Accounting Policies of Aye Finance Ltd. Company

Mar 31, 2025

| 2 | MATERIAL ACCOUNTING POLICIES:

2.1 Statement of compliance:

The financial statements have been prepared in
accordance with the provisions of the Companies
Act, 2013 and the Indian Accounting Standards (Ind
AS) notified under the Companies (Indian Accounting
Standards) Rules, 2015 (as amended from time to time)
issued by Ministry of Corporate Affairs in exercise of
the powers conferred by section 133 of Companies
Act, 2013, (the ''Act''), other relevant provisions of the

Act. In addition, the guidance notes/announcements
issued by the Institute of Chartered Accountants of
India (ICAI) are also applied except where compliance
with other statutory promulgations require a different
treatment. Any directions issued by the RBI or other
regulators are implemented as and when they become
applicable.

2.2 Basis of preparation:

The financial statements have been prepared on a
going concern basis the historical cost basis except
for certain financial instruments that are measured at
fair values at the end of each reporting period.

2.3 Presentation of financial statements:

The financial statements have been prepared in
accordance with Indian Accounting Standards
(Ind AS) as per the Companies (Indian Accounting
Standards) Rules, 2015 as amended from time to
time and notified under section 133 of the Companies
Act, 2013 (the Act) along with other relevant
provisions of the Act and the Master Direction -
Non-Banking Financial Company - Systemically
Important Non-Deposit taking Company and Deposit
taking Company (Reserve Bank) Directions, 2020 , as
amended (''the NBFC Master Directions'') issued by
RBI. The financial statements have been prepared on
a going concern basis.

The Company uses accrual basis of accounting except
in case of significant uncertainties. The financial
statements are presented in Indian Rupees (?) and all
values are rounded to the Crores up to two decimals,
except when otherwise indicated. The regulatory
disclosures as required by RBI Master Directions to be
included as a part of the Notes to Accounts are also
prepared as per the Ind AS financial statements.

The Company presents its balance sheet in order of
liquidity. Financial assets and financial liabilities are
generally reported gross in the balance sheet. They are
only offset and reported net when, in addition to having
an unconditional legally enforceable right to offset the
recognised amounts without being contingent on a
future event, the parties also intend to settle on a net
basis in all of the following circumstances:

(a) The normal course of business

(b) The event of default

(c) The event of insolvency or bankruptcy of the
Group and / or its counterparties

2.4 Revenue recognition:

Revenue is recognised to the extent that it is probable
that the economic benefits will flow to the Company
and the revenue can be reliably measured and there
exists reasonable certainty of its recovery. Revenue
is measured at the fair value of the consideration
received or receivable as reduced for estimated
customer credits and other similar allowances.

(a) Interest income
EIR method

Under Ind AS 109, interest income is recorded
using the effective interest rate method for all
financial instruments measured at amortised cost
and financial instrument measured at fair value
through other comprehensive income (''FVOCI'')
and fair value through profit and loss (FVTPL). The
EIR is the rate that exactly discounts estimated
future cash receipts through the expected life
of the financial instrument or, when appropriate,
a shorter period, to the net carrying amount of
the financial asset. For financial assets at FVTPL
transaction costs are recognised in profit or loss
at initial recognition.

The EIR (and therefore, the amortised cost of the
asset) is calculated by taking into account any
discount or premium on acquisition, fees and
costs that are an integral part of the EIR. The
Company recognises interest income using a rate
of return that represents the best estimate of a
constant rate of return over the expected life of
the financial instrument.

The interest income is calculated by applying the
EIR to the gross carrying amount of non-credit
impaired financial assets (i.e. at the amortised
cost of the financial asset before adjusting for
any expected credit loss allowance). For credit-
impaired financial assets the interest income is
recorded as and when realised.

If expectations regarding the cash flows on the
financial asset are revised for reasons other than
credit risk, the adjustment is booked as a positive
or negative adjustment to the carrying amount of
the asset in the balance sheet with an increase
or reduction in interest income. The adjustment is
subsequently amortised through Interest income
in the statement of profit and loss.

(b) Net gain on fair value changes

Any differences between the fair values of the
financial assets classified as fair value through
the profit or loss, held by the Company on the
balance sheet date is recognised as an unrealized
gain/loss in the statement of profit and loss and
the realized gain on derecognition of financial
instrument classified at fair value through profit
or loss is recognised as a realized gain/loss in the
statement of profit and loss.

