Accounting Policies of Urban Company Ltd. Company

Mar 31, 2026

1. Summary of Material accounting policies

This note provides a list of the material accounting
policies adopted in the preparation of the Standalone
Financial Statements. These policies have been
consistently applied to all the years presented, unless
otherwise stated.

a. Basis of preparation

(i) Compliance with Indian Accounting Standards
and basis of preparation

These Standalone Financial Statements of the
Company have been prepared in accordance with
Indian Accounting Standards (“Ind AS”) prescribed
under Section 133 of the Companies Act, 2013 (''the
Act'') read with the Companies (Indian Accounting
Standards) Rules, 2015, as amended from time to time
and other accounting principles generally accepted
in India which have been approved by the Board of
Directors at their meeting held on May 08, 2026.

The Standalone Financial Statements, and the
Notes are presented in Indian Rupee (h) which
is the functional currency of the Company. All
amounts have been rounded off to two decimal
places to the nearest crores, except earnings per
share unless otherwise stated.

(ii) Historical cost convention

The Standalone Financial Statements have been
prepared on the historical cost convention on
the accrual basis, except for the following which
have been measured at fair value:

• Certain financial assets and liabilities
measured at fair value (refer accounting
policy regarding financial instruments).

• Defined employee benefit plans- measured
at fair value; and

• Share based payments.

(iii) New and amended standards adopted by
the Company

The Ministry of Corporate Affairs vide notification
dated May 07, 2025 and August 13, 2025 notified
the Companies (Indian Accounting Standards)
Amendment Rules, 2025 and Companies (Indian
Accounting Standards) Second Amendment
Rules, 2025, respectively, which amended certain
accounting standards (see below), and are
effective for annual reporting periods beginning
on or after April 01,2025:

(a) Classification of Liabilities as Current or
Non-current and Non-current Liabilities with
Covenants - Amendments to Ind AS 1

(b) Supplier Finance Arrangements -
Amendments to Ind AS 7 and Ind AS 107

(c) International Tax Reform - Pillar Two Model
Rules - Amendments to Ind AS 12- Urban
Company Limited is not within the scope of
the OECD Pillar Two Model Rules, as Pillar
Two legislation has not yet been enacted
in any of the jurisdictions in which the
Company operates.

(d) Lack of Exchangeability - Amendments to Ind
AS 21-The amended Ind AS 21 have added
requirements to help entities to determine
whether a currency is exchangeable into
another currency, and the spot exchange
rate to use where it is not.

These amendments did not have any material
impact on the amounts recognized in prior years
and are not expected to significantly affect the
current or future years.

b. Revenue recognition

The Company generates revenue from providing an
online/mobile app marketplace which enables the
end users registered on its platform to search and
hire service professionals for their household needs.
The Company also earns revenue from subscriptions,
sale of goods under single brand retail trade and other
ancillary services.

Revenue towards satisfaction of a performance
obligation is measured at the amount of transaction
price allocated towards that performance obligation.
The transaction price of goods sold, and services
rendered is net of any taxes collected from customers,
which are remitted to government authorities and
discounts and rebates offered by the Company. The
transaction price is an amount of consideration to
which the Company expects to be entitled in exchange
for transferring promised goods or services.

The Company’s revenues from rendering services
are categorized into ‘Platform related services’ and
‘Customer membership and other services.

Critical judgements involved in revenue recognition:
Platform services and transactions

The Company has separate contractual arrangements
with the end user and the service professionals
respectively which specify the rights and obligations
of each of the parties. An end user initiates the
transaction which requires acceptance from the
service professionals. The acceptance of the
transaction, combined with the contractual agreement,
creates enforceable rights and obligations for each
of the parties.

Principal vs. agent - Service revenue

Judgement is required in determining whether we are
the principal or agent in transactions with service
professionals and end users. The Company evaluates
the presentation of revenue on a gross or net basis
based on whether the Company controls the service
provided and is legally responsible for fulfilling the
promise to the end user acting as the principal (i.e.
“gross”), or the Company arranges for other parties
to provide the service to the end user and act as an
agent (i.e. “net”). This determination also impacts
the presentation of incentives provided to service
professionals to the extent they are not customers.

