Notes to Accounts of Urban Company Ltd.

Mar 31, 2026

(ii) Provisions

Provisions for expenses

Provisions for expenses are recognized when
the Company has a present obligation (legal or
constructive) as a result of a past event, it is probable
that the Company will be required to settle the
obligation, and a reliable estimate can be made of the
amount of the obligation.

The amount recognized as a provision is the best
estimate of the consideration required to settle
the present obligation at the end of the financial
year, taking into account the risks and uncertainties
surrounding the obligation. When a provision is
measured using the cash flows estimated to settle the
present obligation, its carrying amount is the present
value of those cash flows (when the effect of the time
value of money is material).

When some or all the economic benefits required
to settle a provision are expected to be recovered
from a third party, a receivable is recognized as an
asset if it is virtually certain that reimbursement will
be received, and the amount of receivable can be
measured reliably.

Provision for warranty

The Company typically provides warranties for
products sold under Native which covers repairs
of defects that existed at the time of the sale and
services for two years from the sale of goods. These
assurance type warranties are accounted for under
the Ind AS 37 - Provisions, Contingent Liabilities and
Contingent Assets.

Warranty provisions are determined based on the
current year’s percentage of warranty expense to
the sale of the same types of goods for which the
warranty is currently being determined. The same
percentage to the sale is applied for the current
accounting year to derive the warranty expense to be
accrued. It is adjusted to account for unusual factors
related to the goods that were sold, such as defective
inventory lying at the dealers/ecommerce.

The warranty claims may not exactly match the
historical warranty percentage, so such estimates
are reviewed annually for any material changes in
assumptions and likelihood of occurrence.

Contingent liabilities

A contingent liability is a possible obligation that
arises from past events whose existence will be
confirmed by the occurrence or non-occurrence
of one or more uncertain future events beyond the
control of the Company or a present obligation that
is not recognized because it is not probable that an
outflow of resources will be required to settle the
obligation. Contingent liability also arises in extremely
rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably.

The Company does not recognize a contingent liability
but discloses its existence in the financial statements.

(iii) Inventories

Inventories are valued at lower of cost and net
realizable value. Cost is determined using the first-in,
first-out (FIFO) method.Net realizable value represents
the estimated selling price for inventories in the
ordinary course of business less all estimated costs
of completion and costs necessary to make the sale.

Cost of inventories comprises all costs of purchase,
costs of conversion and other costs incurred in bringing
the inventories to their present location and condition.

Obsolete and defective inventory are duly provided
for basis management estimates.

(iv) Income Tax

The income tax expense or credit for the year is the tax
payable on the current year’s taxable income based
on the applicable income tax rate adjusted by changes
in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.

The current tax is calculated using tax rates that have
been enacted or substantially enacted by the end of
the financial year.

The management periodically evaluates positions
taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation
and establishes provisions where appropriate based
on amounts expected to be paid to the tax authorities.

Current tax and deferred tax relating to items
recognized outside the Statement of Profit and
Loss are recognized outside the Statement of Profit
and Loss (either in OCI or in equity). Current tax and
deferred tax items are recognized in correlation to the
underlying transaction either in OCI or directly in equity.

(v) Financial instruments
Financial assets

All recognized financial assets are subsequently
measured in their entirety at either amortised cost
or fair value, depending on the classification of the
financial assets.

Classification and measurement of financial
instruments

Financial assets at Amortised Cost

Debt instruments that meet the following conditions
are subsequently measured at amortised cost (except
for debt instruments that are designated as at fair
value through profit or loss on initial recognition):

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

• the contractual terms of the instrument give
rise on specified dates to cash flows that are
solely payments of principal and interest on the
principal amount outstanding.

After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method. Amortised cost
is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an
integral part of the EIR. EIR amortisation is included
in other income in the Standalone Statement of
Profit and Loss.

The losses arising from impairment are recognized
in the Standalone Statement of Profit and Loss.
This category generally applies to investment in
redeemable preference shares, loans to employees,
trade and other receivables.

Financial assets at fair value through profit or
loss (FVTPL)

Debt instruments that do not meet the amortised cost
criteria or FVTOCI criteria are measured at FVTPL. In
addition, debt instruments that meet the amortised
cost criteria or the FVTOCI criteria but are designated
as at FVTPL are measured at FVTPL.

A financial asset that meets the amortised cost criteria
or debt instruments that meet the FVTOCI criteria may
be designated as at FVTPL upon initial recognition if
such designation eliminates or significantly reduces
a measurement or recognition inconsistency that
would arise from measuring assets or liabilities or
recognizing the gains and losses on them on different
bases. The Company has not designated any debt
instrument as at FVTPL.

