. Summary of material accounting policy information
C1. Revenue recognition
a. Interest income
Interest income is recognised in the standalone statement of profit and loss using the effective interest rate (EIR) method for all financial assets measured at amortised cost or debt instruments measured at Fair Value through Other Comprehensive Income (FVOCI).
EIR is the rate that discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. The calculation of EIR includes all fees received between parties to the contract that are an integral part of the contract, transaction costs, and all other premiums or discounts.
Transaction costs include incremental costs that are directly attributable to the acquisition of financial assets.
Interest income on credit impaired assets is recognised by applying the effective interest rate to the amortised cost (net of impairment loss allowance) of the financial asset. If the financial asset is no longer credit-impaired, the Company reverts to calculate interest income on a gross basis.
b. Dividend income
Income from dividend on shares of corporate bodies and units of mutual funds is accounted when the Company's right to receive the dividend is established.
c. Other revenue from operations
The Company recognises revenue from contracts with customers (other than financial assets to which Ind AS 109 "Financial instruments" is applicable) based on a comprehensive assessment model as set out in Ind AS 115 "Revenue from contracts with customers". Revenue is measured at the transaction price allocated to the performance obligation in accordance with Ind AS 115. The Company identifies contract(s) with a customer and its performance obligations under the contract, determines the transaction price and its allocation to the performance obligations in the contract and recognises revenue only on satisfactory completion of performance obligations.
In case of discounts, rebates, credits, price incentives or similar terms, consideration are determined based on its most likely amount, which is assessed at each reporting period.
• Fees, commission and other services
Fees on services and products are recognised for the rendering of services and products to the customer.
• Net gain on fair value changes:
The Company recognises gains / (losses) on fair value change of financial assets measured at FVTPL and realised gains / (losses) on derecognition of financial asset measured at FVTPL and FVOCI on net basis.
C2. 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.
a. Financial assets
Financial assets are recognised in the Company's financial statements when the Company becomes party to the contractual provisions of the instruments.
• Classification
Upon initial recognition, financial assets are classified into one of the following categories:
• Amortised Cost (AC),
• Fair Value through Other Comprehensive Income (FVOCI), or
• Fair Value through Profit or Loss (FVTPL)
The classification is determined based on the Company's business model for managing the financial assets and the contractual cash flow characteristics of the financial asset. The business model for managing financial assets refers to the way its financial assets are managed in order to achieve its business objective. The business model determines whether cash flows will result from collecting contractual cash flows, selling financial assets or both.
• Initial recognition and measurement
All financial assets are initially recognised at fair value except the following:
• Investment in subsidiaries, associates and joint venture are recorded at cost;
• Financial assets measured at FVTPL are recognised at fair value at the reporting date
Transaction costs and revenues that are directly attributable to the acquisition or issue of financial assets (other than financial assets measured at FVTPL) are added to or deducted from the fair value on initial recognition. Transaction costs and revenues of financial assets measured at fair value through profit or loss are recognised immediately in the standalone statement of profit and loss. However, trade receivables that do not contain a significant financing component are measured at transaction price.
• Subsequent measurement
• Financial assets at Amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions:
• the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
• the contractual terms of the financial asset represent contractual cash flows that are Solely Payments of Principal and Interest (SPPI) on the principal amount outstanding.
Subsequent to initial recognition, financial assets held within this category are measured at amortized cost using the effective interest method, less any impairment losses.
• Financial assets at FVOCI
A financial asset is measured at FVOCI if it meets both of the following conditions:
• the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
• the contractual terms of the financial asset represent contractual cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets designated as FVOCI are subsequently measured at fair value, with unrealized gains and losses recognised in other comprehensive income, except for impairment losses and foreign exchange gains and losses on monetary assets.
• Financial assets at FVTPL
Financial assets not classified as either amortised cost or FVOCI are measured at fair value through profit or loss. Subsequent changes in fair value are recognised in the standalone statement of profit and loss.