The Company acts as an agent wherein fulfilment
of the services is the responsibility of a service

professional; accordingly, the gross order value is
not recognized as revenue, only the convenience
and platform fee to which the Company is entitled is
recognized as revenue.

Identification of the customer

The Company considers a party to be a customer
if that party has contracted with the entity to obtain
goods or services that are an output of the entity’s
ordinary activities in exchange for consideration.
Based on the terms of use and substance of the
arrangement, the end users are considered customers
of the Company for the convenience fee and platform
fee, memberships sold, sale of goods under Native
and other charges levied. The service professionals
are considered as customers to the extent of
subscription purchased by the service professional,
payment facilitation fees and other charges

Platform services and transactions

The Company has separate contracts with the end
user and the service professionals respectively which
specify the rights and obligations of each of the
parties. An end user initiates the transaction which
requires acceptance from the service professionals.
The acceptance of the transaction, combined with the
contractual agreement, creates enforceable rights
and obligations for each of the parties.

Platform and related services

• Convenience and platform fee

Income generated from end users for use of its
platform related services is recognized when
the transaction is completed as per the terms
of the arrangement with the end user, being the
point at which the Company has no remaining
performance obligation.

• Subscription revenue

Revenues from subscription contracts are
recognized over the contract period on a
systematic basis in accordance with the terms
of agreement entered with service professionals.
Such subscription revenue includes contracts
with service professionals, wherein the Company
assures certain minimum business to subscribed
service professional over the contract period.
In these cases, the revenue is recognized when
both the conditions of the contract period and
minimum business for the subscribed service
professional are achieved.

Customer membership and others

• Membership revenue

Revenues from end user membership are
recognized over the contract period on a
systematic basis in accordance with the terms of
agreement entered with the customer.

• Service Charges The Company generates
revenue on account of service charges from
service professionals to be levied for facilitating
the collection and remittance of payment
from the end user to the service professional,
providing partner support functions and uniform
replacement. Service Charges is recognized when
the transaction is completed as per the terms of
the arrangement with the service professional,
being the point at which the Company has no
remaining performance obligation.

Sale of products

The Company sells goods to the end users under the
‘Native’ brand via their own app/ website/ retail store
and consignment intermediaries. Revenue from the
sale of goods is recognized at a point in time when the
performance obligations are satisfied upon transfer of
control in promised goods to the end users i.e., when
the goods are delivered to the end user. The Company
considers itself as a principal in this arrangement and
accordingly, the revenue is recognized at gross value
minus reduced by discounts, incentives and other
such items offered to the customer and channel
margin to consignment intermediaries.

Discounts, wallet balance, credits and other
incentives

The Company provides various types of incentives to
the end users to promote transactions on its platform.
These payments are generally in the nature of discount
coupons, cash credits, wallet balances etc. which are
applied against the transaction price. These incentives
are recorded as a reduction to the convenience and
platform fee revenue on a transaction-by-transaction
basis. Payments in excess of the revenue earned from
the end users at an individual transaction level are
recorded as sales promotion expenses. These include
payment to end users where the Company is not
responsible for the delivery of services and are given
at the Company’s discretion to compensate for any
service delivery concerns raised by these end users.

The Company also pays certain incentives to the
service providers in arrangements where such service

providers are not determined to be ‘customers’
considering the contracts with such service providers
and end users. In such scenarios, the incentives are
recorded as an expense under ‘Incentive to service
professionals.’

Contract liabilities

The Company recognizes a contract liability for an
obligation to transfer goods or services to a customer
for which the Company has received consideration
(or the amount is due) from the customer. This
includes advances received from the service provider
and end users for the future purchase of traded
goods / Native products and towards subscription/
membership purchased.

c. Other income

Profits on sale of mutual funds and the fair value
impact on mark-to-market contracts are recognized
upon transaction completion and/or on the reporting
date, as applicable.

Interest income is recognized using an effective
interest method or time-proportion method, based on
rates implicit in the transaction.

Dividend income is recognized when the Company’s
right to receive dividend is established.

d. Property, plant and equipment

All items of property, plant and equipment are stated
at historical cost less accumulated depreciation and
accumulated impairment losses, if any.

