2.2 Summary of material accounting policies
a) Use of Estimates
• The preparation of financial statements in conformity with Ind AS requires management of the Company to make judgements,
estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent
liabilities as at the date of the standalone financial statements and the reported amount of income and expenses for the
reporting period. The application of accounting policies that require critical accounting estimates involving complex and
subjective judgments and the use of assumptions in the standalone financial statements have been disclosed as applicable in the
respective notes to accounts.
• Accounting estimates can change from period to period. Future results could differ from these estimates. Appropriate changes in
estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in
estimates are reflected in the standalone financial statements in the period in which changes are made and, if material, their
effects are disclosed in the notes to the standalone financial statements.
b) Current versus non-current classification
• The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is treated as current when it is:
• Expected to be realised or intended to be sold or consumed in normal operating cycle;
• Held primarily for the purpose of trading.
• Expected to be realised within twelve months after the reporting year, or
• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the
reporting year.
Current assets include the current portion of non-Current financial assets.
All other assets are classified as non-current.
A liability is current when:
• It is expected to be settled in normal operating cycle
• It is held primarily for the purpose of trading
• It is due to be settled within twelve months after the reporting year, or
• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting year.
Current liabilities include current portion of non-current financial liabilities.
The Company classifies all other liabilities as noncurrent.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents.
The Company has identified twelve months as its operating cycle.
c) Revenue recognition
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an
amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
As the Company is acting as a Business Correspondent of various Banks and Payment Banks and engaged in the business of
Domestic Money Transfer (DMT), IMPS, AEPS, Mobile Recharges, Railway and Air Tickets, Cash
Collection Services, EMI Collection Services and other incidental business through its agents/channel partners network, the major
revenues of the company are service charges received for various transactions, onboarding fees of merchants, sale of recharges
etc.
Revenue is recognized when it is earned, and no significant uncertainty exists as to its realisation or collection. Revenue is
recognised net of Goods & Service Tax (GST). Revenues in excess of invoicing are classified as contract assets (which are referred to
as unbilled revenue under Trade Receivables). Contract assets are recognised when there is excess of revenue earned over billings
on contracts. Contract assets are classified as unbilled revenue (only act of invoicing is pending) when there is unconditional right
to receive cash, and only passage of time is required, as per contractual terms.
Unearned revenue (“contract liability") is recognised when there are billings in excess of revenues. These are subsequently
recognized as revenue when the associated performance obligations are fulfilled.
Advances received for services and products are reported as Advance until all conditions for revenue recognition are met.
Revenue from subsidiaries is recognised based on transaction price which is at arm's length
Service Charges on Banking Correspondent Services & Non-Banking Correspondent Services:
Service Charges are generally determined as a percentage of transaction value executed by the Merchants of the company.
Service Charges received on various transaction services (DMT, IMPS, AEPS, EMI Collection, Cash Collection, Insurance, Ticket
Bookings, etc.) provided through the Company's portal is recognised when the transaction is executed successfully. Service
Charges are accounted on net-off Goods & Service Tax.
Onboarding Income:
Onboarding Income is recognised as and when retailers and distributors are enrolled with the company and is included under
the head “Revenue from Operations" in the Statement of Profit and Loss.
Sale of Recharges:
Revenue from sale of recharges is recognised when the transaction is carried out successfully on the portal of the company.
Revenue in respect of the same is recognised on gross basis on the amount of recharge net-off goods and service tax.
Sale of Devices & Intangibles:
Revenue for Sale of Devices is recognised when the devices are dispatched to merchants and are accounted, net off, returns,
trade discounts and Goods & Service Tax.
Interest Income:
Interest is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable and when
no significant uncertainty of its realization exists.
Other Income:
Other income is accounted on accrual basis.
d) Income Tax.
Income tax expense consists of current and deferred tax. Income tax expense is recognised in profit or loss except to the extent
that it relates to items recognised in OCI or directly in equity, in which case it is recognised in OCI or directly in equity respectively.