(c) Net gain / (loss) on de recognition of financial
instruments under amortised cost category

Gains arising out of direct assignment
transactions comprise the difference between the
interest on the loan portfolio and the applicable
rate at which the direct assignment is entered
into with the assignee, also known as the right
of Excess Interest Spread (EIS). The future EIS
basis the scheduled cash flows, on execution of
the transaction, discounted at the applicable rate
entered into with the assignee is recorded upfront
in statement of profit and loss.

Income from direct assignment transaction
represents the difference between the
carrying amount of the asset (or the carrying
amount allocated to the portion of the asset
de-recognised) and consideration received
(including any new asset obtained less any
new liability).

(d) Other operational revenue:

Other operational revenue represents income
earned from the activities incidental to the
business and is recognised when the right to
receive the income is established as per the terms
of the contract. This includes cheque bouncing
charges, late payment charges and prepayment
charges etc. which are recorded as and when
realised.

The Company recognises revenue from contracts
with customers based on a five-step model as
set out in IndAS 115:

Step 1: Identify contract(s) with a customer: A
contract is defined as an agreement between two
or more parties that creates enforceable rights
and obligations and sets out the criteria for every
contract that must be met.

Step 2: Identify performance obligations in the
contract: A performance obligation is a promise
in a contract with a customer to transfer a good
or service to the customer.

Step 3: Determine the transaction price: The
transaction price is the amount of consideration
to which the Company expects to be entitled
in exchange for transferring promised goods
or services to a customer, excluding amounts
collected on behalf of third parties.

Step 4: Allocate the transaction price to the
performance obligations in the contract: For a
contract that has more than one performance
obligation, the Company allocates the transaction
price to each performance obligation in an amount
that depicts the amount of consideration to which
the Company expects to be entitled in exchange
for satisfying each performance obligation.

Step 5: Recognise revenue when (or as) the
Company satisfies a performance obligation.

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.

Income from other financial charges including
cheque bouncing charges, foreclosure charges
are collected from loan customers for early
payment/closure of loan and are recognised on
realisation.

(e) Insurance claims:

Insurance claims are accounted for on the basis
of claims admitted/expected to be admitted and
to the extent that the amount recoverable can be
measured reliably and it is reasonable to expect
ultimate collection.

2.5 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''s lease asset classes primarily consist
of leases for its various office spaces. The Company
assesses whether a contract contains a lease, at
inception of a contract. A contract is, or contains, a
lease if the contract conveys the right to control the use

of an identified asset for a period of time in exchange
for consideration. To assess whether a contract
conveys the right to control the use of an identified
asset, the Company assesses whether: (i) the contract
involves the use of an identified asset (ii) the Company
has substantially all of the economic benefits from use
of the asset through the period of the lease and (iii) the
Company has the right to direct the use of the asset.

At the date of commencement of the lease, the
Company recognises a right-of-use asset ("ROU") and a
corresponding lease liability for all lease arrangements
in which it is a lessee. The Company has not exercised
the exemption to exclude short term leases or low
value leases.

Certain lease arrangements includes the options to
extend or terminate the lease before the end of the
lease term. ROU assets and lease liabilities includes
these options when it is reasonably certain that they
will be exercised.

The right-of-use assets are initially recognised at cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the
commencement date of the lease plus any initial direct
costs less any lease incentives. They are subsequently
measured at cost less accumulated depreciation and
impairment losses.

Right-of-use assets are depreciated from the
commencement date on a straight-line basis over
the shorter of the lease term and useful life of the
underlying asset. Right of use assets are evaluated
for recoverability whenever events or changes in
circumstances indicate that their carrying amounts
may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the
fair value less cost to sell and the value-in-use) is
determined on an individual asset basis unless the
asset does not generate cash flows that are largely
independent of those from other assets. In such cases,
the recoverable amount is determined for the Cash
Generating Unit (CGU) to which the asset belongs.

The lease liability is initially measured at amortised
cost at the present value of the future lease payments.
The lease payments are discounted using the interest
rate implicit in the lease or, if not readily determinable,
using the incremental borrowing rates pertaining to
the Company. Lease liabilities are remeasured with
a corresponding adjustment to the related right of
use asset if the Company changes its assessment if
whether it will exercise an extension or a termination
option.

