case those are measured at
lifetime ECL.
• Expected credit losses are the weighted
average of credit losses with the respective
risks of default occurring as the weights. Credit
loss is the difference between all contractual
cash flows that are due to the Company in
accordance with the contract and all the cash
flows that the Company expects to receive
(i.e. all cash shortfalls), discounted at the
original effective interest rate. The Company
estimates cash flows by considering all
contractual terms of the financial instrument
(for example, prepayment, extension, call and
similar options) through the expected life of
that financial instrument.
• The Company measures the loss allowance
on financial assets at an amount equal to
the lifetime expected credit losses if the
credit risk on that financial instrument has
increased significantly since initial recognition.
If the credit risk on a financial asset has not
increased significantly since initial recognition,
the Company measures the loss allowance
for that financial asset at an amount equal to
12-month expected credit losses. 12-month
expected credit losses are portion of the
lifetime expected credit losses and represent
cash shortfalls that will result if default
occurs within the 12 months weighted by
the probability of default after the reporting
date and thus, are not cash shortfalls that are
predicted over the next 12 months.
• When making the assessment of whether
there has been a significant increase in credit
risk since initial recognition, the Company
uses the change in the risk of a default
occurring over the expected life of the
financial instrument instead of the change in
the amount of expected credit losses. To make
that assessment, the Company compares the
risk of a default occurring on the financial
instrument as at the reporting date with the
risk of a default occurring on the financial
instrument as at the date of initial recognition
and considers reasonable and supportable
information, that is available without undue
cost or effort, that is indicative of significant
increases in credit risk since initial recognition.
The Company follows 'simplified approach' for
recognition of impairment loss allowance on trade
receivables. The application of simplified approach
does not require the Company to track changes in
credit risk. Rather, it recognises impairment loss
allowance based on lifetime ECLs at each reporting
date, right from its initial recognition. The Company
uses a provision matrix to determine impairment
loss allowance on portfolio of its receivables.
The provision matrix is based on its historically
observed default rates over the expected life of
the receivables. However, if receivables contain
a significant financing component, the Company
chooses as its accounting policy to measure the
loss allowance by applying general approach to
measure ECL.
The Company writes off a financial asset when
there is information indicating that the obligor is
in severe financial difficulty and there is no realistic
prospect of recovery.
iv. Financial Liabilities and Equity Instruments:
Financial Instruments issued by the entity are
classified are either as financial liabilities or
as equity instruments in accordance with the
substance of the contractual arrangements and the
definition of a financial liability and an equity. An
equity instruments is any contract that evidences
a residual interest in the assets of an entity after
deducting all of its liabilities.
Initial recognition and measurement:
The Company recognises a financial liability in
its Balance Sheet when it becomes party to the
contractual provisions of the instrument. Having
regards to the terms and structure of issuance,
the company is classifying Financial Liabilitiesas
follows:
i. recognised at amortised costs.
ii. recognised at fair value through profit and loss
(FVTPL) including the embedded derivative
component if any, which is not separated.
iii. An embedded derivative is a component
of a hybrid instrument that also includes
a non-derivative host contract with the
effect that some of the cash fiows of the
combined instrument vary in a way similar
to a standalone derivative. An embedded
derivative causes some or all of the cash
flows that otherwise would be required by
the contract to be modified according to a
specified interest rate, foreign exchange rate,
or other variable, provided that, in the case of
a non-financial variable, it is not specific to a
party to the contract. Derivatives embedded
in all other host contracts are accounted
for as separate derivatives and recorded at
fair value if their economic characteristics
and risks are not closely related to those of
the host contracts and the host contracts
are not held for trading or designated at fair
value though profit or loss. These embedded
derivatives are measured at fair value with
changes in fair value recognised in profit or
loss, unless designated as effective hedging
instruments.
Subsequent measurement:
(i) All financial liabilities of the Company
measured at amortised cost are subsequently
measured using effective interest method.
(ii) All financial liabilities of the Company
categorised at fair value are subsequently
measured at fair value through profit and loss
statement.
Derecognition: A financial liability is derecognised
when the obligation under the liability is discharged
or cancelled or expires.
i) Fair Value
The Company measures financial instruments
at fair value in accordance with the accounting
policies mentioned above. Fair value is the
price that would be received to sell an asset
or paid to transfer a liability in an orderly
transaction between market participants
at the measurement date. The fair value
measurement is based on the presumption
that the transaction to sell the asset or transfer
the liability takes place either:
• In the 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.
