Note 2: Summary of Material Accounting
Policy Information
This note provides a list of material accounting policies
adopted in the preparation of these standalone financial
statements. These policies have been consistently applied
to all the years presented, unless otherwise stated:
a. Basis of preparation
These standalone financial statements of the
Company have been prepared in accordance with
Indian Accounting Standards (Ind AS) notified under
the Companies (Indian Accounting Standards)
Rules, 2015 (as amended from time to time) and
presentation requirements of Division II of Schedule
III to the Companies Act, 2013, (Ind AS compliant
Schedule III). These standalone financial statements
are presented in Indian rupees, and all values are
rounded to the nearest lakh, except when otherwise
indicated.
b. Historical Cost Convention
These standalone financial statements have been
prepared on the historical cost basis, except for the
following items:
- Certain financial assets and liabilities measured
at fair value;
- Defined benefits plans - plan assets measured
at fair value; and
- Share based payments
c. Current and non-current classification
All assets and liabilities have been classified as
current or non-current as per Company's operating
cycle and other criteria set out in the Schedule III
(Division II) to the Companies Act, 2013 as amended
from time to time. The Company has ascertained
its operating cycle as 12 months for the purpose of
current or non-current classification of assets and
liabilities.
d. Amendment in Accounting standards adopted by
the company
The Ministry of Corporate Affairs vide notification
dated May 07, 2025 and August 13, 2025 notified
the companies (Indian Accounting Standards)
Amendment Rules, 2025 and Companies (Indian
Accounting Standards) Second Amendment
Rules, 2025, respectively, which amended certain
accounting standards (as below), and are effective
for annual reporting periods beginning on or after
April 01,2025:
i. Amendments to Ind AS 1- Presentation of
Financial Statements:
The amendments primarily impacts classification
of liabilities. In accordance with the amendments,
the requirement of classification of liabilities as
non-current based on the existence of a right
to defer settlement for at least 12 months after
the reporting date has been revised to require
that such right must exist, with substance, at the
end of the reporting period. The amendments
also require assessment of compliance with
covenants for the purpose of classification of
liabilities, along with enhanced disclosures.
These amendments has no impact on the
Company's financial statements.
ii. Supplier Finance Arrangements - Amendments
to Ind AS 7 and Ind AS 107
The amendment requires disclosure of the
effects of supplier finance arrangements on the
Company's liabilities, cash flows and exposure
to liquidity risk.
These amendments has no impact on the
Company's financial statements.
iii. International Tax Reform - Pillar Two Model
Rules - Amendments to Ind AS 12
The Company is not within the scope of the
OECD Pillar Two Model Rules, as Pillar Two
legislation has not yet been enacted in any of
the jurisdictions in which the Company operates.
iv. Lack of Exchangeability - Amendments to Ind
AS 21
The amended Ind AS 21 have added
requirements to help entities to determine
whether a currency is exchangeable into
another currency, and the spot exchange rate to
use where it is not.
These amendments has no impact on the
Company's financial statements.
e. Business Combinations
The acquisition method of accounting is used to
account for all business combinations, regardless
of whether equity instruments or other assets are
acquired. The consideration transferred for the
acquisition of a subsidiary comprises the
• fair values of the assets transferred
• liabilities incurred to the former owners of the
acquired business
• equity interests issued by the group
• fair value of any asset or liability resulting from a
contingent consideration arrangement.
Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business
combination are, with limited exceptions, measured
initially at their fair values at the acquisition date.
The group recognises any non-controlling interest in
the acquired entity on an acquisition-by-acquisition
basis either at fair value or at the non-controlling
interest's proportionate share of the acquired entity's
net identifiable assets. Acquisition-related costs are
expensed as incurred.
Goodwill is initially measured at cost, being the excess
of the aggregate of the consideration transferred,
amount of any non-controlling interest in the acquired
entity and acquisition-date fair value of any previous
equity interest in the acquired entity over the net
identifiable assets acquired and liabilities assumed.
After initial recognition, goodwill is measured at cost
less any accumulated impairment losses. Goodwill
is tested for impairment annually or more frequently
if events or changes in circumstances indicate that
they might be impaired.