• Reclassification of financial assets
Financial assets are reclassified subsequent to their recognition only if the Company changes its business model for managing those financial assets. Changes in business model are made and applied prospectively from the reclassification date which is the first day of immediately next reporting period following the changes in business model in accordance with principles laid down under Ind AS 109 "Financial Instruments".
• Derecognition of financial assets
Financial assets are derecognised when the contractual rights to receive cash flows from the asset have expired or have been transferred in accordance with Ind AS 109, and the Company has transferred substantially all risks and rewards associated with the asset.
On derecognition of a financial asset in its entirety, the difference between (a) the carrying amount (measured at the date of derecognition) and (b) the consideration received (including any new asset obtained less any new liability assumed) is recognised in standalone statement of profit and loss.
• Investment in subsidiaries, associates and joint venture
The Company has accounted for its investments in subsidiaries, associates and joint ventures at cost less impairment loss (if any). Investments are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable.
• Impairment of financial assets
The Company recognises loss allowances on:
• Financial assets measured at amortized cost; and
• Financial assets measured at FVOCI - debt instruments.
Expected credit losses are measured based on an assessment of the credit risk associated with financial instruments. This assessment considers historical experience, current economic conditions, and forward-looking information relevant to the collectability of contractual cash flows.
Both Lifetime ECLs and 12-month ECLs are calculated on either an individual basis or a collective basis, depending on the nature of the underlying portfolio of financial instruments.
Financial assets where no significant increase in credit risk has been observed are considered to be in 'Stage 1' for which a 12-month ECL is recognised. Financial assets that are considered to have significant increase in credit risk are considered to be in 'stage 2' and those which are in default or for which there is objective evidence of impairment are considered to be in 'stage 3'. Lifetime ECL is recognised for stage 2 and stage 3 financial assets.
The Company has established a policy to perform an assessment, at the end of each reporting period, of whether a financial instrument's credit risk has increased significantly since initial recognition, by considering the change in the risk of default occurring over the remaining life of the financial instrument.
Probability-Weighted Approach: Expected credit losses are calculated using a probability-weighted approach, considering a range of possible outcomes and their associated probabilities. This approach incorporates both the likelihood of default and the severity of loss in the event of default.
The Company maintains allowances for expected credit losses, which are deducted from the carrying amount of the financial asset to present the net carrying amount on the balance sheet. The allowance is adjusted through standalone statement of profit and loss to reflect changes in expected credit losses.
The Company follows a 'simplified approach' for recognition of impairment loss allowance on trade / other receivables that do not contain a significant financing component. The application of simplified approach does not require the Company to track changes in credit risk. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward-looking estimates are analysed.
• Derecognition
Financial assets are written off (either partially or in full) when there is no reasonable expectation of recovering a financial asset in its entirety or a portion thereof. However, financial assets that are written off could still be subject to enforcement activities under the Company recovery procedures, considering legal advice where appropriate. Any recoveries made are recognised in the standalone statement of profit and loss on actual realisation from customer.
b. Financial liabilities
Financial liabilities and equity instruments issued by the Company are classified according to substance of the contractual arrangements entered into and the definitions of financial liabilities and an equity instrument.
• Initial recognition and measurement
All financial liabilities are recognised at fair value and in case of borrowings and payables, net of directly attributable cost. Fees of recurring nature are directly recognised in the standalone statement of profit and loss as finance cost.
• Subsequent measurement
Financial Liabilities are carried at amortised cost using the effective interest method.
• Derecognition
A financial liability (or a part of a financial liability) is derecognised from the Company's balance sheet when the obligation specified in the contract is discharged or cancelled or expires. Any gains or losses arising on derecognition of liabilities are recognised in the standalone statement of profit and loss.
c. Compound financial instruments
The Company recognises separately the components of compound financial instrument that (a) creates a financial liability of the entity and (b) grants an option to the holder of the instrument to convert it into an equity instrument of the entity.
d. Offsetting of financial instruments
Financial assets and financial liabilities are offset, and the net amount is reported in the Balance Sheet only where the Company has legally enforceable right to set off the amount and Company intends, either to settle them on a net basis or to realize the asset and settle the liability simultaneously as permitted by Ind AS.