Financial assets at FVTPL are measured at fair value
at the end of each financial year, with any gains or
losses arising on remeasurement recognized in the
Standalone Statement of Profit and Loss. The net gain
or loss recognized in the Standalone Statement of
Profit and Loss incorporates any dividend or interest
earned on the financial asset and is included in the
‘Other income’ line item.

The Company subsequently measures all equity
investments at fair value. Where the 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 the Standalone Statement of Profit and Loss
following the derecognition of the investment.

Dividends from such investments are recognized
in the Standalone Statement of Profit and Loss as
other income when the Company’s right to receive
payments is established.

Impairment of financial assets

The Company applies the Expected Credit Loss
(“ECL”) model for recognizing impairment loss on
financial assets measured at amortised cost, debt
instruments, trade receivables, other contractual
rights to receive cash or other financial asset not
designated as at FVTPL.

Expected credit losses are the weighted average
of credit losses with the respective risks of default
occurring as the weights. Credit loss is the difference
between all contractual cash flows that are due to the
Company in accordance with the contract and all the

cash flows that the Company expects to receive (i.e.
all cash shortfalls), discounted at the original effective
interest rate (or credit-adjusted effective interest rate
for purchased or originated credit-impaired financial
assets). The Company estimates cash flows by
considering all the contractual terms of the financial
instrument (for example, prepayment, extension, call
and similar options) through the expected life of that
financial instrument.

The Company measures the loss allowance for a
financial instrument at an amount equal to the lifetime
expected credit losses if the credit risk on that financial
instrument has increased significantly since initial
recognition. If the credit risk on a financial instrument
has not increased significantly since initial recognition,
the Company measures the loss allowance for that
financial instrument at an amount equal to 12-month
expected credit losses. 12-month expected credit
losses are portion of the life-time expected credit
losses and represent the lifetime cash shortfalls that
will result if a default occurs within the 12 months after
the reporting date and thus, are not cash shortfalls
that are predicted over the next 12 months.

When making the assessment of whether there has
been a significant increase in credit risk since initial
recognition, the Company uses the change in the risk
of a default occurring over the expected life of the
financial instrument instead of the change in the amount
of expected credit losses. To make that assessment,
the Company compares the risk of a default occurring
on the financial instrument as at the reporting date
with the risk of a default occurring on the financial
instrument as at the date of initial recognition and
considers reasonable and supportable information,
that is available without undue cost or effort, that is
indicative of significant increases in credit risk since
initial recognition.

For trade receivables or any contractual right to
receive cash or another financial asset that result from
transactions that are within the scope of Ind AS 115,
the Company always measures the loss allowance at
an amount equal to lifetime expected credit losses.

Further, for the purpose of measuring lifetime expected
credit loss allowance for trade receivables, the
Company has used a practical expedient as permitted
under Ind AS 109. This expected credit loss allowance
is computed based on a provision matrix which takes
into account historical credit loss experience and
adjusted for forward-looking information.

Derecognition of financial assets

The Company derecognizes a financial asset when
the contractual rights to the cash flows from the asset
expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership of
the asset to another party.

Upon derecognition of a financial asset in its entirety,
the difference between the asset’s carrying amount
and the sum of the consideration received and
receivable and the cumulative gain or loss that had
been recognized in other comprehensive income and
accumulated in equity is recognized in the Standalone
Statement of Profit and Loss if such gain or loss would
have otherwise been recognized in the Standalone
Statement of Profit and Loss upon disposal of that
financial asset.

Upon derecognition of a financial asset other than
in its entirety (e.g. when the Company retains an
option to repurchase part of a transferred asset), the
Company allocates the previous carrying amount of
the financial asset between the part it continues to
recognize under continuing involvement, and the part
it no longer recognizes on the basis of the relative fair
values of those parts on the date of the transfer. The
difference between the carrying amount allocated
to the part that is no longer recognized and the sum
of the consideration received for the part no longer
recognized and any cumulative gain or loss allocated
to it that had been recognized in other comprehensive
income is recognized in the Standalone Statement
of Profit and Loss if such gain or loss would have
otherwise been recognized in the Standalone
Statement of Profit and Loss upon disposal of that
financial asset. A cumulative gain or loss that had
been recognized in other comprehensive income
is allocated between the part that continues to be
recognized and the part that is no longer recognized
on the basis of the relative fair values of those parts.

Financial liabilities and equity instruments

Debt and equity instruments issued by an entity are
classified as either financial liabilities or as equity in
accordance with the substance of the contractual
arrangements and the definitions of a financial liability
and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences
a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued

by the Company are recognized at the proceeds
received, net of direct issue costs.

Financial liabilities

All financial liabilities are subsequently measured
at amortised cost using the effective interest
method or at FVTPL.

Financial liabilities are classified as at FVTPL
when the financial liability 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

• upon 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.

