1. Significant accounting policies
The significant accounting policies applied by the Company in the preparation of its
financial statements are listed below. Such accounting policies have been applied
consistently to all the periods presented in these financial statements, unless otherwise
indicated.
(a) Basis of Preparation
The standalone financial statements comply in all material aspects with Indian Accounting
Standards (hereinafter referred to as “Ind AS") as notified under the Companies (Indian
Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards)
Amendment Rules, 2016 prescribed under Section 133 of the Companies Act, 2013 read with
rule 7 of the Companies (Accounts) Rules, 2014.
The standalone financial statements have been prepared in accordance with the Indian
Accounting Standards (Ind AS) on the historical cost basis except for certain financial
instruments that are measured at fair values at the end of each reporting period as
explained in the accounting policies below and the relevant provisions of the Act.
(b) Revenue Recognition
(i) Revenue: Company follows accrual system of accounting and takes into account
expense and incomes as accrued. Income from consultancy charges, brokerage &
commission is recognized when it is reliably measured that it will flow to the company.
(ii) Interest: Interest income from a financial asset is recognised when it is probable that
the economic benefits will flow to the company and the amount of income can be
measured reliably. Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts through the expected life of the
financial asset to that asset's net carrying amount on initial recognition.
(iii) Dividend: Dividend income from investments is recognized when the shareholder's
right to receive payment has been established (provided that it is probable that the
economic benefits will flow to the company and the amount of income can be
measured reliably).
(c) Income tax
Current Income tax: Current income tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws
used to compute the amount are those that are enacted or substantively enacted, at the
reporting date in the countries where the company operates and generates taxable income.
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.
Deferred tax
1) 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 liabilities are generally recognized for all taxable
temporary differences. Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that taxable profits will be available
against which those deductible temporary differences can be utilised. Such deferred tax
assets and liabilities are not recognized if the temporary difference arises from the initial
recognition (other than in a business combination) of assets and liabilities in a transaction
that affects neither the taxable profit nor the accounting profit. In addition, deferred tax
liabilities are not recognised if the temporary difference arises from the initial recognition of
goodwill.
2) Deferred tax liabilities are recognised for taxable temporary differences associated with
investments in subsidiaries and associates, and interests in joint ventures, except where the
Company is able to control the reversal of the temporary difference and it is probable that
the temporary difference will not reverse in the foreseeable future. Deferred tax assets
arising from deductible temporary differences associated with such investments and
interests are only recognized to the extent that it is probable that there will be sufficient
taxable profits against which to utilize the benefits of the temporary differences and they
are expected to reverse in the foreseeable future.
3) The carrying amount of deferred tax assets is reviewed at the end of each reporting period
and reduced to the extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
4) 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.
5) Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred tax assets relate to the
same taxable entity and same taxation authority.
Minimum Alternate Tax:
Minimum Alternate Tax ('MAT') credit is recognised as an asset only when and to the extent
there is convincing evidence that the company will pay normal income-tax during the
specified period. In the year in which the MAT credit becomes eligible to be recognised as
an asset, the said asset is created by way of a credit to the statement of profit and loss. The
company reviews the same at each balance sheet date and writes down the carrying
amount of MAT credit entitlement to the extent there is no longer convincing evidence to
the effect that company will pay normal income-tax during the specified period.
(d) Impairment of non-financial assets
Goodwill and intangible assets that have an indefinite useful life are not subject to
amortization and are tested annually for impairment, or more frequently if events or
changes in circumstances indicate that they might be impaired. Other assets are tested for
impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised in the statement of profit
or loss for the amount by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset's fair value less costs of disposal
and value in use. For the purposes of assessing impairment, assets are grouped at the lowest
level for which there are separately identifiable cash inflows which are largely dependent of
the cash inflows from other assets or groups of assets (cash-generating units). Non-financial
assets other than goodwill that suffered an impairment are reviewed for possible reversal of
the impairment at the end of each reporting period.
After impairment, depreciation is provided on the revised carrying amount of the asset over
its remaining useful life.
(e) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and
demand deposits with an original maturity of three months or less and highly liquid
investments that are readily convertible into known amounts of cash and which are subject
to an insignificant risk of changes in value net of outstanding bank overdrafts as they are
considered an integral part of the Company's cash management.