Lease liability and ROU asset have been separately
presented in the balance sheet and lease payments
have been classified as financing cash flows.

2.6 Employee benefits:

Employee benefits include provident fund, employee
state insurance scheme, gratuity fund and
compensated absences.

(a) Short term employee benefits:

Employee benefits falling due wholly within twelve
months of rendering the service are classified as
short term employee benefits and are expensed
in the period in which the employee renders the
related service. Liabilities recognised in respect
of short-term employee benefits are measured
at the undiscounted amount of the benefits
expected to be paid in exchange for the related
service.

(b) Post employment benefits:

(i) Defined contribution plan

The Company''s contribution to Employee
Provident Fund, Employee State Insurance
Scheme and Labour Welfare Fund under
the relevant Acts are considered as defined
contribution plans and are charged as an
expense based on the amount of contribution
required to be made and when services are
rendered by the employees.

(ii) Defined benefit plan

Benefits payable to eligible employees of
the Company with respect to gratuity, a
defined benefit plan is accounted for on
the basis of an actuarial valuation as at
the balance sheet date. In accordance with
the Payment of Gratuity Act, 1972, the plan
provides for lump sum payments to vested
employees on retirement, death while in
service or on termination of employment
in an amount equivalent to 15 days basic
salary for each completed year of service.
Vesting occurs upon completion of five
years of service. The present value of such
obligation is determined by the projected
unit credit method and adjusted for past
service cost and fair value of plan assets as
at the balance sheet date through which the
obligations are to be settled. The resultant
actuarial gain or loss on change in present
value of the defined benefit obligation is

reflected immediately in the balance sheet
with a charge or credit recognised in other
comprehensive income in the period in
which they occur.

(c) Long-term employee benefits

Compensated absences with respect to leave
encashment benefits payable to employees of the
Company while in service, on retirement, death
while in service or on termination of employment
with respect to accumulated leaves outstanding
at the year end are accounted for on the basis
of an actuarial valuation as at the balance sheet
date. The defined benefit obligation is calculated
annually by an actuary using the projected unit
credit method.

(d) Termination benefits

Termination benefits such as compensation
under employee separation schemes are
recognised as expense when the Company''s offer
of the termination benefit is accepted or when the
Company recognises the related restructuring
costs whichever is earlier.

2.7 Taxation:

Income tax expense represents the sum of the tax

currently payable and deferred tax.

(a) Current tax

The tax currently payable is based on taxable
profit for the year. Taxable profit differs from ''profit
before tax'' as reported in the statement of profit
and loss because of items of income or expense
that are taxable or deductible in other years and
items that are never taxable or deductible. The
Company''s current tax is calculated using tax
rates that have been enacted or substantively
enacted by the end of the reporting period and
is measured in accordance with Income tax
Act, 1961, Income Computation and Disclosure
Standards and other applicable tax laws.

Current tax assets and liabilities are offset only if
there is a legally enforceable right to set off the
recognised amounts, and it is intended to realise
the asset and settle the liability on a net basis or
simultaneously.

(b) 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
liabilities are generally recognised 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 recognised 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.

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.

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 measurement of deferred tax liabilities and
assets reflects the tax consequences that would
follow from the manner in which the Company
expects, at the end of the reporting period, to
recover or settle the carrying amount of its assets
and liabilities.

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.

(c) Current tax and deferred tax for the year

Current tax and deferred tax are recognised in
statement of profit or loss, except when they
relate to items that are recognised in other
comprehensive income or directly in equity, in
which case, the current and deferred tax are also
recognised in other comprehensive income or
directly in equity respectively.

2.8 Property, plant and equipment:

(a) Property, plant and equipment

Property, plant and equipment is stated at cost,
less accumulated depreciation and accumulated
impairment losses. The initial cost of an asset

comprises its purchase price or construction
cost, any costs directly attributable to bringing
the asset into the location and condition
necessary for it to be capable of operating in
the manner intended by management, the initial
estimate of any decommissioning obligation,
if any, and, for assets that necessarily take a
substantial period of time to get ready for their
intended use, finance costs. Cost includes import
duties and any non-refundable taxes on such
purchase, after deducting rebates and trade
discounts and is inclusive of freight, duties,
taxes and other incidental expenses. All cost
are capitalized which are directly attributable
to bringing assets to the condition and location
essential for it to operate in a manner as intended
by the management. In respect of assets due for
capitalization, where final bills/claims are to be
received/passed, the capitalisation is based on
the engineering estimates. Final adjustments, for
costs and depreciation are made retrospectively
in the year of ascertainment of actual cost and
finalisation of claim.

