1. MATERIAL ACCOUNTING POLICIES
The material accounting policies used in preparation of the standalone financial statements have been included in the relevant notes to the standalone financial statements.
The accounting policies mentioned herein are relating to standalone financial statements of the Company.
a) Brief description of the Company
Pace Automation Limited is a public limited company incorporated and domiciled in India with its registered office located at No2. Ill Street, Parameshwari Nagar, Adyar, Chennai 600020.
It is engaged in providing on-line transaction processing services to various clients. Its shares are listed in stock exchanges.
b) Basis of Preparation
The financial statements 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 and other relevant provisions of the Act. The financial statements have been prepared on the historical cost convention under accrual basis of accounting except for certain financial assets and liabilities (as per accounting policy below), which have been measured at fair value.
All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle, paragraph 66 and 69 of Ind AS 1 and other criteria as set out in the Division II of Schedule III to the Companies Act, 2013.
c) Use of Estimates
The preparation of Financial Statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and reported amounts of amounts of income and expenses during the period. Examples of such estimates include computation of percentage of completion which requires the company to estimate the efforts or cost expended to date as a proportion of the total efforts or costs to be expensed, provision for doubtful debts, further obligations under employee retirement benefit plans, income taxes and the useful lives of fixed assets and intangible assets. Actual results could differ from these estimates. Differences between the actual results and estimates are recognized in the period in which the results are known/ materialized. Management believes that the estimates used in preparation of financial statements are prudent and reasonable.
The Company uses the following critical accounting judgements, estimates and assumptions in preparation of its financial statements:
(I) Revenue Recognition
Revenue is primarily derived from providing "online transaction services", software development and related services. Arrangements with customers for online transaction services are either on a fixed price, fixed timeframe or on a time and material basis. Annual technical services revenue from fixed-price on-line service contracts are recognized over the period in which the services are rendered. Where the service contracts are expired and not renewed/ftnalised before the end of the year, revenue is not recognised after the period for which negotiations for renewal Is not accepted by the customers. The Company presents revenues net of Indirect taxes in the Statement of Profit and Loss.
(il) Property, Plant and Equipment
All Items of Property, Plant and Equipment are stated at cost of acquisition or construction less accumulated depredation/ amortization and Impairment, If any. Cost includes purchase price, taxes and duties, labour cost and directly attributable overheads Incurred up to the date the asset is ready for its intended use. However, cost excludes Excise Duty, Value Added Tax to the extent credit of the duty or tax Is availed of.
Subsequent costs are included in the asset's carrying amount or recognised as separate asset, as appropriate, only when it is probable that future economic benefit associated with the item flows 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 repair and maintenance costs are charged to Profit and Loss during the reporting period in which they are incurred.
(iii) Depreciation and amortization
1) Depreciation on tangible fixed assets is charged over the estimated useful life of the asset (or part of the asset) on straight line method, in accordance with Part - A of Schedule II of the Companies Act, 2013. On tangible fixed assets additions/ disposed off during the year, depreciation is charged on pro-rata basis from the date of addition/ till the date of disposal.
2) Depreciation is not recorded on capital work-in-progress until construction and installation are complete and the asset is ready for its intended use.
3) Intangible Assets: Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.
Research costs are expenses as incurred. Software product development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the Company had an intention and ability to complete and use or sell the product with the software and the costs can be measured reliably.
Depreciation on assets purchased/ sold during a period is proportionately charged. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, commencing from the date the asset is available to the Company for Its use.
(iv) Provisions and Contingent Liabilities
A provision is recognized when an enterprise has a potential obligation as a result of the past event. An outflow of resources will probably be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to the current best estimates.
(v) Retirement Benefits to employees a. Gratuity
The Company provides for gratuity, a defined retirement benefit plan ('the Gratuity Plan') covering eligible employees. The Gratuity Plan provides a lump-sum payment to vested employees at retirement, death, Incapacitation or termination of employees, of an amount based on the respective employee’s salary and the tenure of employment with the company.
Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, performed by an Independent actuary at each Balance Sheet date using the projected unit credit method. The Company fully contribute all ascertained liabilities to the Pace Automation Employees Gratuity Fund Trust ('the Trust'). Trustees administer contributions made to the Trust and contributions are invested In a scheme with Life Insurance Corporation of India, as permitted by law. The Company recognizes the net obligation of the gratuity plan In the Balance Sheet as an asset or liability, respectively In accordance with the Accounting Standard (AS) 15, 'Employee Benefits'.
b. Provident Fund and Employees State Insurance Benefits
Contribution to Provident Fund and Employees State Insurance Corporation is made every month at the prescribed rate, to the Provident Fund Commissioner and Employees State Insurance Corporation. All eligible employees of the Company are entitled to receive benefits under the provident fund and ESI in which both the employee and employer (at a determined rate) contribute monthly to the Provident Fund Commissioner and Employees State Insurance Corporation. This plan Is a defined contribution plan as the obligation of the employer is limited to the monthly contributions made to the fund. The contributions made to the fund are recognized as an expense in profit and loss under employee benefit expenses. There is no benefit like short/long term compensated absence.
(vl) Foreign Currency Transactions
Foreign exchange transactions are normally recorded at the exchange rate prevailing at the time of the transaction. Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining the net profit for the period In which the transaction is settled.
(vli) Income Taxes
Current Tax is determined in accordance with the Income Tax Act, 1961. Deferred Tax arising on timing difference between the book and tax profit is accounted for using the tax rates and laws as of the Balance Sheet date. Deferred Tax Assets are reassessed and recognized on prudence, based on reasonable certainty of future taxable income.
Both Deferred tax liability and asset are recognized on timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. In the case of deferred tax assets, the same will be recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income is available against which such deferred tax assets can be realized.
(vfll) Earnings per Share
Earnings considered in ascertaining the Company's earnings per share comprise the net profit after tax. The number of shares used in computing the basic earnings per share is the weighted average number of shares outstanding during the year. The number of shares used In computing diluted earnings per share comprises the weighted average share considered for deriving basic earnings per share, and also the weighted average number of shares, if any, which would have been issued on the conversion of dilutive potential equity shares, if any.
(xi) Investments
Trade Investments are the investments made to enhance the Company's business interests. Investments are classified as current or long-term based on management's intention. Long-term investments are stated as cost less depreciation, if any. Short-term Investments are valued at lower of cost or market value. Income from Investment - Interest Income is accounted for on an accrual basis.
(lx) Trade Receivables
Trade receivables are recognized Initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for Impairment.
(x) Cash and Cash Equivalents
Cash and cash equivalents comprise of cash and cash on deposit with banks and corporations. The company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.
(xi) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expenses associated with investing or financing cash flows, The cash flows from operating, investing and financing activities of the Company are segregated.
f) Recent pronouncements
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
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