C3. Cash and cash equivalents
Cash and cash equivalents comprise of cash on hand, cash at bank, short-term deposits and shortterm highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
C4. Trade receivable
A receivable represents the Company's right to an amount of consideration that is unconditional.
C5. Tax expenses
The tax expenses for the period comprises of current tax and deferred income tax. Tax is recognised in the standalone statement of profit and loss, except to the extent that it relates to items recognised in the other comprehensive income. In which case, the tax is also recognised in other comprehensive income or equity.
• Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the income tax authorities, based on tax rates and laws that are enacted at the Balance sheet date.
• 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.
Deferred tax assets are recognised to the extent it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax losses can be utilised.
Deferred tax items in correlation to the underlying transaction relating to Other comprehensive income and Equity are recognised in Other comprehensive income and Equity respectively.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the
period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of Deferred tax assets are reviewed at the end of each reporting period 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 reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax assets to be recovered.
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 entity and the same taxation authority.
C6. Property, Plant and Equipment
Property, Plant and Equipment (PPE) are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost and any cost directly attributable to bringing the assets to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of that item are depreciated separately.
Property, plant and equipment not ready for the intended use on the date of Balance Sheet are disclosed as 'Capital work-in-progress'. Advances given towards acquisition of property, plant and equipment outstanding at each balance sheet date are disclosed in other non-financial assets.
Administrative and other general overhead expenses that are specifically attributable to the acquisition of Property, plant and equipment are allocated and capitalised as a part of the cost of the respective Property, plant and equipment. Expenses on repair and maintenance are charged to the statement of profit and loss during the year in which such costs are incurred.
Depreciation on property, plant and equipment is provided using straight line method on cost. Depreciation is provided based on useful life of the
assets as prescribed in Schedule II to the Act.
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.
Gains or losses arising from derecognition of a property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the standalone statement of profit and loss when the asset is derecognised.
C7. Leases
The Company, as a lessee, recognises a Right-of-Use (ROU) asset and a lease liability for its enforceable leasing arrangements, if the contract conveys the right to control the use of an identified asset.
The contract conveys the right to control the use of an identified asset, if it involves the use of an identified asset and the company has substantially all of the economic benefits from use of the asset and has right to direct the use of the identified asset.
The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease if that rate can be readily determined. If that rate cannot be readily determined, the Company uses an incremental borrowing rate.
Costs including depreciation are recognised as an expense in the standalone statement of profit and loss. Initial direct costs are recognised immediately in the standalone statement of profit and loss.
For short-term and low value leases the company recognises the lease payments as an operating expense on a straight-line basis over the lease term. None of the agreements and contracts of the Company are resulting into ROU asset and lease liability.
C8. Other intangible assets
Other intangible assets are stated at cost of acquisition net of recoverable taxes, trade discount and rebates less accumulated amortisation / depletion and impairment losses, if any. Such cost includes purchase price, borrowing costs, and any cost directly attributable to bringing the asset to its working condition for the intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the other intangible assets.
Administrative and other general overhead expenses that are specifically attributable to the acquisition of other intangible assets are allocated and capitalised
as a part of the cost of the other intangible assets. Expenses on software support and maintenance are charged to the standalone statement of profit and loss during the year in which such costs are incurred.
Gains or losses arising from derecognition of an other intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the standalone statement of profit and loss when the asset is derecognised.
Company's other intangible assets are amortized based on the following table:
Other intangible assets not ready for the intended use on the date of Balance Sheet are disclosed as 'Intangible assets under development'.
The amortisation period and the amortisation method for other intangible assets with a finite useful life are reviewed at each reporting date.
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