Financial liabilities at FVTPL are stated at fair value,
with any gains or losses arising on remeasurement
recognized in the Standalone Statement of Profit and
Loss. The net gain or loss recognized in the Standalone
Statement of Profit and Loss incorporates any interest
paid on the financial liability and is included in the
‘Other income’ line item. The net gain or loss arising
on embedded derivative (i.e. equity linked interest
payments) measured at FVTPL is recognized as
‘Finance costs’.

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
years. 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 capitalized as part of costs
of an asset is included in the ‘Finance costs’ line item.

Derecognition of financial liabilities

The Company derecognizes financial liabilities
when, and only when, the Company’s obligations are
discharged, cancelled or have expired. An exchange
between 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
derecognized and the consideration paid and payable
is recognized in profit or loss.

Offsetting financial instruments

Financial assets and liabilities are offset and the
net amount is reported in the Standalone Statement
of Assets and Liabilities where there is a legally
enforceable right to offset the recognized amounts
and there is an intention to settle on a net basis or
realize the asset and settle the liability simultaneously.
The legally enforceable right must not be contingent
on future events and must be enforceable in the
normal course of business and in the event of
default, insolvency or bankruptcy of the Company or
the counterparty.

(vi) Earnings per share

(i) Basic earnings per share

Basic earnings per share are calculated by dividing:

• the net profit or loss for the year attributable
to equity shareholders (after deducting
preference dividends and attributable taxes)

• by the weighted average number of equity
shares outstanding during the year including
exercisable options under employee
stock option scheme.

(ii) Diluted earnings per share

Diluted earnings per share adjust the figures
used in the determination of basic earnings per
share into account:

• the after-income tax effect of interest and
other financing costs associated with
dilutive potential equity shares, and

• the weighted average number of additional
equity shares that would have been
outstanding, assuming the conversion of all
dilutive potential equity shares.

(vii) Foreign currency translation

a) Functional and presentation currency

The items included in the Standalone Financial
Statements of each of the Company’s entities
are measured using the currency of the primary
economic environment in which the entity
operates (that is, functional currency’). The

Standalone Financial Statements are presented
in H, which is the Company’s functional and
presentation currency.

b) Transactions and balances

Transactions in foreign currency are recorded
applying the exchange rate at the date of
transaction. Monetary assets and liabilities
denominated in foreign currency, remaining
unsettled at the end of the year, are translated
at the closing exchange rates prevailing on the
Balance Sheet date.

Exchange differences arising on settlement or
translation of monetary items are recognized in
the Statement of Profit and Loss.

Non-monetary assets and liabilities carried at fair
value that are denominated in foreign currencies
are retranslated at the rates prevailing at the
date when the fair value was determined. Non¬
monetary items that are measured in terms
of historical cost in a foreign currency are
not retranslated. The gain or loss arising on
translation of non-monetary items measured at
fair value is treated in line with the recognition of
the gain or loss on the change in fair value of the
item (i.e. translation differences on items whose
fair value gain or loss is recognized in Other
Comprehensive Income (OCI) or the Statement
of Profit and Loss are also reclassified in OCI or
the Statement of Profit and Loss, respectively).

(viii) Cash and cash equivalents

For the purpose of presentation in the Standalone
Statement of Cash Flows, cash and cash equivalents
includes cash on hand, other short-term, highly liquid
investments with original maturities of three months or
less that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of
changes in value.

(ix) Employee benefits

a) Defined benefit plan

An actuarial valuation involves making various
assumptions that may differ from actual
developments in the future. These include
the determination of the discount rate; future
salary increases and mortality rates. Due to the
complexities involved in the valuation and its long¬
term nature, a defined benefit obligation is highly
sensitive to changes in these assumptions. All
assumptions are reviewed at each reporting date.

The parameter most subject to change is the
discount rate. In determining the appropriate
discount rate for plans operated in India, the
management considers the interest rates of
government bonds in currencies consistent
with the currencies of the post-employment
benefit obligation.

The mortality rate is based on publicly available
mortality tables for the specified countries.
Those mortality tables tend to change only at
certain intervals in response to demographic
changes. Future salary increases and gratuity
increases are based on expected future inflation
rates, seniority, promotion and other relevant
factors, such as supply and demand in the
employment market.

This cost is included in the ‘Employee benefits
expense’ in the Statement of Profit and Loss.
Remeasurement gains or losses and return on
plan assets (excluding amounts included in
net Interest on the net defined benefit liability)
arising from changes in actuarial assumptions
are recognized in the year in which they
occur, directly in OCI. These are presented
as remeasurement gains or losses on defined
benefit plans under other comprehensive
income in other equity. Remeasurements gains
or losses are not reclassified subsequently to
the Statement of Profit and Loss.

b) Compensated absences

The Company records an obligation for
compensated absences in the year in which the
employee renders the services that increases
this entitlement. The Company measures the
expected cost of compensated absences as
the additional amount that the Company expects
to pay as a result of the unused entitlement
that has accumulated at the end of the financial
year. The Company recognizes accumulated
compensated absences based on actuarial
valuation in the Statement of Profit and Loss.