Subsequent expenditure incurred on assets put
to use is capitalised only when it increases the
future economic benefits / functioning capability
from / of such assets.

Capital work in progress includes the cost of
property plant and equipment that are not yet
ready for their intended use and the cost of assets
not put to use before the Balance Sheet date.

(b) Depreciation and amortisation

Depreciation is calculated on cost of items
of property, plant and equipment less their
estimated residual values over their estimated
useful lives using the written down value method,
and is generally recognised in the statement of
profit and loss. The Company follows estimated
useful lives which are given under Part C of
the Schedule II of the Companies Act, 2013.
Leasehold improvements are amortised over the
period of lease.

Depreciation on addition to property, plant
and equipment is provided on pro-rata basis
from the date the assets is acquired/installed.
Depreciation on sale/deduction from property,
plant and equipment is provided for up to the date
of sale deduction and discernment as the case
may be.

The estimated useful life and amortization
method are reviewed at the end of each reporting
period, with the effect of any changes in estimate
being accounted for on a prospective basis. In
respect of assets whose useful lives has been
revised, the unamortised depreciable amount is
charged over the revised remaining useful lives of
the assets.

(c) Derecognition of property, plant and equipment

An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from
the continued use of the asset. Any gain or loss
arising on the disposal or retirement of an item
of property, plant and equipment is recognised in
profit or loss.

2.9 Intangible assets:

(a) Recognition and measurement

Intangible assets with finite useful lives that
are acquired separately are carried at cost less
accumulated amortization and accumulated
impairment losses. Amortization is recognised on
a written down basis over their estimated useful
lives. The estimated useful life and amortization
method are reviewed at the end of each reporting
period, with the effect of any changes in estimate
being accounted for on a prospective basis.
Intangible assets with indefinite useful lives that
are acquired separately are carried at cost less
accumulated impairment losses. Subsequent
expenditure incurred on assets put to use is
capitalised only when it increases the future
economic benefits / functioning capability from /
of such assets.

(b) Derecognition of Intangible assets

An intangible asset is derecognised on disposal,
or when no future economic benefits are expected
from use or disposal. Gains or losses arising from
derecognition of an intangible asset, measured
as the difference between the net disposal
proceeds and the carrying amount of the asset,
are recognised in profit or loss when the asset is
derecognised.

(c) Useful lives of intangible assets

Estimated useful lives of the intangible asset
for the current and comparative periods are as
follows:

Computer software: 3 years

(d) Intangible Assets under development which are
under development as at the balance sheet date.

2.10 Impairment of non financial assets

At the end of each reporting period, the Company reviews
the carrying amounts of its tangible and intangible
assets to determine whether there is any indication
that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent
of the impairment loss (if any). When it is not possible
to estimate the recoverable amount of an individual
asset, the Company estimates the recoverable amount
of the cash-generating unit to which the asset belongs.
When a reasonable and consistent basis of allocation
can be identified, corporate assets are also allocated
to individual cash-generating units, or otherwise they
are allocated to the smallest group of cash-generating
units for which a reasonable and consistent allocation
basis can be identified.

Recoverable amount is the higher of fair value less
costs of disposal and value in use. 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 for which
the estimates of future cash flows have not been
adjusted.

If recoverable amount of an asset (or cash generating
unit) is estimated to be less than its carrying amount,
such deficit is recognised immediately in the statement
of profit and loss as impairment loss and the carrying
amount of the asset (or cash generating unit) is
reduced to its recoverable amount.

An assessment is made annually as to see if there are
any indications that impairment losses recognised
earlier may no longer exist or may have come down.
The impairment loss is reversed, if there has been a
change in the estimates used to determine the asset''s
recoverable amount since the previous impairment
loss was recognised. If it is so, the carrying amount of
the asset is increased to the lower of its recoverable
amount and the carrying amount that have been
determined, net of depreciation, had no impairment
loss been recognised for the asset in prior years. After
a reversal, the depreciation charge is adjusted in future
periods to allocate the asset''s revised carrying amount,
less any residual value, on a systematic basis over its
remaining useful life. Reversals of Impairment loss are
recognised in the Statement of Profit and Loss.