For the purpose of impairment testing, goodwill
acquired in a business combination is, from the
acquisition date, allocated to each of the Group's
cash-generating units that are expected to benefit
from the combination, irrespective of whether other
assets or liabilities of the acquiree are assigned to
those units.
A cash generating unit to which goodwill has been
allocated is tested for impairment annually, or more
frequently when there is an indication that the unit
may be impaired. If the recoverable amount of the
cash generating unit is less than its carrying amount,
the impairment loss is allocated first to reduce the
carrying amount of any goodwill allocated to the unit
and then to the other assets of the unit pro rata based
on the carrying amount of each asset in the unit.
Any impairment loss for goodwill is recognised in
the statement of profit and loss. An impairment loss
recognised for goodwill is not reversed in subsequent
periods.
If the business combination is achieved in stages,
the acquisition date carrying value of the acquirer's
previously held equity interest in the acquiree
is remeasured to fair value at the acquisition
date. Any gains or losses arising from such
remeasurement are recognised in the statement
of profit and loss or other comprehensive income,
as appropriate.
The financial information in the standalone financial
statements in respect of prior period has been
restated from the beginning of the preceding period
presented i.e. April 01,2024 to give effect of scheme
of amalgamation effective on August 29, 2025, i.e.
the date of sanction of Scheme by Hon'ble Tribunal.
Appointed date for the scheme is April 01, 2022.
Refer note 35.
f. Property, plant and equipment
All items of property, plant and equipment are carried
at cost less accumulated depreciation / amortisation
and impairment losses, if any. Historical cost
includes expenditure that is directly attributable to the
acquisition of the items.
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 Company and the cost of the item can
be measured reliably. The carrying amount of any
component accounted for as a separate asset is
derecognised when replaced. All other repairs and
maintenance are charged to the statement of profit
and loss during the reporting period in which they are
incurred.
Advances paid towards the acquisition of property,
plant and equipment outstanding at each balance
sheet date is classified as capital advances under
the non-current assets.
Depreciation methods, estimated useful lives
and residual value
Depreciation is recognised so as to write off the cost
of assets less their residual values over the useful
lives, using the straight-line method. The useful lives
have been determined based on technical evaluation
performed by the management which in some cases
are different as compared to those specified by
Schedule II to the Companies Act, 2013, in order to
reflect the actual usage of the assets.
The residual value of the assets are assessed to be
nil. The assets' residual values and useful lives are
reviewed, and adjusted if appropriate, at the end of
each reporting period.
An asset's carrying amount is written down
immediately to its recoverable amount if the asset's
carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These
are included in the statement of profit and loss.
* For these class of assets, based on internal
assessment, the management believes that the
useful lives as given above best represents the
period over which the management expects to use
these assets. Hence, useful lives of these assets are
different from the useful lives as prescribed under
Part C of Schedule II of the Companies Act, 2013.
g. Intangible assets
Intangible assets are stated at acquisition cost,
net of accumulated amortisation and accumulated
impairment losses, if any. Intangible assets with
indefinite useful lives or not yet available are not
amortised but instead tested for impairment annually.
Intangible assets with finite lives are amortised on a
straight-line basis over their estimated useful lives.
The amortisation period and the amortisation method
are reviewed at least at each financial year end. If
the expected useful life of the asset is significantly
different from previous estimates, the amortisation
period is changed accordingly. Gains or losses arising
from the retirement or disposal of an intangible asset
are determined as the difference between the net
disposal proceeds and the carrying amount of the
asset and recognised as income or expense in the
Statement of Profit and Loss.
The useful lives of intangible assets have been
considered as follows:
h. Impairment of non-financial assets
For all non-financial assets, the Company assesses
whether there are indicators of impairment. If such an
indicator exists, the recoverable amount of the asset
is estimated in order to determine the extent of the
impairment loss, if any. Where the asset does not
generate cash flows that are independent from other
assets, the Company estimates the recoverable
amount of the cash-generating unit (CGU) to which
the asset belongs.
The recoverable amount for an asset or CGU is the
higher of its value in use and fair value less costs of
disposal. If the recoverable amount of an asset or
CGU is estimated to be less than its carrying amount,
the asset or CGU is considered impaired and the
carrying amount of the asset or CGU is reduced to its
recoverable amount. An impairment loss is recognised
immediately in the statement of profit and loss.
