Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised 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 recognised as a provision is the best
estimate of the consideration required to settle the
present obligation at the end of the reporting period,
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).

Contingent liabilities are recognised at their fair value
only, if they were assumed as part of a business
combination. Contingent assets are not recognised.
However, when the realisation of income is virtually
certain, then the related asset is no longer a contingent
asset, and is recognised as an asset. Information on
contingent liabilities is disclosed in the notes to the
financial statements, unless the possibility of an
outflow of resources embodying economic benefits is
remote. The same applies to contingent assets where
an inflow of economic benefits is probable.

1.18 Borrowing Cost

General and specific borrowing costs that are
directly attributable to the acquisition, construction
or production of a qualifying asset are capitalised
during the period of time that is required to complete
and prepare the asset for its intended use. Qualifying
assets are assets that necessarily take a substantial
period of time to get ready for their intended use.
Other borrowing costs are expensed in the period in
which they are incurred.

1.19 Dividend

Dividend distributed to Equity shareholders is
recognised as distribution to owners of capital in the
Statement of Changes in Equity, in the period in which
it is paid.

1.20 Fair value measurement

The Company measures financial instruments, such
as, certain investments at fair value at each balance
sheet date.

Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement is
based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:

- In the principal market for the asset or liability, or

- In the absence of a principal market, in the most
advantageous market for the asset or liability.

The principal or the most advantageous market must
be accessible by the Company.

The fair value of an asset or a liability is measured
using the assumptions that market participants
would use when pricing the asset or liability, assuming
that market participants act in their economic best
interest.

All assets and liabilities for which fair value is
measured or disclosed in the financial statements are
categorised within the fair value hierarchy, described
as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:

• Level 1 — Quoted (unadjusted) market prices in
active markets for identical assets or liabilities

• Level 2 — Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is directly or indirectly
observable

• Level 3 — Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable

1.21 Financial Instruments

(i) Recognition

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 instruments are recognised on the
balance sheet when the Company becomes a party
to the contractual provisions of the instrument.

Initial measurement

Financial instruments are initially recognised
at its fair value. Transaction costs directly
attributable to the acquisition or issue of financial
instruments are recognised in determining the
carrying amount, if it is not classified as at fair
value through profit or loss.

However, trade receivables that do not contain a
significant financing component are measured at
transaction price. Transaction costs of financial
instruments carried at fair value through profit or
loss are expensed in the statement of profit and
loss.

Subsequently, financial instruments are
measured according to the category in which
they are classified.

Classification and measurement - financial
assets

Classification of financial assets is based on the
business model in which the instruments are held
as well as the characteristics of their contractual
cash flows. The business model is based on
management's intentions and past pattern of
transactions. Financial assets with embedded
derivatives are considered in their entirety when
determining whether their cash flows are solely
payment of principal and interest. The Company
reclassifies financial assets when and only when
its business model for managing those assets
changes.

Financial assets are classified into three
categories

Financial assets at amortised cost: Financial
assets having contractual terms that give rise
on specified dates to cash flows that are solely

payments of principal and interest on the
principal outstanding and that are held within
a business model whose objective is to hold
such assets in order to collect such contractual
cash flows are classified in this category.
Subsequently, these are measured at amortised
cost using the effective interest method less any
impairment losses.

Equity investments at fair value through other
comprehensive income (Equity instruments):

These include financial assets that are equity
instruments and are designated as such upon
initial recognition irrevocably. Subsequently, these
are measured at fair value and changes therein
are recognised directly in other comprehensive
income, net of applicable income taxes.

Dividends from these equity investments are
recognised in the statement of Profit and Loss
when the right to receive payment has been
established.

When the equity investment is derecognised, the
cumulative gain or loss in equity is transferred to
retained earnings.

Financial assets at fair value through other
comprehensive income (Debt instruments):

Financial assets having contractual terms that
give rise on specified dates, to cash flows that
are solely payments of principal and interest
on the principal outstanding and that are held
within a business model whose objective is
to hold such assets in order to collect such
contractual cash flows as well as to sell the
financial asset, are classified in this category.
Subsequently, these are measured at fair value,
with unrealised gains or losses being recognised
in other comprehensive income apart from any
expected credit losses or foreign exchange gains
or losses, which are recognised in profit or loss.