---

Mar 31, 2024

2 MATERIAL ACCOUNTING POLICIES:

2.1 Statement of compliance:

The financial statements have been prepared in
accordance with the provisions of the Companies
Act, 2013 and the Indian Accounting Standards (Ind
AS) notified under the Companies (Indian Accounting
Standards) Rules, 2015 (as amended from time to time)
issued by Ministry of Corporate Affairs in exercise of
the powers conferred by section 133 of Companies
Act, 2013, (the ''Act''), other relevant provisions of the
Act. In addition, the guidance notes/announcements
issued by the Institute of Chartered Accountants of
India (ICAI) are also applied except where compliance
with other statutory promulgations require a different
treatment. Any directions issued by the RBI or other
regulators are implemented as and when they become
applicable.

2.2 Basis of preparation:

The financial statements have been prepared on a
going concern basis the historical cost basis except
for certain financial instruments that are measured at
fair values at the end of each reporting period.

2.3 Presentation of financial statements:

The financial statements have been prepared in
accordance with Indian Accounting Standards
(Ind AS) as per the Companies (Indian Accounting
Standards) Rules, 2015 as amended from time to time
and notified under section 133 of the Companies Act,
2013 (the Act) along with other relevant provisions
of the Act and the Master Direction - Non-Banking
Financial Company - Systemically Important Non¬
Deposit taking Company and Deposit taking Company
(Reserve Bank) Directions, 2020 , as amended (''the
NBFC Master Directions'') issued by RBI. The financial
statements have been prepared on a going concern
basis.

The Company uses accrual basis of accounting
except in case of significant uncertainties. The
financial statements are presented in Indian Rupees
(INR) and all values are rounded to the crore, except
when otherwise indicated. The regulatory disclosures
as required by RBI Master Directions to be included as
a part of the Notes to Accounts are also prepared as
per the Ind AS financial statements.

The Company presents its balance sheet in order of
liquidity. Financial assets and financial liabilities are
generally reported gross in the balance sheet. They are
only offset and reported net when, in addition to having
an unconditional legally enforceable right to offset the
recognised amounts without being contingent on a
future event, the parties also intend to settle on a net
basis in all of the following circumstances:

(a) The normal course of business

(b) The event of default

(c) The event of insolvency or bankruptcy of the
Group and / or its counterparties

2.4 Revenue recognition:

Revenue is recognised to the extent that it is probable
that the economic benefits will flow to the Company
and the revenue can be reliably measured and there
exists reasonable certainty of its recovery. Revenue
is measured at the fair value of the consideration

received or receivable as reduced for estimated

customer credits and other similar allowances.

(a) Interest income
EIR method

Under Ind AS 109, interest income is recorded
using the effective interest rate method for all
financial instruments measured at amortised
cost and financial instrument measured at fair
value through other comprehensive income
(''FVOCI'') and fair value through profit and loss
(FVTPL). The EIR is the rate that exactly discounts
estimated future cash receipts through the
expected life of the financial instrument or,
when appropriate, a shorter period, to the net
carrying amount of the financial asset. For
financial assets at FVTPL transaction costs are
recognised in profit or loss at initial recognition.

The EIR (and therefore, the amortised cost of the
asset) is calculated by taking into account any
discount or premium on acquisition, fees and
costs that are an integral part of the EIR. The
Company recognises interest income using a
rate of return that represents the best estimate
of a constant rate of return over the expected life
of the financial instrument.

The interest income is calculated by applying the
EIR to the gross carrying amount of non-credit
impaired financial assets (i.e. at the amortised
cost of the financial asset before adjusting for
any expected credit loss allowance). For credit-
impaired financial assets the interest income is
recorded as and when realised.

If expectations regarding the cash flows on the
financial asset are revised for reasons other than
credit risk, the adjustment is booked as a positive
or negative adjustment to the carrying amount of
the asset in the balance sheet with an increase or
reduction in interest income. The adjustment is
subsequently amortised through Interest income
in the statement of profit and loss.

(b) Net gain or fair value changes

Any differences between the fair values of
the financial assets classified as fair value
through the profit or loss, held by the Company
on the balance sheet date is recognised as an
unrealised gain/loss in the statement of profit
and loss.