In assessing value in use, the estimated future
cash flows of the asset or CGU are discounted to
their present value using a pre-tax discount rate
that reflects current market assessments of the time
value of money and the risks specific to the asset. In
determining fair value less costs of disposal, recent
market transactions are taken into account.
If no such transactions can be identified, an
appropriate valuation model is used. These
calculations are corroborated by valuation multiples,
quoted share prices for publicly traded companies or
other available fair value indicators.
The Company bases its impairment calculation on
detailed budgets and forecast calculations. These
budgets and forecast calculations generally cover a
period of five years. For longer periods, a long-term
growth rate is calculated and applied to project future
cash flows after the fifth year. To estimate cash flow
projections beyond periods covered by the most
recent budgets/forecasts, the Company extrapolates
cash flow projections in the budget using a steady or
declining growth rate for subsequent years, unless
an increasing rate can be justified. In any case, this
growth rate does not exceed the long-term average
growth rate for the products, industries, or country
or countries in which the entity operates, or for the
market in which the asset is used.
An assessment is made at each reporting date
to determine whether there is an indication that
previously recognised impairment losses no longer
exist or have decreased. If such indication exists,
the Company estimates the asset's or CGU's
recoverable amount. A previously recognised
impairment loss is reversed only if there has been
a change in the assumptions used to determine the
asset's or CGU's recoverable amount since the last
impairment loss was recognised. The reversal is
limited so that the carrying amount of the asset does
not exceed its recoverable amount, nor exceed the
carrying amount that would have been determined,
net of depreciation, had no impairment loss been
recognised for the asset in prior years. Such reversal
is recognised in the statement of profit and loss.
i. Revenue recognition
Revenue is measured based on the consideration
specified in a contract with a customer. The Company
recognises revenue as follows:
Sale of services
The Company earns revenue from services as
described below:
1) IT support services - includes services related to
IT application and solutions
Revenue from above services (other than IT support
services) is recognised at a point in time when the
related services are rendered as per the terms of the
agreement with customer. Revenue from IT Support
Services is recognised over time. Revenue is
disclosed net of the Goods and Service tax charged
on such services. In terms of the contract, excess of
revenue over the billed at the year-end is carried in
the balance sheet as unbilled trade receivables as
the amount is recoverable from the customer without
any future performance obligation. Cash received
before the services are delivered is recognised as a
contract liability, if any.
Revenue from above services is recognised in the
accounting period in which the services are rendered.
When there is uncertainty as to measurement
or ultimate collectability, revenue recognition is
postponed until such uncertainty is resolved.
No significant element of financing is deemed present
as the services are rendered with a credit term of 30¬
45 days, which is consistent with market practice.
Intellectual Property Rights (IPR) Fees
Income from IPR fees is recognised on an accrual
basis in accordance with the substance of the
relevant agreements. refer note 28.
j. Trade receivables
Trade receivables are amounts due from customers
for services performed in the ordinary course of
business. Trade receivables are recognised initially
at the amount of consideration that is unconditional.
The Company holds the trade receivables with the
objective of collecting the contractual cash flows and
therefore measures them subsequently at amortised
cost, less loss allowance.
k. Foreign currency transactions
Functional and presentation currency
Items included in the standalone financial statements
of the Company are measured using the currency
of the primary economic environment in which the
Company operates (‘the functional currency') i.e.
Indian rupee (INR), which is PB Fintech Limited's
functional and presentation currency.
Transactions and balances
Initial recognition: On initial recognition, all foreign
currency transactions are recorded by applying to
the foreign currency amount the spot exchange rate
between the functional currency and the foreign
currency at the date of the transactions.
Subsequent recognition: As at the reporting date,
foreign currency monetary items are translated
using the closing rate and non-monetary items that
are measured in terms of historical cost in a foreign
currency are translated using the exchange rate at
the date of the transaction.