Subsequent costs are included in the asset’s
carrying amount or recognized as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will
flow to the Company and the cost of the item can
be measured reliably. The carrying amount of any
component accounted for as a separate asset is
derecognized when replaced. All other repairs and
maintenance are charged to profit or loss during the
financial year in which they are incurred.

Depreciation methods, estimated useful lives and
residual value

Depreciation is recognized on a straight-line basis
over the estimated useful lives net of residual values.
The estimated useful lives, residual values and
depreciation methods are reviewed at the end of
each financial year, with the effect of any changes in
estimate accounted for on a prospective basis.

Leasehold improvements are depreciated over the
shorter of their useful life or the lease term, unless
the Company expects to use the assets beyond
the lease term.

The assets’ residual values and useful lives are
reviewed, and adjusted if appropriate, at the end of
each financial year.

Depreciation on additions/ disposals is provided on a
pro-rata basis i.e., from/ up to the date on which asset
is ready for use/ disposed off.

An asset’s carrying amount is written down
immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated
recoverable amount.

Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These are
included in profit or loss within other gains/(losses).

e. Impairment of Property, plant and equipment

At the end of each financial year, the Company reviews
the carrying amounts of its assets to determine
whether there is any indication of impairment based
on internal/ external factors.

f. Leases
Company as a lessee
As a lessee

The Company’s lease asset primarily consists of
leases for buildings. At inception or on reassessment
of a contract that contains a lease component, the
Company allocates the consideration in the contract
to each lease component on the basis of their relative
standalone prices.

The right-of-use asset is 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 tested for
impairment whenever there is any indication that
their carrying amounts may not be recoverable.
Impairment loss, if any, is recognized in the Statement
of Profit and Loss.

Lease liabilities

The lease liability is initially measured at the present
value of the lease payments that are not paid at
the commencement date. The lease payments are
discounted using the interest rate implicit in the lease,
if that rate can be readily determined. If that rate
cannot be readily determined, the Company uses an
incremental borrowing rate.

The Company applies the short-term lease recognition
exemption to its short-term leases (i.e., those leases
that have a lease term of 12 months or less from the
commencement date and do not contain a purchase
option). It also applies the lease of low-value assets
recognition exemption to leases that are considered
to be low value. Lease payments on short-term leases
and leases of low-value assets are recognized as
expense on a straight-line basis over the lease term.

g. Financial instruments

A financial instrument is any contract that gives
rise to a financial asset of one entity and a financial
liability or equity instrument of another entity. Financial
assets and financial liabilities are recognized when
a Company becomes a party to the contractual
provisions of the instruments.

Financial assets other than trade receivable and
financial liabilities are initially measured at fair value.
Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial
liabilities at fair value through profit or loss which are
recognized immediately in the Standalone Statement
of Profit and Loss) are added to or deducted from the
fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs
directly attributable to the acquisition of financial
assets or financial liabilities at fair value through profit
or loss are recognized immediately in the Standalone
Statement of Profit and Loss. Regular way purchase and
sale of financial assets are accounted for at trade date.

Classification of financial assets at amortised cost

The Company classifies its financial assets
at amortised cost only if both of the following
criteria are met:

• the asset is held within a business model
whose objective is to collect the contractual
cash flows, and

• the contractual terms give rise to cash flows that
are solely payments of principal and interest.

Financial assets classified at amortised cost comprise
trade receivables, security deposits, recoverable from
payment gateways and service providers, investments
in non-convertible debentures, zero coupon bonds
and fixed deposits.

Classification of financial assets at fair value through
profit or loss

The Company classifies the following financial assets
at fair value through profit or loss (FVTPL):

• equity investments that are held for trading,
and equity investments for which the entity has
not elected to recognize fair value gains and
losses through OCI - such as investment in the
compulsorily convertible preference shares of
Vivish Technologies Private Limited and Karban
Envirotech Private Limited.

h. Share based payments

Employees of the Company receive remuneration in
the form of equity-settled instruments for rendering
services over a defined vesting period. Equity-settled
share based payments to employees and others
providing similar services are measured at the fair
value of the equity instruments at the grant date using
an appropriate valuation model.

The Company has the Employee Stock Option
Plan (“ESOP 2015”) and the Employees Restricted
Stock Unit Plan (RSU) subsequently renamed as
“Employee Stock Option Plan, 2022” (“ESOP 2022”),
for eligible employees of the Company which entitles
the employee to receive equity instruments of the
Company, provided the specified vesting conditions
are met and is classified as ‘Equity-settled share
based payments’.