(c) Net gain / (loss) on de recognition of financial
instruments under amortised cost category

Gains arising out of direct assignment
transactions comprise the difference between
the interest on the loan portfolio and the
applicable rate at which the direct assignment
is entered into with the assignee, also known
as the right of Excess Interest Spread (EIS). The
future EIS basis the scheduled cash flows, on
execution of the transaction, discounted at the
applicable rate entered into with the assignee is
recorded upfront in statement of profit and loss.

Income from direct assignment transaction
represents the difference between the carrying
amount of the asset (or the carrying amount
allocated to the portion of the asset de¬
recognised) and consideration received (including
any new asset obtained less any new liability).

(d) Other operational revenue:

Other operational revenue represents income
earned from the activities incidental to the
business and is recognised when the right to
receive the income is established as per the
terms of the contract. This includes cheque
bouncing charges, late payment charges and
prepayment charges etc. which are recorded as
and when realised.

The Company recognises revenue from
contracts with customers based on a five-step
model as set out in IndAS 115:

Step 1: Identify contract(s) with a customer: A
contract is defined as an agreement between
two or more parties that creates enforceable
rights and obligations and sets out the criteria
for every contract that must be met.

Step 2: Identify performance obligations in the
contract: A performance obligation is a promise
in a contract with a customer to transfer a good
or service to the customer.

Step 3: Determine the transaction price: The
transaction price is the amount of consideration
to which the Company expects to be entitled
in exchange for transferring promised goods
or services to a customer, excluding amounts
collected on behalf of third parties.

Step 4: Allocate the transaction price to the
performance obligations in the contract: For a

contract that has more than one performance
obligation, the Company allocates the transaction
price to each performance obligation in an
amount that depicts the amount of consideration
to which the Company expects to be entitled
in exchange for satisfying each performance
obligation.

Step 5: Recognise revenue when (or as) the
Company satisfies a performance obligation.

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.

Income from other financial charges including
cheque bouncing charges, foreclosure charges
are collected from loan customers for early
payment/closure of loan and are recognised on
realisation.

(e) Insurance claims:

Insurance claims are accounted for on the basis
of claims admitted/expected to be admitted and
to the extent that the amount recoverable can be
measured reliably and it is reasonable to expect
ultimate collection.

2.5 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''s lease asset classes primarily consist
of leases for its various office spaces. The Company
assesses whether a contract contains a lease, at
inception of a contract. A contract is, or contains,
a lease if the contract conveys the right to control
the use of an identified asset for a period of time in
exchange for consideration. To assess whether a
contract conveys the right to control the use of an
identified asset, the Company assesses whether: (i)
the contract involves the use of an identified asset (ii)
the Company has substantially all of the economic
benefits from use of the asset through the period of
the lease and (iii) the Company has the right to direct
the use of the asset.

At the date of commencement of the lease, the
Company recognises a right-of-use asset ("ROU")

and a corresponding lease liability for all lease
arrangements in which it is a lessee. The Company
has not exercised the exemption to exclude short term
leases or low value leases.

Certain lease arrangements includes the options to
extend or terminate the lease before the end of the
lease term. ROU assets and lease liabilities includes
these options when it is reasonably certain that they
will be exercised.

The right-of-use assets are initially recognised at
cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or
prior to the commencement date of the lease plus
any initial direct costs less any lease incentives. They
are subsequently measured at cost less accumulated
depreciation and impairment losses.

Right-of-use assets are depreciated from the
commencement date on a straight-line basis over
the shorter of the lease term and useful life of the
underlying asset. Right of use assets are evaluated
for recoverability whenever events or changes in
circumstances indicate that their carrying amounts
may not be recoverable. For the purpose of
impairment testing, the recoverable amount (i.e. the
higher of the fair value less cost to sell and the value-
in-use) is determined on an individual asset basis
unless the asset does not generate cash flows that
are largely independent of those from other assets.
In such cases, the recoverable amount is determined
for the Cash Generating Unit (CGU) to which the asset
belongs.

The lease liability is initially measured at amortised
cost at the present value of the future lease payments.
The lease payments are discounted using the interest
rate implicit in the lease or, if not readily determinable,
using the incremental borrowing rates pertaining to
the Company. Lease liabilities are remeasured with
a corresponding adjustment to the related right of
use asset if the Company changes its assessment if
whether it will exercise an extension or a termination
option.

Lease liability and ROU asset have been separately
presented in the balance sheet and lease payments
have been classified as financing cash flows.