Exchange gains and losses arising on the settlement
of monetary items or on translating monetary items at
rates different from those at which they were translated
on initial recognition during the year or in previous
financial statements are recognised in the statement
of profit and loss in the year in which they arise.
l. Employee benefits
Employee benefits include Wages and salaries,
Provident Fund, Employee State Insurance scheme,
Gratuity, Compensated absences and share based
payments.
i) Defined contribution plans
The Company's contributions to Provident
Fund, National Pension Scheme and Employee
State Insurance scheme are considered as
contribution to defined contribution plan and
charged as an expense based on the amount of
contributions required to be made as and when
services are rendered by the employees.
ii) Defined benefits plans
For defined benefits plans in the form of gratuity,
the cost of providing benefits is determined
using the Projected Unit Credit method,
with actuarial valuations being carried out at
each balance sheet date. Re-measurement,
comprising actuarial gains and losses, the effect
of the changes to the asset ceiling and the return
on plan asset, is reflected immediately in the
balance sheet with a charge or credit recognised
in other comprehensive income in the period in
which they occur. Re-measurement recognised
in other comprehensive income is reflected
immediately in retained earnings and is not
reclassified to the statement of profit and loss.
Past service cost is recognised in profit and loss
in the period of a plan amendment. Net interest
is calculated by applying the discount rate at the
beginning of the period to the net defined liability
or asset.
iii) Short-term obligations
The undiscounted amount of short-term
employee benefits expected to be paid
in exchange for the services rendered by
employees are recognised during the year when
the employees render the services.
These benefits include wages, salaries, bonus,
performance incentive and compensated
absences which are expected to occur within
twelve months after the end of the period in
which the employee renders the related service.
The cost of short-term compensated absences
is accounted as under:
a. i n case of accumulated compensated
absences, when employees render the
services that increase their entitlement of
future compensated absences;
b. in case of non-accumulating compensated
absences, when the absences occur.
iv) Other long-term employee benefits
obligations
The liabilities for compensated absences
that are not expected to be settled wholly
within 12 months after the end of the period
in which the employees render the related
service. They are therefore measured as the
present value of expected future payments
to be made in respect of services provided
by employees up to the end of the reporting
period using the projected unit credit method.
The benefits are discounted using the market
yields at the end of the reporting period that
have terms approximating to the terms of the
related obligation. Remeasurements as a
result of experience adjustments and changes
in actuarial assumptions are recognised in the
statement of profit and loss.
The obligations in relation to compensated
absences are presented as current liabilities
in the balance sheet as the Company does not
have an unconditional right to defer settlement
for at least 12 months after the reporting period,
regardless of when the actual settlement is
expected to occur.
v) Share-based payments
The Company operates a number of equity
settled, employee share based compensation
plans, under which the Company receives
services from employees as consideration for
equity shares of the Company. The Company
has granted stock options to its employees and
employees of its subsidiaries.
The fair value of the employees services
received in exchange for the grant of the
options is determined by reference to the
fair value of the options as at the grant date
and is recognised as an ‘employee benefits
expense' with a corresponding increase in
other equity. The total expense is recognised
over the vesting period which is the period over
which the applicable vesting condition is to be
satisfied. The total amount to be expensed is
determined by reference to the fair value of the
options granted:
1. including any market performance
conditions (e.g., the entity's share price)
2. excluding the impact of any service
and non-market performance vesting
conditions, and
3. including the impact of any non-vesting
conditions
At the end of each period, the entity revises
its estimates of the number of options that
are expected to vest based on the non¬
market vesting and service conditions. It
recognises the impact of the revision to
original estimates, if any, in the statement
of profit and loss, with a corresponding
adjustment to other equity.
The expense relating to options granted to the
employees of subsidiaries is cross charged to the
subsidiaries w.e.f. October 01,2024. Therefore,
the fair value of the employees' services received
by these subsidiaries (determined by reference to
the fair value of the options as at the grant date)
is recognised as an ‘receivable from subsidiaries'
with a corresponding increase in other equity.
m. Treasury shares (Shares held by the ESOP Trust)
The Company has created an Etechaces Employee
Stock Option Plan Trust (ESOP Trust) for providing
share-based payment to its employees under
Employee Stock Option Plan 2014 (“ESOP- 2014”)
and Employee Stock Option Plan 2020 (“ESOP
- 2020”). The Company uses Trust as a vehicle
for transferring shares to employees under the
employee remuneration schemes. The Company
allots shares to ESOP Trust. The Company in its
standalone financial statements treats ESOP trust
as its extension and shares held by ESOP Trust are
treated as treasury shares. Share options exercised
by employees under the ESOP schemes ESOP-
2014 and ESOP - 2020 are settled through the
transfer of these treasury shares.
n. Leases
Company as a lessee:
Leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased
asset is available for use by the Company. Contracts
may contain both lease and non-lease components.