(x) Recoverable from payment gateways

‘Remittance in transit,’ which represent amount
collected from customers through payment gateways
via credit card / debit cards / UPI / Wallets / net
banking, and not yet settled by them are classified as
other financial assets.

(xi) Trade receivables

Trade receivables are amounts due from customers
for goods sold or services performed in the ordinary
course of business and reflects the Company’s
unconditional right to consideration (that is, payment
is due only on the passage of time). Trade receivables
are recognized initially at the transaction price as
they do not contain significant financing components.
The Company holds the trade receivables with the
objective of collecting the contractual cash flows and
therefore measures them subsequently at amortised
cost using the effective interest method, less
loss allowance.

(xii) Current versus non-current classification

The Company presents assets and liabilities in the
Standalone Statement of Assets and Liabilities based
on current/ non-current classification. An asset is
treated as current when it is:

a) Expected to be realized or intended to be sold or
consumed in normal operating cycle, or

b) Held primarily for the purpose of trading, or

c) Expected to be realized within twelve months
after the financial year, or

d) Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for
at least twelve months after the financial year.

All other assets are classified as non-current assets.

A liability is treated as current when it is:

a) It is expected to be settled in a normal
operating cycle, or

b) It is held primarily for the purpose of trading, or

c) It is due to be settled within twelve months after
the financial year, or

d) There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the financial year.

All other liabilities are classified as non¬
current liabilities.

Deferred tax assets and liabilities are classified as
non-current assets and liabilities.

The operating cycle of an entity is the time between
the acquisition of assets for processing and their
realization in the form of cash or cash equivalents.
Where the entity’s normal operating cycle is not clearly
identifiable, its duration is assumed to be 12 months.

2. (b) Significant accounting judgements,

estimates and assumption

The preparation of the financial statements
requires management to make judgements,
estimates and assumptions that affect the
reported amounts of revenue, expenses,
assets and liabilities. Uncertainty about these
assumptions and estimates could result in
outcomes that require material adjustment to the
carrying amount of assets or liabilities affected
in future years.

Judgements

In the process of applying the accounting
policies, management has made the following
judgements, which have the most significant
effect on the amounts recognized in the
financial statements:

The key assumptions concerning the future and
other key sources of estimation uncertainty at
the reporting date, that have a significant risk
of causing a material adjustment to the carrying
amounts of assets and liabilities within the
financial year, are described below:

a. The Company based its assumptions
and estimates on parameters available
when the standalone financial
statement were prepared.

b. Existing circumstances and assumptions
about future developments, however,
may change due to market changes or
circumstances arising that are beyond
the control of the Company. Such
changes are reflected in the assumptions
when they occur.

Principal vs. agent

As disclosed in Note 1(b), the Company has
separate contractual arrangements with the end
users 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. The Company
charges convenience and platform fee from the
end user for which the Company considers itself
as an agent for convenience and platform fees.

Identification of the customer

As disclosed in Note 1(b), 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 (rather than the
service professionals) are considered customers
of the Company for the convenience fee
and platform fee.

Discounts and other incentives

As disclosed in Note 1(b), the Company provides
incentives to its end user users in various forms
including credits and direct payment discounts
to promote traffic on its platform. All incentives
given to the end users where the Company is
responsible for providing the platform to hire
service professionals are recorded as a reduction
of revenue to the extent of the revenue earned
from that end user on a transaction-by-transaction
basis. The amount of incentive in excess of the
revenue earned from the transacting users is
recorded as sales promotion expense.

Deferred tax recognition

Deferred tax assets (DTA) is recognized only when
and to the extent there is convincing evidence
that the Company will have sufficient taxable
profits in future against which such assets can
be utilized. 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,
recent business performance and developments.

Fair value measurement of financial instruments

When the fair value of financial assets and
financial liabilities recorded in the balance
sheet cannot be measured based on quoted
prices in active markets, their fair value is
measured using valuation techniques including
the Discounted Cash Flow model. The inputs to
these models are taken from observable markets
where possible, but where this is not feasible, a
degree of judgement is required in establishing
fair values. Judgements include considerations
of inputs such as liquidity risk, credit risk and
volatility. Changes in assumptions about these
factors could affect the reported fair value of
financial instruments.