2.6 Employee benefits:

Employee benefits include provident fund, employee
state insurance scheme, gratuity fund and
compensated absences.

(a Short term employee benefits:

Employee benefits falling due wholly within
twelve months of rendering the service are
classified as short term employee benefits
and are expensed in the period in which the
employee renders the related service. Liabilities
recognised in respect of short-term employee
benefits are measured at the undiscounted
amount of the benefits expected to be paid in
exchange for the related service.

(b) Post employment benefits:

(i) Defined contribution plan

The Company''s contribution to
Employee Provident Fund, Employee
State Insurance Scheme and Labour
Welfare Fund under the relevant Acts
are considered as defined contribution
plans and are charged as an expense
based on the amount of contribution
required to be made and when services
are rendered by the employees.

(ii) Defined benefit plan

Benefits payable to eligible employees
of the Company with respect to
gratuity, a defined benefit plan is
accounted for on the basis of an
actuarial valuation as at the balance
sheet date. In accordance with
the Payment of Gratuity Act, 1972,
the plan provides for lump sum
payments to vested employees on
retirement, death while in service
or on termination of employment
in an amount equivalent to 15 days
basic salary for each completed
year of service. Vesting occurs upon
completion of five years of service.
The present value of such obligation is
determined by the projected unit credit
method and adjusted for past service
cost and fair value of plan assets as at
the balance sheet date through which
the obligations are to be settled.
The resultant actuarial gain or loss
on change in present value of the
defined benefit obligation is reflected
immediately in the balance sheet with
a charge or credit recognised in other
comprehensive income in the period
in which they occur.

(c) Long-term employee benefits

Compensated absences with respect to
leave encashment benefits payable to
employees of the Company while in service,
on retirement, death while in service or on
termination of employment with respect
to accumulated leaves outstanding at the
year end are accounted for on the basis
of an actuarial valuation as at the balance
sheet date. The defined benefit obligation
is calculated annually by an actuary using
the projected unit credit method.

(d) Termination benefits

Termination benefits such as
compensation under employee separation
schemes are recognised as expense when
the Company''s offer of the termination
benefit is accepted or when the Company
recognises the related restructuring costs
whichever is earlier.

2.7 Taxation:

Income tax expense represents the sum of the tax

currently payable and deferred tax.

(a) Current tax

The tax currently payable is based on taxable
profit for the year. Taxable profit differs from
''profit before tax'' as reported in the statement
of profit and loss because of items of income
or expense that are taxable or deductible in
other years and items that are never taxable
or deductible. The Company''s current tax
is calculated using tax rates that have been
enacted or substantively enacted by the end
of the reporting period and is measured in
accordance with Income tax Act, 1961, Income
Computation and Disclosure Standards and
other applicable tax laws.

Current tax assets and liabilities are offset only
if there is a legally enforceable right to set off the
recognised amounts, and it is intended to realise
the asset and settle the liability on a net basis or
simultaneously.

(b) 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

liabilities are generally recognised 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 recognised 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.

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.

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 measurement of deferred tax liabilities and
assets reflects the tax consequences that would
follow from the manner in which the Company
expects, at the end of the reporting period, to
recover or settle the carrying amount of its
assets and liabilities.

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.

(c) Current tax and deferred tax for the year

Current tax and deferred tax are recognised in
statement of profit or loss, except when they
relate to items that are recognised in other
comprehensive income or directly in equity, in
which case, the current and deferred tax are also
recognised in other comprehensive income or
directly in equity respectively.

2.8 Property, plant and equipment:

(a) Property, plant and equipment

Property, plant and equipment is stated at cost,
less accumulated depreciation and accumulated
impairment losses. The initial cost of an asset

comprises its purchase price or construction
cost, any costs directly attributable to bringing
the asset into the location and condition
necessary for it to be capable of operating in
the manner intended by management, the initial
estimate of any decommissioning obligation,
if any, and, for assets that necessarily take a
substantial period of time to get ready for their
intended use, finance costs. Cost includes
import duties and any non-refundable taxes
on such purchase, after deducting rebates and
trade discounts and is inclusive of freight, duties,
taxes and other incidental expenses. All cost
are capitalised which are directly attributable
to bringing assets to the condition and location
essential for it to operate in a manner as intended
by the management. In respect of assets due for
capitalisation, where final bills/claims are to be
received/passed, the capitalisation is based on
the engineering estimates. Final adjustments, for
costs and depreciation are made retrospectively
in the year of ascertainment of actual cost and
finalisation of claim.