Lease liabilities:
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities
include the net present value of the future lease
payments.
The lease payments include fixed payments
(including in substance fixed payments) less any
lease incentives receivable, variable lease payments
that depend on an index or a rate and amounts
expected to be paid under residual value guarantees.
The lease payments also include the exercise price of
a purchase option reasonably certain to be exercised
by the Company and payments of penalties for
terminating the lease, if the lease term reflects
the Company exercising the option to terminate.
Variable lease payments that do not depend on an
index or a rate are recognised as expenses in the
period in which the event or condition that triggers
the payment occurs. Lease payments to be made
under reasonably certain extension options are also
included in the measurement of the liability.
The lease payments are discounted using the
lessee's incremental borrowing rate. Lease payments
are allocated between principal and finance cost.
The finance cost is charged to the statement of profit
and loss over the lease period so as to produce a
constant periodic rate of interest on the remaining
balance of the liability for each period.
Right-of-use assets:
Right-of-use assets are measured at cost comprising
the amount of the initial measurement of lease
liability and lease payments made before the
commencement date.
Right-of-use assets are depreciated over the asset's
lease term on a straight-line basis. Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted
for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease
liabilities recognised, and lease payments made at
or before the commencement date less any lease
incentives received.
Short term leases and leases of low value assets:
Payments associated with short-term leases of
equipment, and all leases of low-value assets are
recognised on a straight-line basis as an expense in
the statement of profit and loss. Short-term leases
are leases with a lease term of 12 months or less.
Low-value assets comprise small items of office
equipment including IT equipment.
o. Earnings per share (EPS)
Basic earnings per share are computed by dividing
the profit after tax by the weighted average number of
equity shares outstanding during the year excluding
treasury shares. Diluted earnings per share is
computed by dividing the profit after tax as adjusted
for dividend, interest and other charges to expense or
income relating to the dilutive potential equity shares,
by the weighted average number of equity shares
considered for deriving basic earnings per share and
the weighted average number of equity shares which
could have been issued on the conversion of all
dilutive potential equity shares, except where results
are anti-dilutive.
p. Cash and cash equivalents
For the purpose of presentation in the statement of
cash flows, cash and cash equivalents includes cash
on hand, other short term, 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
change in value.
q. Trade Payables
These amounts represent liabilities for goods and
services provided to the Company prior to the end
of the financial year which are unpaid. The amounts
are unsecured and are usually paid within 30
days of recognition. Trade and other payables are
presented as current liabilities unless payment is
not due within 12 months after the reporting period.
They are recognised initially at their fair value and
subsequently measured at amortised cost using the
effective interest method.
r. Income Taxes
The income tax expense or credit for the period is the
tax payable on the current period's taxable income
based on the applicable income tax rate adjusted
by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused
tax losses.
The current income tax charge is calculated on the
basis of the tax laws enacted or substantively enacted
at the end of the reporting period. Management
periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is recognised on temporary
differences arising between the tax bases of
assets and liabilities and their carrying amounts
in the financial statements. Deferred tax liabilities
are generally recognised for all taxable temporary
differences. Deferred tax assets are generally
recognised for all deductible temporary differences
and unused tax losses to the extent that is probable
that tax profits will be available against which those
deductible temporary differences can be utilized.
Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantially
enacted by the end of the reporting period and are
expected to apply when the related deferred income
tax asset is realised or the deferred income tax
liability is settled.
Deferred tax assets and liabilities are offset when
there is a legally enforceable right to offset current
tax assets and liabilities and when the deferred
tax balances relate to the same taxation authority.
Current tax assets and tax liabilities are offset where
the entity has a legally enforceable right to offset and
intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
Current and deferred tax is recognised in the
statement of profit and loss, except to the extent that
it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is
also recognised in other comprehensive income or
directly in equity, respectively.
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