Share based payment

Estimating fair value for share based payment
transactions requires determination of the
most appropriate valuation model, which is
dependent on the terms and conditions of the
grant. This estimate also requires determination
of the most appropriate inputs to the valuation
model including the expected life of the share
option, volatility, dividend yield, forfeiture rate
and making assumptions about them. The
assumptions and models used for estimating fair
value for share based payment transactions are
disclosed in note 32.

Determination of Lease term

In determining the lease term, management
considers all facts and circumstances that create
an economic incentive to exercise an extension
option or not exercise a termination option.
Extension options (or periods after termination
options) are only included in the lease term if the
lease is reasonably certain to be extended (or
not terminated).

Most extension options in office leases have
been included in the lease liability, because the
Company could not replace the assets without
significant cost or business disruption.

The lease term is reassessed if an option is
actually exercised (or not exercised) or the
Company becomes obliged to exercise (or not
exercise) it. The assessment of reasonable
certainty is only revised if a significant event or
a significant change in circumstances occurs,
which affects this assessment, and that is within
the control of the lessee.

Estimates and judgements are continually
evaluated. They are based on historical experience
and other factors, including expectations of future
events that may have a financial impact on the
Company and that are believed to be reasonable
under the circumstances. Also refer to note 30.

Notes:

1. The number of partly paid-up equity shares as at the year ended March 31,2024 was 31,239. These partly paid-
up equity shares were called up during the year ended March 31,2025.

2. Under the Employee Stock Option Plan, 2015 (ESOP - 2015), the Company issued 2,62,78,672 (March 31, 2025
- 10,60,244) equity shares to the employees during the year ended March 31,2026 (refer note 32).

3. Pursuant to the Board of Directors'' approval dated December 20, 2024, and the Shareholders'' approval dated
January 31, 2025, the authorised share capital of the Company was increased from 2,40,943 equity shares of
H 1 each to 250,00,00,000 equity shares of H 1 each.

4. Pursuant to the Board of Directors'' approval dated January 21, 2025, and the Shareholders'' approval dated
January 31, 2025, the Company issued 48,85,22,013 bonus equity shares of H 1 per share in the ratio 1:2499
per fully paid-up equity shares having a face value of H 1 per share to the existing equity shareholders of the
Company, in accordance with the provisions of the Companies Act, 2013. The allotment of these bonus equity
shares was approved by the Board of Directors via the resolution dated February 13, 2025.

5. The unsubscribed portion of the issued share capital comprising 1,289 equity shares having a face value of H 1
each, was cancelled pursuant to the approval of the Board of directors through resolution dated April 24, 2025.

6. Pursuant to the Board of Directors'' approval dated August 24, 2025, the company converted 3,82,705 CCCPS
(Series A to F) having a face value of H 10.00 per share into equity shares with face value of H 1.00 each.
Accordingly, each CCCPS of H 10 each, held by series A to series E CCCPS shareholders were converted into
2,330 equity shares of H 1 each; and each CCCPS of H 10 each, held by series F CCCPS shareholders were
converted into 2,500 equity shares of H 1 each.

7. Treasury shares: Own equity instruments that are held by the ESOP Trust (controlled by the Company) are
recognised at cost and deducted from equity. No gain or loss is recognised in the standalone statement of profit
and loss on the issue of the Company’s own equity instruments. There is no difference between the carrying
amount and the consideration is recognised in equity.

Pursuant to the Board of Directors'' approval dated February 01, 2026, and the Shareholders'' approval dated March

02, 2026, the Company issued an interest free loan to the Urban Company ESOP Trust of H 8.00 crore which was

subsequently utilized to subscribe 8,00,00,000 equity shares of having a face value of H 1 each of the Company. The

same is being treated as treasury shares and netted off from the loan given to trust.

(e) The Company has only one class of equity shares having a par value of H 1 per share. Shareholders are eligible for
one vote per share held in case of fully paid-up equity shares and up to paid-up value in case of partly paid-up equity
shares. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing
Annual General Meeting, except in case of an interim dividend. In the event of liquidation of the Company, the equity
shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts,
in proportion to their shareholding.

(f) Share options granted under the Company''s employee share option plan

Information relating to the Company''s Employee Stock Option Plan, 2015 (ESOP - 2015) and Employee Stock Option
Plan, 2022 (ESOP - 2022), including details of options issued, exercised and lapsed during the year and options
outstanding at the end of the year, is set out in note 32.

Nature and purpose of items of other equity:

1 Securities premium: The securities premium account is used to recognize the premium on issue of shares and is
utilized in accordance with the provisions of the Companies Act, 2013.

2 Employee stock options reserve: The employee stock options reserve account is used to recognize the fair
value of options as on the grant date, to employees of the Company, under the employee stock option plans.
Refer note 32 for further details.