Subsequent expenditure incurred on assets put
to use is capitalised only when it increases the
future economic benefits / functioning capability
from / of such assets.

Capital work in progress includes the cost of
property plant and equipment that are not yet
ready for their intended use and the cost of assets
not put to use before the Balance Sheet date.

(b) Depreciation and amortisation

Depreciation is calculated on cost of items
of property, plant and equipment less their
estimated residual values over their estimated
useful lives using the written down value method,
and is generally recognised in the statement of
profit and loss. The Company follows estimated
useful lives which are given under Part C of
the Schedule II of the Companies Act, 2013.
Leasehold improvements are amortised over the
period of lease.

Depreciation on addition to property, plant
and equipment is provided on pro-rata basis
from the date the assets is acquired/installed.
Depreciation on sale/deduction from property,
plant and equipment is provided for up to the
date of sale deduction and discernment as the
case may be.

The estimated useful life and amortisation
method are reviewed at the end of each reporting
period, with the effect of any changes in estimate
being accounted for on a prospective basis. In
respect of assets whose useful lives has been
revised, the unamortised depreciable amount is
charged over the revised remaining useful lives
of the assets.

(c) Derecognition of property, plant and equipment

An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from
the continued use of the asset. Any gain or loss
arising on the disposal or retirement of an item
of property, plant and equipment is recognised
in profit or loss.

2.9 Intangible assets:

(a) Recognition and measurement

Intangible assets with finite useful lives that
are acquired separately are carried at cost less
accumulated amortisation and accumulated
impairment losses. Amortisation is recognised
on a written down basis over their estimated
useful lives. The estimated useful life and
amortisation method are reviewed at the end
of each reporting period, with the effect of
any changes in estimate being accounted
for on a prospective basis. Intangible assets
with indefinite useful lives that are acquired
separately are carried at cost less accumulated
impairment losses. Subsequent expenditure
incurred on assets put to use is capitalised only
when it increases the future economic benefits /
functioning capability from / of such assets.

(b) Derecognition of Intangible assets

An intangible asset is derecognised on disposal,
or when no future economic benefits are
expected from use or disposal. Gains or losses
arising from derecognition of an intangible
asset, measured as the difference between the
net disposal proceeds and the carrying amount
of the asset, are recognised in profit or loss
when the asset is derecognised.

(c) Useful lives of intangible assets

Estimated useful lives of the intangible asset
for the current and comparative periods are as
follows:

Computer software: 3 years

(d) Intangible Assets under development which are
under development as at the balance sheet date.

2.10 Impairment of non financial assets

At the end of each reporting period, the Company
reviews the carrying amounts of its tangible and
intangible assets to determine whether there is
any indication that those assets have suffered an
impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in
order to determine the extent of the impairment
loss (if any). When it is not possible to estimate
the recoverable amount of an individual asset,
the Company estimates the recoverable amount
of the cash-generating unit to which the asset
belongs. When a reasonable and consistent basis
of allocation can be identified, corporate assets are
also allocated to individual cash-generating units, or
otherwise they are allocated to the smallest group of
cash-generating units for which a reasonable and
consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less
costs of disposal and value in use. 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 for
which the estimates of future cash flows have not
been adjusted.

If recoverable amount of an asset (or cash generating
unit) is estimated to be less than its carrying amount,
such deficit is recognised immediately in the
statement of profit and loss as impairment loss and
the carrying amount of the asset (or cash generating
unit) is reduced to its recoverable amount.

An assessment is made annually as to see if there are
any indications that impairment losses recognised
earlier may no longer exist or may have come
down. The impairment loss is reversed, if there has
been a change in the estimates used to determine
the asset''s recoverable amount since the previous
impairment loss was recognised. If it is so, the
carrying amount of the asset is increased to the lower
of its recoverable amount and the carrying amount
that have been determined, net of depreciation, had
no impairment loss been recognised for the asset in
prior years. After a reversal, the depreciation charge
is adjusted in future periods to allocate the asset''s
revised carrying amount, less any residual value,
on a systematic basis over its remaining useful life.

Reversals of Impairment loss are recognised in the
Statement of Profit and Loss.