Note 2: Summary of significant accounting policies:
a. Basis of preparation
The standalone financial statements of the Company comply in all material aspects with Indian Accounting
Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) Companies (Indian
Accounting Standards) Rules, 2015 (as amended) and other relevant provisions of the Act.
The Company, being an exempt Core Investment Company (CIC) under RBI regulations, has prepared
financial statement in accordance with Division III of Schedule III of the Act, except for disclosure of
following ratios - (i) Capital to risk-weighted assets ratio (CRAR), (ii) Tier I CRAR, (iii) Tier II CRAR and
Liquidity Coverage Ratio. Typically, these ratios are required to be maintained by Banking companies
and NBFC to comply with RBI regulations. However, the Company, being an exempt CIC, is not required
to maintaining such capital to assets and liquidity ratios. Accordingly, disclosure of such ratios is not
required.
The financial statements have been prepared on the historical cost basis except for certain financial
instruments that are measured at fair values as per Ind AS 109, at the end of each reporting period, as
explained in the accounting policies below.
Fair value is the price that would be received to sell an asset or would be 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 assumptions
that market participants would use when pricing the asset or liability, assuming that market participants
act in their economic best interest. The Company uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair value, maximising the use of
relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the standalone financial statements
are categorised within the fair value hierarchy, described as follows, based on the lowest level input that
is significant to the fair value measurement as a whole:
Level 1- Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2- Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable;
Level 3- Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
b. Presentation and Classification
The Company presents its balance sheet in the order of liquidity as per the presentation requirement of
division III of schedule III of the Act.
The Company’s normal operating cycle has been taken as 12 months.
c. Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company
and the revenue can be reliably measured, regardless of when the payment is being made. The Company
has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in
all the revenue arrangements as it has pricing latitude and is also exposed to inventory and credit risks.
Revenue is measured at the fair value of the consideration received or receivable, taking into account
contractually defined terms of payment i.e. adjusted for discounts, incentive, time value of money and
excluding taxes or duties collected on behalf of the government. No element of financing deemed present,
as the sales are made with a credit term consistent with market practice. Further the Company charges
interest to customers on delayed payment, if any.
Revenue from operating leases
Revenue from lease of real estate, arising from operating leases on investment properties is accounted
for on a straight-line basis over the lease terms.
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective
interest rate applicable.
Dividends
Income from dividend on investments is accrued in the year in which it is declared, whereby the Company’s
right to receive is established.
Services
Income from services on supply of services for sales and marketing is accrued on a basis of services
provided.
d. Other income
Profit from sale/transfer of assets is recognised only when the transfer is complete, i.e. when the transferee
obtains control and legal title for the asset and when there is no uncertainty on the amount and timing of
receipt of the sale consideration. The recording of profit from sale/transfer is postponed until then.
e. Trade receivables
The company classifies the right to consideration in exchange for deliverables as either a receivable or
as unbilled revenue. A receivable is a right to consideration that is unconditional upon passage of time.
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f. Property, plant and equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated
impairment losses, if any. Such cost includes the cost of replacing part of the property, plant and equipment
and borrowing costs for long-term construction projects if the recognition criteria are met. All other repair
and maintenance costs are recognised in statement of profit or loss as incurred. No decommissioning
liabilities are expected or be incurred on the assets of plant and equipment.
The Company, based on technical assessment made by technical expert and management estimate,
depreciates all the assets over estimated useful life which is also the useful life prescribed in Schedule
II to the Companies Act, 2013. The management believes that these estimated useful lives are realistic
and reflect fair approximation of the period over which the assets are likely to be used.
The residual values, useful lives and methods of depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted prospectively, if appropriate.
g. Investment properties
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied
by the Company for use in business, neither held for sale is classified as investment property. Investment
properties are measured initially at cost, including transaction costs. Subsequent to initial recognition,
investment properties are stated at cost less accumulated depreciation (as applicable to building
component) and accumulated impairment loss, if any.
Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future
economic benefits associated with expenditure will flow to the company and the cost of the item can be
measured reliably. All other repairs and maintenance costs are expensed when incurred.
The Company, based on technical assessment made by technical expert and management estimate,
depreciates the building over estimated useful life, which is also the useful life prescribed in Schedule
II to the Act. The management believes that these estimated useful lives are realistic and reflect fair
approximation of the period over which the assets are likely to be used.
Though the Company measures investment property using cost based measurement, the fair value of
investment property is disclosed in the notes. Fair values are determined based on an annual evaluation
performed by the management. The Company obtains valuation report at reasonable intervals from
external valuers.
h. Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the
arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the
arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right
to use the asset or assets, even if that right is not explicitly stated in the arrangement.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership
of an asset are classified as operating leases. Rental income from operating lease is recognised on a
straight-line basis over the term of the relevant lease.
i. Taxes
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss of the year
and any adjustment to the tax payable or receivable in respect of previous years. It is measured using
tax rate enacted or substantially enacted at the reporting date.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets/liabilities are recognised for deductible/taxable temporary differences. Deferred
tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred taxes relate to the same taxable Company and
the same taxation authority.
Current and deferred tax are recognized in profit or loss, except when they relate to items that are
recognized in other comprehensive income or directly in equity, in which case, the current and deferred
tax are also recognized in other comprehensive income or directly in equity respectively.
j. Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term
deposits with an original maturity of three months or less, which are subject to an insignificant risk of
changes in value.
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