Current income tax
Current tax is the expected tax payable on the taxable profit for the year, using tax rates enacted or substantively enacted by the
end of the reporting period, and any adjustment to tax payable in respect of previous years.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other
comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or
directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
The Govt. of India had issued the Taxation Laws (Amendment) Act 2019 which provides Domestic Companies an option to pay
corporate tax at reduced rates from April 1, 2019 subject to certain conditions. The company has opted to avail this concessional
tax regime
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
• When the deferred tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
• In respect of taxable temporary differences associated with investments in subsidiaries and interests in joint ventures when
the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will
not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences and the carry forward of any unused tax losses.
Deferred tax assets are recognised to the extent that 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, except:
• When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss
• In respect of deductible temporary differences associated with investments in subsidiaries and interests in joint ventures
deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the
foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date 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 re-assessed at each reporting date and are recognised to the extent that it has become probable that
future taxable profits will allow the deferred tax asset to be recovered.
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 relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive
income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in
equity.
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.
e) Inventories
Closing Stock is valued at lower of, cost arrived on FIFO method or Net Realizable Value.
Cost comprises of all cost of purchase, cost of conversion and other cost incurred in bringing them to their respective present
location and condition. Cost is determined using FIFO method of inventory valuation.
f) Property, plant and equipment
Plant and equipment are stated at cost of acquisition or constructions including attributable borrowing cost till such assets are
ready for their intended use, less of accumulated depreciation and accumulated impairment losses, if any. Cost of acquisition for
the aforesaid purpose comprises its purchase price, including import duties and other non-refundable taxes or levies and any
directly attributable cost of bringing the asset to its working condition for its intended use, net of trade discounts, rebates and
credits received if any.
Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects
if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the
Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost
is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All
other repair and maintenance costs are recognised in profit or loss as incurred.
Property Plant and Equipment are eliminated from financial statements, either on disposal or when retired from active use.
Losses arising in case of retirement of Property, Plant and equipment and gains or losses arising from disposal of property, plant
and equipment are recognised in statement of profit and loss in the year of occurrence.
The asset's residual values, useful lives and methods of depreciation are reviewed at each financial year and adjusted
prospectively, if appropriate,
Depreciation is calculated on a Written down value basis over the estimated useful lives of the assets. Useful lives used by the
Company are same as prescribed rates prescribed under Schedule II of the Companies Act 2013. The range of useful lives of the
property, plant and equipment are as follows:
Depreciation on the assets purchased during the year is provided on pro-rata basis from the date of purchase
of the assets. An item of property, plant and equipment and any significant part initially recognized is derecognised upon disposal or
when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income
statement when the asset
is derecognized.
g) Intangible Assets
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will flow to
the Company and the cost of the asset can be measured reliably. Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and
accumulated impairment losses.
Internally generated intangibles, except for development costs that meet the recognition criteria, are not capitalised and the related
expenditure is charged to Statement of profit or loss in the period in which the expenditure is incurred. Expenditure incurred during
the development phase of ongoing projects, is classified under 'Intangible assets under development' and same is capitalized to the
respective intangible asset upon completion of the project. Developed Technology/ Software and Non- Compete acquired in a
business combination are recognised at fair value at the acquisition date.
Intangible assets are amortised over the useful economic life and assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset are reviewed at least
at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic
benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as
changes in accounting estimates.
Company amortises intangible assets over the period of 3 to 10 years, as the Company expects to generate future benefits from the
given assets for a period of 3 to 10 years.