The fair value determined at the grant date of the
equity-settled share based payments is expensed
over the vesting period on a straight-line basis, based
on the Company’s estimate of equity instruments that

will eventually vest, with a corresponding increase
in equity. At the end of each financial year, the
Company revises its estimate of the number of equity
instruments expected to vest. The impact of the
revision of the original estimates, if any, is recognized
in the Statement of Profit and Loss such that the
cumulative expense reflects the revised estimate,
with a corresponding adjustment to the equity-settled
employee benefits reserve. Also refer note 15 and 32.

The Company has created Urban Company ESOP Trust
(“ESOP Trust”) for providing share based payments to
the employees. The Company uses ESOP trust as a
vehicle for distributing shares to the employees under
the Employee Stock Option Schemes. The ESOP
Trust buy shares of the Company from the existing
shareholders of the Company for giving shares to
employees. The Company treats ESOP Trust as its
extension post revision of trust deed dated March 02,
2026, and shares held by ESOP trust are treated as
treasury shares.

Treasury shares

Own equity instruments that are issued to ESOP Trust
are recognised at cost and deducted from equity.
No gain or loss is recognised in profit or loss on
the issue of the Company’s own equity instruments.
Any difference between the carrying amount and
the consideration, if reissued, is recognised in the
standalone statement of profit and loss.

i. Deferred tax assets

Deferred tax is recognized on temporary differences
between the carrying amounts of assets and liabilities
in the Standalone Financial Statements and the
corresponding tax bases used in the computation
of taxable profit/(Loss). Deferred tax liabilities are
generally recognized for all taxable temporary
differences. Deferred tax assets are generally
recognized for all deductible temporary differences
and carry forward tax losses to the extent that it is
probable that taxable profits will be available against
which those deductible temporary differences and
carry forward tax losses can be utilized. Deferred tax
is not recognized if it arises from the initial recognition
of assets and liabilities in a transaction (other than in a
business combination) that affects neither the taxable
profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed
at the end of each financial year 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 assets to be recovered. Unrecognized deferred
tax assets are reassessed at each reporting date

and are recognized 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 (and laws) that are expected to apply
in the year when the asset is realized or the liability
is settled, based on tax rates and tax laws that
have been enacted or substantively enacted at the
reporting date. Significant management judgement
is required to determine the amount of deferred tax
assets that can be recognized, based upon the likely
timing and the level of future taxable profits together
with future tax planning strategies.

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. Current tax assets
and tax liabilities are offset where the entity has a
legally enforceable right to offset and intends either
to settle on a net basis, or to realize the asset and
settle the liability simultaneously.

j. Employee benefits

(i) Short-term employee benefits

Short-term employee benefits are recognized as
an expense on an accrual basis.

(ii) Defined contribution plan

The Company makes defined contributions to the
Government Employee Provident Fund which are
recognized in the Statement of Profit and Loss,
on an accrual basis. The Company recognizes
the contribution payable to the provident fund
scheme as an expense when an employee
renders the related service. The Company has
no obligation, other than the contribution payable
to the provident fund.

(iii) Defined benefit plan

The Company operates a defined benefit gratuity
plan in India. The Company’s liabilities under The
Payment of Gratuity Act, 1972 are determined
on the basis of actuarial valuation made at the
end of each financial year using the projected
unit credit method.

(iv) Compensated absences

The employees of the Company are entitled
to compensated absences. The employees
can carry forward a portion of the unutilized
accumulated compensated absences and utilize
them in future years or receive cash at retirement
or termination of employment. The Company
presents the entire leave as a current liability in
the Balance Sheet, since it does not have any
unconditional right to defer its settlement for
twelve months after the reporting date.

2. (a) Summary of other accounting policies

(i) Trade payables

These amounts represent liabilities for goods and
services provided to the Company prior to the end of
the year which are unpaid. The amounts are unsecured.
Trade payables are presented as current liabilities
unless payment is not due within 12 months after the
financial year. They are recognized initially at their fair
value and subsequently measured at amortised cost
using the effective interest method.