All assets and liabilities for which fair value
is measured or disclosed in the financial
statements are categorised within the fair
value hierarchy that categorises into three
levels, described as follows:
The fair value hierarchy gives the highest
priority to quoted prices in active markets for
identical assets or liabilities (Level 1 inputs)
and the lowest priority to unobservable inputs
(Level 3 inputs).
Level 1 — quoted (unadjusted) market prices
in active markets for identical assets or
liabilities.
Level 2 — inputs other than quoted prices
included within Level 1 that are observable
for the asset or liability, either directly or
indirectly.
Level 3 — inputs that are unobservable for the
asset or liability.
For assets and liabilities that are recognised
in the financial statements at fair value on a
recurring basis, the Company determines
whether transfers have occurred between
levels in the hierarchy by re-assessing
categorisation at the end of each reporting
period and discloses the same.
j) Foreign Currency Translation
These financial statements are presented in Indian
Rupees, which is the Company's functional currency.
Initial Recognition:
On initial recognition, transactions in foreign currencies
entered into by the Company are recorded in the
functional currency, by applying to the foreign currency
amount, the spot exchange rate between the functional
currency and the foreign currency at the date of the
transaction. Exchange differences arising on foreign
exchange transactions settled during the year are
recognised in the Statement of Profit and Loss.
Measurement of foreign currency items at
reporting date:
Foreign currency monetary items of the Company are
translated at the closing exchange rates. Non-monetary
items that are measured at historical cost in a foreign
currency, are translated using the exchange rate at
the date of the transaction. Nonmonetary items that
are measured at fair value in a foreign currency, are
translated using the exchange rates at the date when the
fair value is measured.
Exchange differences arising out of these translations
are recognised in the Statement of Profit and Loss.
k) Income Taxes
Tax expense is the aggregate amount included in the
determination of profit or loss for the period in respect
of current tax and deferred tax.
Current tax:
Current tax is the amount of income taxes payable in
respect of taxable profit for a period. Taxable profit differs
from 'profit before tax' as reported in the Statement of
Profit and Loss because of items of income or expense
that are taxable or deductible in other years and items
that are never taxable or deductible in accordance with
applicable tax laws. Current tax is measured using tax
rates that have been enacted or substantively enacted
by the end of reporting period.
Deferred tax:
Deferred tax is recognised on temporary differences
between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases
used in the computation of taxable profit under Income
tax Act, 1961. Deferred tax liabilities are generally
recognised for all taxable temporary differences. In
case of temporary differences that arise from initial
recognition of assets or liabilities in a transaction
(other than business combination) that affect neither
the taxable profit nor the accounting profit, deferred
tax liabilities are not recognised. Also, for temporary
differences that arise from initial recognition of goodwill,
deferred tax liabilities are not recognised.
Deferred tax assets has been recognised for all
deductible temporary differences to the extent it is
probable that taxable profits will be available against
which those deductible temporary difference can be
utilised. In case of temporary differences that arise from
initial recognition of assets or liabilities in a transaction
(other than business combination) that affect neither the
taxable profit nor the accounting profit, deferred tax
assets are not recognised.
The carrying amount of deferred tax assets is reviewed
at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable
profits will be available to allow the benefits of part or all
of such deferred tax assets to be utilised.
In case of temporary differences that arise from initial
recognition of assets or liabilities in a transaction (other
than business combination) that affect neither the
taxable profit nor the accounting profit, deferred tax
assets are not recognised.
Deferred tax assets and liabilities are measured at
the tax rates that have been enacted or substantively
enacted by the Balance Sheet date and are expected
to apply to taxable income in the years in which those
temporary differences are expected to be recovered or
settled.
Presentation of current and deferred tax:
Current and deferred tax are recognised as income or
an expense in the Statement of Profit and Loss, except
when they relate to items that are recognised in Other
Comprehensive Income, in which case, the current and
deferred tax income/expense are recognised in Other
Comprehensive Income.
The Company offsets current tax assets and current
tax liabilities, where it has a legally enforceable right
to set off the recognised amounts and where it intends
either to settle on a net basis, or to realise the asset and
settle the liability simultaneously. In case of deferred
tax assets and deferred tax liabilities, the same are
offset if the Company has a legally enforceable right to
set off corresponding current tax assets against current
tax liabilities and the deferred tax assets and deferred
tax liabilities relate to income taxes levied by the same
tax authority on the Company. Where current tax or
deferred tax arises from the initial accounting for a
business combination, the tax effect is included in the
accounting for the business combination.
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