(f) Non-current assets (or disposal groups) held for sale and discontinued operations
Non-current assets are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use and a sale is
considered highly probable. They are measured at the lower of their carrying amount and
fair value less costs to sell, except for assets such as deferred tax assets, assets arising from
employee benefits, financial assets and contractual rights under insurance contracts, which
are specifically exempt from this requirement.
Non-current assets are not depreciated or amortised while they are classified as held for
sale. Interest and other expenses attributable to the liabilities of a disposal asset classified
as held for sale continue to be recognised.
(g) Investments and other financial assets
(i) Classification: Financial assets, other than equity instruments, are subsequently
measured at amortised cost, fair value through other comprehensive income (FVOCI)
or fair value through profit or loss (FVTPL) on the basis of both:
(a) the entity's business model for managing the financial assets and
(b) the contractual cash flow characteristics of the financial asset.
For assets measured at fair value, gains and losses will either be recorded in profit or
loss or other comprehensive income. For investments in debt instruments, this will
depend on the business model in which the investment is held. For investments in
equity instruments, this will depend on whether the company has made an irrevocable
election at the time of initial recognition to account for the equity investment at fair
value through other comprehensive income.
The company reclassifies debt investments when and only when its business model for
managing those assets changes.
(ii) Measurement
At initial recognition, the company measures a financial asset at its fair value plus, in the
case of a financial asset not carried at fair value through profit or loss, transaction costs that
are directly attributable to the acquisition of the financial asset. Transaction costs of
financial assets carried at fair value through profit or loss are expensed in profit or loss.
Debt instruments
Subsequent measurement of debt instruments depends on the company's business model for
managing the asset and the cash flow characteristics of the asset. There are three
measurement categories into which the company classifies its debt instruments:
• Amortised cost: Assets that are held for collection of contractual cash flows where those
cash flows represent solely payments of principal and interest are measured at amortised
cost. A gain or loss on a debt investment that is subsequently measured at amortised cost
and is not part of a hedging relationship is recognised in profit or loss when the asset is
derecognised or impaired. Interest income from these financial assets is included in finance
income using the effective interest rate method.
• Fair value through other comprehensive income (FVOCI): Assets that are held for collection
of contractual cash flows and for selling the financial assets, where the assets' cash flows
represent solely payments of principal and interest, are measured at fair value through other
comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI,
except for the recognition of impairment gains or losses, interest revenue and foreign
exchange gains and losses which are recognised in profit and loss. When the financial asset
is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from
equity to profit or loss and recognised in other gains/ (losses). Interest income from these
financial assets is included in other income using the effective interest rate method.
• Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or
FVOCI are measured at fair value through profit or loss.
A gain or loss on a debt investment that is subsequently measured at fair value through profit
or loss and is not part of a hedging relationship is recognised in profit or loss and presented net
in the statement of profit and loss within other gains/(losses) in the period in which it arises.
Interest income from these financial assets is included in other income.
Equity instruments
The company subsequently measures all equity investments at fair value. Where the company's
management has elected to present fair value gains and losses on equity investments in other
comprehensive income, there is no subsequent reclassification of fair value gains and losses to
profit or loss. Dividends from such investments are recognised in profit or loss as other income
when the company's right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in
the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity
investments measured at FVOCI are not reported separately from other changes in fair value.
(iii) Impairment of financial assets
The company assesses on a forward looking basis the expected credit losses associated
with its assets carried at amortised cost and FVOCI debt instruments. The impairment
methodology applied depends on whether there has been a significant increase in credit
risk. Note 20 details how the company determines whether there has been a significant
increase in credit risk.
For trade receivables only, the company applies the simplified approach permitted by Ind
AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from
initial recognition of the receivables.
(iv) Derecognition of financial assets
A financial asset is derecognised only when
• The company has transferred the rights to receive cash flows from the financial asset
or
• The company retains the contractual rights to receive the cash flows of the financial
asset, but assumes a contractual obligation to pay the cash flows to one or more
recipients.