The amortization expense on intangible assets is recognised in the statement of profit and loss unless such expenditure forms part of
carrying value of another asset.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
An internally generated intangible asset arising from development (or from the development phase of an internal project) is
recognized if, and only if, all of the following have been demonstrated:
i) . the technical feasibility of completing the intangible asset so that it will be available for use or sale.
ii) . the intention to complete the intangible asset and use or sell it;
iii) . the ability to use or sell the intangible asset.
iv) . how the intangible asset will generate probable future economic benefits;
v) . adequate technical, financial and other resources to complete the development and to use or sell the software are available, and
vi) . the expenditure attributable to the software during its development can be reliably measured.
h) Impairment of Assets
Financial Assets:
A financial asset not carried at fair value is assessed at each reporting date to determine whether there is objective evidence that it is
impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the
asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
The company assess at each date of Balance sheet whether a financial assets or group of financial assets is impaired. In accordance
with Ind-AS 109, the Company applies Expected Credit Loss model for measurement and recognisition of impairment loss on the
financial assets measured at amortized cost. Loss allowance on Trade receivables are measured following 'simplified approach' at an
amount equal to lifetime ECL at each reporting date. As the company has not sufficient historical credit loss experience, the expected
loss rates used in determining the lifetime ECL are based on management's best estimates of customer creditworthiness and current
macroeconomic conditions.
Non-Financial Assets:
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists,
or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount. An asset's
recoverable amount is the higher of an assets or cash-generating unit's (CGU) fair value less costs of disposal and its value in use.
Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or Company's assets. When the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows 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.
Impairment losses of continuing operations, including impairment on inventories, are recognised in the statement of profit and loss.
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 assets 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
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 or loss.
i) Borrowing costs:
• Borrowing costs that are attributable to the acquisition, construction, or production of a qualifying asset are capitalised as a part of
the cost of such asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily
requires a substantial period of time (generally over twelve months) to get ready for its intended use or sale.
• All other borrowing costs are amortized over the tenure of the loan and disclosed accordingly in the financial statements.
j) Leases
The Company evaluates each contract or arrangement, whether it qualifies as lease as defined under Ind AS 116.
The Company as a lessee:
The Company enters into an arrangement for lease of land, buildings, plant and machinery including computer equipment and vehicles.
Such arrangements are generally for a fixed period but may have extension or termination options. The Company assesses, whether the
contract is, or contains, a lease, at its inception. A contract is, or contains, a lease if the contract conveys the right to
a) control the use of an identified asset,
b) obtain substantially all the economic benefits from use of the identified asset, and
c) direct the use of the identified asset.
The Company determines the lease term as the non-cancellable period of a lease, together with periods covered by an option to extend
the lease, where the Company is reasonably certain to exercise that option.
Right-of-use assets
The Company at the commencement of the lease contract recognizes a Right-of-Use (RoU) asset at cost and corresponding lease
liability, except for leases with term of less than twelve months (short term leases) and low-value assets. For these short term and low
value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the lease term.
The cost of the right-of-use asset comprises the amount of the initial measurement of the lease liability, any lease payments made at or
before the inception date of the lease, plus any initial direct costs, less any lease incentives received. Subsequently, the right-of-use assets
are measured at cost less any accumulated depreciation and accumulated impairment losses, if any. The right-of-use assets are
depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use
asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment.
The Company applies Ind AS 36 to determine whether an RoU asset is impaired and accounts for any identified impairment loss as
described in the impairment of non-financial assets below.
Lease liabilities
For lease liabilities at the commencement of the lease, the Company measures the lease liability at the present value of the lease
payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can
be readily determined, if that rate is not readily determined, the lease payments are discounted using the incremental borrowing rate
that the Company would have to pay to borrow funds, including the consideration of factors such as the nature of the asset and location,
collateral, market terms and conditions, as applicable in a similar economic environment.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease
payments made. The Company recognizes the amount of the re-measurement of lease liability as an adjustment to the right-of-use
assets. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of
the lease liability, the Company recognizes any remaining amount of the re-measurement in statement of profit and loss. Lease liability
payments are classified as cash used in financing activities in the statement of cash flows.
The Company as a lessor
Leases under which the Company is a lessor are classified as finance or operating leases. Lease contracts where all the risks and rewards
are substantially transferred to the lessee, the lease contracts are classified as finance leases. All other leases are classified as operating
leases. The Company recognises lease payments received under operating leases as income on a straight-line basis over the lease term.
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