3 Instruments entirely equity in nature: The Company has issued certain Compulsory Convertible Cumulative
Preference Shares ("CCCPS") referred above as instruments entirely equity in nature carrying a predetermined
cumulative dividend rate of 1% p.a. Each CCCPS is convertible into equity shares either at the end of 19 years or
pursuant to a Public Offer, whichever is earlier. These CCCPS were converted into equity shares in the manner
as provided under the Articles of Association during the year ended March 31, 2026. The Company has not
declared and paid any dividend during the year ended March 31,2026. Refer note 33 for further details.

4 Pursuant to the Board of Directors’ approval dated January 21,2025 and the Shareholders’ approval dated January
31, 2025, respectively, the Company has made adjustment to the conversion ratio of the outstanding CCPS to
2,330 equity shares of H 1 each for each CCPS of H 10 each, held by series A to series E CCPS shareholders; and
2,500 equity shares of H 1 each, for every one CCPS of H 10 each, held by series F CCPS shareholders.

28. Earnings per share (EPS) (Contd..)

ii) In view of losses during the year ended March 31, 2026, the options which are anti-dilutive has been ignored
in the calculation of diluted earnings per share. Accordingly, there is no variation between basic and diluted
earnings per share.

iii) During the year ended March 31, 2025, the Company issued 488,522,013 bonus equity shares of H 1 per share
in the ratio of 1:2499 per fully paid up equity shares, having a face value of H 1 per share, to the existing equity
shareholders. As such, the weighted average number of equity shares is adjusted for the proportionate change
in the number of equity shares outstanding as if the bonus issue had occurred at the beginning of the earliest
period presented in these Standalone Financial Statements. Refer note 14 for further details on the bonus issue.

(i) The Company''s average tax rate for the year ended March 31,2026 was 25.17% (March 31,2025: 25.17%).

(ii) Deferred tax assets have been recognised to the extent of available and reasonable certainty of future taxable
profits which will be available against which temporary differences can be utilised.

(iii) The Company had recognised deferred tax assets on carried forward tax losses. The Company has concluded
that the deferred tax assets will be recovered against the estimated future taxable income based on the current
approved business plans.

(iv) As at March 31, 2026, the Company has reviewed the recoverability of its previously recognised deferred tax
assets in accordance with Ind AS 12 - Income Taxes based on the updated forecasts, recent financial performance
and the expected availability of future taxable profits. Consequently, the Company has reversed the deferred
tax assets amounting to H 35.94 crore in the standalone statement of profit and loss. As at March 31, 2026, the
Company has recognised deferred tax assets on tax losses having expiry from 3-5 years, for H 428.21 crore and
more than 5 years for H 14.41 crore.

(v) As at March 31,2026, the Company has brought forward losses, unabsorbed depreciation and other deductible
temporary differences of H 228.07 crore (March 31,2025: H 104.72 crore) under the Income tax Act, the company
has not created additional deferred tax assets of H 57.40 crore (March 31, 2025: 26.36 crore) other than H
35.94 crore reversed during the year [refer (iv) above]. As of March 31, 2026, these tax losses have expiry of
more than 5 years.

30. Leases

The Company has entered into agreements to lease certain offices and store premises. The lease term for such
properties range between 2 to 9 years, with escalation clauses in certain lease agreements.

Extension and termination options are included in the leases for a number of properties. These are used to maximize
operational flexibility. Extension and termination options are exercisable by lessor and the Company mutually.

(c) The total cash outflow for leases for the year ended March 31,2026, was H 43.36 crore (March 31,2025 - H 31.22 crore).

(d) Additions to the right-of-use assets during the year ended March 31, 2026, were H 38.47 crore (March 31, 2025 - H
45.87 crore), including the discounting of interest free security deposits amounting to H 1.38 crore (March 31, 2025

- H 1.97 crore).

(e) Refer note 3(b) for amounts recognised in the standalone balance sheet for right-of-use assets.

(f) Net gain on the leases terminated during the year ended March 31, 2026, was H 0.12 crore (March 31, 2025

- H 2.19 crore).

31. Employee benefits

(a) Defined Benefit Plan
Gratuity:

The Company provides for gratuity as per defined benefit plan (the “Gratuity Plan”) covering eligible employees
in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to eligible
employees upon retirement, death, incapacitation or termination of employment, of an amount determined basis
the respective employee’s salary and the tenure of employment. The liability is actuarially determined (using the
Projected Unit Credit method) at the end of each reporting period. Actuarial losses/ gains are recognised in the
Statement of Profit and Loss in the period in which they arise. The Company''s liability is not funded by any plan asset.

viii) Sensitivity analysis of significant assumptions

The following tables present a sensitivity analysis to each of the relevant actuarial assumption, holding other
assumptions constant, showing how the defined benefit obligation would have been affected by changes in the
relevant actuarial assumptions that were reasonably possible at the reporting date.