Where the entity has transferred an asset, the company evaluates whether it has transferred
substantially all risks and rewards of ownership of the financial asset. In such cases, the
financial asset is derecognised. Where the entity has not transferred substantially all risks
and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks
and rewards of ownership of the financial asset, the financial asset is derecognised if the
company has not retained control of the financial asset. Where the company retains control
of the financial asset, the asset is continued to be recognised to the extent of continuing
involvement in the financial asset.
(h) Financial Liabilities
All Financial liabilities are measured at amortized cost using effective interest method or fair
value through profit and loss. However, financial liabilities that arise when a transfer of a
financial asset does not qualify for derecognition or when the continuing involvement
approach applies, financial guarantee contracts issued by the Company, and commitments
issued by the Company to provide a loan at below-market interest rate are measured in
accordance with the specific accounting policies set out below.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either contingent
consideration recognised by the Company as an acquirer in a business combination to which
Ind AS 103 applies or is held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
• it has been incurred principally for the purpose of repurchasing it in the near term; or
• on initial recognition it is part of a portfolio of identified financial instruments that the
Company manages together and has a recent actual pattern of short-term profit-taking; or
• it is a derivative that is not designated and effective as a hedging instrument
A financial liability other than a financial liability held for trading or contingent consideration
recognised by the Company as an acquirer in a business combination to which Ind AS 103
applies, may be designated as at FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise;
• the financial liability forms part of a Company of financial assets or financial liabilities or
both, which is managed and its performance is evaluated on a fair value basis, in accordance
with the Company's documented risk management or investment strategy, and information
about the Company is provided internally on that basis; or
• it forms part of a contract containing one or more embedded derivatives, and Ind AS 109
permits the entire combined contract to be designated as at FVTPL in accordance with Ind
AS 109
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on
remeasurement recognised in Statement of Profit and Loss. The net gain or loss recognized in
Statement of Profit and Loss incorporates any interest paid on the financial liability and is
included in the 'Other income' line item.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the
amount of change in the fair value of the financial liability that is attributable to changes in the
credit risk of that liability is recognised in other comprehensive income, unless the recognition
of the effects of changes in the liability's credit risk in other comprehensive income would
create or enlarge an accounting mismatch in profit or loss, in which case these effects of
changes in credit risk are recognised in Statement of Profit and Loss. The remaining amount of
change in the fair value of liability is always recognised in Statement of Profit and Loss.
Changes in fair value attributable to a financial liability's credit risk that are recognised in other
comprehensive income are reflected immediately in retained earnings and are not
subsequently reclassified to Statement of Profit and Loss.
Gains or losses on financial guarantee contracts and loan commitments issued by the Company
that are designated by the Company as at fair value through profit or loss are recognised in
Statement of Profit and Loss.
Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are
measured at amortised cost at the end of subsequent accounting periods. The carrying
amounts of financial liabilities that are subsequently measured at amortised cost are
determined based on the effective interest method. Interest expense that is not capitalised as
part of costs of an asset is included in the 'Finance costs' line item. The effective interest
method is a method of calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash payments
(including all fees paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the expected life of the financial
liability, or (where appropriate) a shorter period, to the net carrying amount on initial
recognition.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company's
obligations are discharged, cancelled or have expired. An exchange with a lender of debt
instruments with substantially different terms is accounted for as an extinguishment of the
original financial liability and the recognition of a new financial liability. Similarly, a substantial
modification of the terms of an existing financial liability (whether or not attributable to the
financial difficulty of the debtor) is accounted for as an extinguishment of the original financial
liability and the recognition of a new financial liability. The difference between the carrying
amount of the financial liability derecognised and the consideration paid and payable is
recognised in Statement of Profit and Loss.
(i) Trade and other payables
These amounts represent liabilities for goods and services provided to the company prior to
the end of financial year which are unpaid. The amounts are unsecured and are usually paid
within 45 -90 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.
(j) Expected Credit Losses
The Company measures the expected credit loss of trade receivables and loan from
individual customers based on historical trend, industry practices and the business
environment in which the entity operates. Loss rates are based on actual credit loss
experience and past trends. Based on the historical data, loss on collection of receivable is
not material hence no additional provision considered.
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