Change in defined benefit obligation of Gratuity plan due to change in mortality rate, is negligible.

As at March 31, 2026: Defined benefit obligation (base): H 18.38 crore @ salary increase rate: 10%, and
discount rate: 6.75%

(c) Provident fund and labour welfare fund:

Contribution towards provident fund for eligible employees is made to the regulatory authorities. Such benefits are
classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the
contributions made on a monthly basis.

Expense recognised for contribution to provident and other fund is H 8.33 crore (March 31,2025 - H 6.81 crore).

32. Employees'' stock options

Pursuant to the Shareholders'' resolution dated July 25, 2015, the Company introduced “Employee Stock Option Plan
2015 (ESOP - 2015)” and further amended by the Shareholders'' resolution dated January 31,2025 and February 28,
2026. The plan entitles employees to purchase equity shares in the Company at the stipulated exercise price, subject
to compliance with vesting conditions i.e., the requisite service duration. While in employment, all vested options can
be exercised upto ten years from the date of vesting or two years from the date of listing, whichever is later. For ex
employees, all vested options must be exercised within two years from the date of exit or two years from the date of
listing, whichever is later. All exercised options shall be settled by dematerialised equity shares. Also refer note 14.

Further, the Company changed the mode of implementation and administration of ESOP 2015 from direct allotment
to trust route through an already setup irrevocable employee welfare trust of the Company, namely ‘Urban Company
ESOP Trust’ (“Trust”) w.e.f. March 2, 2026.

(b) Fair value of options granted:

The weighted average fair value at grant date of the options granted during the year ended March 31, 2026 was
H 107.81 (March 31,2025 : H 92.72 ) per option. During the year ended March 31,2026, the fair value at grant date is
determined on the basis observable market price of the Company''s equity shares as the shares are actively traded
in an open market.

(c) For the year ended March 31,2026, the expense recognised in the Standalone Statement of Profit and Loss amounted
to H 91.34 crore (March 31,2025 - H 64.47 crore) and expense transferred to subsidiaries in relation to grants given to
their employees recognised as investment of H 12.22 crore (March 31, 2025: H 8.10 crore). refer note 24 and 5.

(d) Pursuant to Shareholders'' resolution dated June 06, 2022, the Company introduced “Employees Restricted Stock
Unit Plan, 2022 (RSU Plan 2022)", subsequently renamed as "Employee Stock Option Plan, 2022". The plan entitles
directors and employees of the subsidiaries and step-down subsidiaries to purchase equity shares in the Company
at the stipulated exercise price, subject to compliance with vesting conditions. The vesting period for the Options/
RSU''s is in the range of 1-4 years from the grant date. All exercised Options/RSU''s shall be settled by equity shares
in dematerialised account.

33. Instruments entirely equity in nature

These instruments consist of Series A Compulsorily Convertible Cumulative Preference Shares, Series A1
Compulsorily Convertible Cumulative Preference Shares, Series B Compulsorily Convertible Cumulative Preference
Shares, Series B1 Compulsorily Convertible Cumulative Preference Shares, Series C Compulsorily Convertible
Cumulative Preference Shares, Series D Compulsorily Convertible Cumulative Preference Shares, Series E
Compulsorily Convertible Cumulative Preference Shares, Series F Compulsorily Convertible Cumulative Preference
Shares ("Preference Shares").

The holders of the Preference Shares may convert their respective class of Compulsorily Convertible Cumulative
Preference Shares ("CCCPS") in whole or part into Equity shares at any time before 19 (Nineteen) years from the date
of issuance of the same subject to the adjustments specified in Schedule III - PART A, PART B, PART C, PART D, PART
E, PART F and PART G of the Article of Association of the Company. In the event the conversion of respective class
of CCCPS entitles the holder to any fraction of an equity share then such fraction shall be rounded up to the nearest
whole number. Also refer note 33(e).

The Preference Shares shall carry a predetermined cumulative dividend rate of 1% per annum on an As If Converted
Basis. In addition to the same, if the holder of equity shares are paid dividend in excess of 1% per annum, the holder of
the Liquidation Preference shares shall be entitled to dividend at such higher rate. The dividend shall be paid on pari
passu basis in priority to other classes of shares.

Pursuant to the Board of Directors'' approval dated January 21,2025, and the Shareholders'' approval dated January 31,
2025, respectively, the Company made adjustment to the conversion ratio of the outstanding CCCPS to 2330 equity
shares of H 1 each for each CCCPS of H 10 each, held by series A to series E CCCPS holders, and 2,500 equity shares
of H 1 each for every one CCCPS of H 10 each, held by series F CCCPS holders.

Further, the unsubscribed portion of the issued share capital comprising 1 Series B1 CCCPS having a face value of
H 10 each was cancelled pursuant to the approval of the Board of Directors dated April 24, 2025.

Further, these CCCPS were converted into equity shares in the manner as provided under the Articles of Association
during the year ended March 31,2026 (refer note 14).

34. Capital Management

The Company''s objective when managing capital is to safeguard its ability to continue as a going concern and to
maintain an optimal capital structure so as to maximize shareholder value. As at the year ended March 31, 2026, the
Company has only one class of equity shares and has no debt. Consequent to the above capital structure, there are
no externally imposed capital requirements.

As at the year ended March 31,2026, the Company has borrowings amounting to Nil (March 31, 2025 - Nil).

B. Measurement of fair values

The table shown above analyses financial instruments carried at fair value, by valuation method. The different levels

have been defined below:

- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

- Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e., as prices) or indirectly (i.e., derived from prices).

- Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

C. Valuation techniques

The following methods and assumptions were used to estimate the fair values:

1) Fair value of the cash and cash equivalents, other bank balances, trade receivables, other financial assets, trade
payables and other financial liabilities approximate their carrying value largely due to short term maturities of
these instruments.

2) Fair value of unquoted instruments is estimated by discounting future cash flows using rates currently available
for debt of similar terms, credit risk and remaining maturities.

3) Fair value of quoted mutual funds is determined by reference to quotes from the financial institutions, i.e. net
asset value (NAV) declared by mutual fund house as at the reporting date.

(i) During the previous year ended March 31, 2025, Urbanclap Technologies Global B.V. transferred its equity
shareholding in Urbanclap Technologies FZCO to Urbanhome Experts PTE Ltd at book value as on December 24,
2024, and Urbanclap Technologies Global B.V. was deregistered w.e.f. January 31,2025 resulting in investment
value being written off for H 2.02 crore.

(ii) During the year ended March 31, 2025, the Company has started operations through its Joint Venture entity
(Company Waed Khadmat Al-Munzal For Marketing) located in the Kingdom of Saudi Arabia, with effect from
January 01, 2025, with an intent to eventually close the step - down subsidiary, Urban Company Arabia for
Information Technology. For this step - down subsidiary, the revenue from operations for the period ended March
31,2026, was Nil (March 31,2025: H 41.59 crore), and the prodit/ (loss) before tax for the year ended March 31,
2026 was H 0.69 crore [March 31, 2025: ( H 23.45 crore)]. As at the year ended March 31, 2026, the amount of
provision for other than temporary diminuition in Urban Company Arabia for Information Technology is for H 1.70
crore (March 31,2025 - H 1.70 crore).

(iii) The Company had ceased operations of Urban Company Employee Welfare Trust located in India, and the PAN
of this entity was surrendered w.e.f. September 05, 2024. As such, the Company has written off the receoverable
from this trust for H 0.01 crore.

(iv) During the year ended March 31,2026, the Company augmented its UAE operations through a newly incorporated
step-down subsidiary, Urban Essentials General Trading L.L.C., which commenced operations with effect from
January 15, 2026.

(v) During the year ended March 31,2026, the name of Urbanclap Technologies DMCC, was changed to Urbanclap
Technologies FZCO with effect from March 23, 2026, pursuant to the applicable regulatory approvals.

D. Terms and conditions of transactions with related parties

Amounts owed to and by related parties are unsecured and interest free and settlement occurs in cash. All transactions
entered into by the Company with its related parties were on arm''s length basis and in ordinary course of business.

38. Financial risk management objectives and policies

The Company is exposed to the following risks from its use of financial instruments:

- Credit risk

- Liquidity risk

- Interest rate risk

- Market risk

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company''s
risk management framework. This note presents information about the risks associated with the Company''s financial
instruments, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s
management of capital.

(a) Credit risk

The Company is exposed to credit risk as a result of the risk of counterparties defaulting on their obligations. The
Company''s exposure to credit risk primarily relates to its operating activities (trade receivables) and its treasury
activities, including deposits with banks, investment in money market funds and other financial instruments. The
Company monitors and limits its exposure to credit risk on a continuous basis. The Company''s credit risk associated
with trade receivable is primarily related to customers being unable to settle their obligation as agreed upon. To
manage this, the Company periodically reviews the financial health of its customers, taking into account their financial
condition, current economic trends and analysis of historical bad debts and aging of trade receivables.

Trade receivables

The Company has established an allowance for impairment that represents its expected credit losses in respect
of trade and other receivables. The management uses a simplified approach for estimating the expected credit
loss from trade receivables and 12 months'' expected credit loss from other receivables. An impairment analysis is
performed at each reporting date on an individual basis for material counterparties. In addition, a large number of
minor receivables are combined into homogenous categories and assessed for impairment collectively.

38. Financial risk management objec