Financial assets at fair value through profit and
loss:

Financial assets are measured at fair value
through profit and loss unless it is measured
at amortised cost or at fair value through other
comprehensive income on initial recognition.
The transaction costs directly attributable to the
acquisition of financial assets and liabilities at
fair value through profit and loss are immediately
recognised in profit and loss.

Classification and measurement - financial
liabilities:

Financial liabilities are classified as measured at
amortised cost or FVTPL. A financial liability is
classified as at FVTPL if it is classified as held-
for-trading, it is a derivative or it is designated
as such on initial recognition. Financial liabilities
at FVTPL are measured at fair value and net
gains and losses, including any interest expense,
are recognised in profit or loss. Other financial
liabilities are subsequently measured at amortised
cost using the effective interest method. Interest
expense and foreign exchange gains and losses
are recognised in profit or loss. Any gain or loss on
derecognition is also recognised in profit or loss.

Financial guarantee contracts:

These are initially measured at their fair values
and, are subsequently measured at the higher of
the amount of loss allowance determined or the
amount initially recognised less, the cumulative
amount of income recognised.

Other financial liabilities:

These are measured at amortised cost using the
effective interest method.

(ii) Determination of fair value:

Fair value is the price that would be received to
sell an asset or paid to transfer a liability in an
orderly transaction between market participants
at the measurement date, regardless of whether
that price is directly observable or estimated
using another valuation technique.

The fair value of a financial instrument on initial
recognition is normally the transaction price (fair
value of the consideration given or received).

In estimating the fair value of an asset or
liability, the Company takes into account the
characteristics of the asset or liability if market
participants would take those characteristics
into account when pricing the asset or liability at
the measurement date.

Subsequent to initial recognition, the Company
determines the fair value of financial instruments
that are quoted in active markets using the
quoted bid prices (financial assets held) or
quoted ask prices (financial liabilities held) and
using valuation techniques for other instruments.

Valuation techniques include discounted cash
flow method and other valuation methods.

(iii) Derecognition of financial assets and financial
liabilities

The Company derecognises a financial asset
only when the contractual rights to the cash
flows from the asset expires or it transfers the
financial asset and substantially all the risks and
rewards of ownership of the asset to another
entity. If the Company neither transfers nor retains
substantially all the risks and rewards of ownership
and continues to control the transferred asset,
the Company recognises its retained interest in
the asset and an associated liability for amounts
it may have to pay. If the Company retains
substantially all the risks and rewards of ownership
of a transferred financial asset, the Company
continues to recognise the financial asset and
also recognises a collateralised borrowing for
the proceeds received. Any gain or loss arising
on derecognition is recognised in profit or loss.
When a financial instrument is derecognised, the
cumulative gain or loss in equity is transferred
to the statement of profit and loss unless it was
an equity instrument electively held at fair value
through other comprehensive income. In this
case, any cumulative gain or loss in equity is
transferred to retained earnings. Financial assets
are written off when there is no reasonable
expectation of recovery. The Company reviews
the facts and circumstances around each asset
before making a determination. Financial assets
that are written off could still be subject to
enforcement activities.

Financial liabilities are decrecognised when these
are extinguished, that is when the obligation is
discharged, cancelled or has expired.

(iv) Impairment of financial Assets

The Company recognises a loss allowance for
expected credit losses on a financial asset that
is at amortised cost or at fair value through other
comprehensive income. Expected credit losses
are forward looking and are measured in a way
that is unbiased and represents a probability-
weighted amount, takes into account the time
value of money (values are discounted using
the applicable effective interest rate) and uses
reasonable and supportable information.

1.22 Operating Cycle

Based on the nature of activities of the Company
and the normal time between acquisition of assets
and their realisation in cash or cash equivalents, the
Company has determined its operating cycle as 12
months for the purpose of classification of its assets
and liabilities as current and non-current.

1.23 Current and non Current classification :

i. The assets and liabilities in the Balance Sheet are
based on current/ non - current classification. An
asset as current when it is:

1 Expected to be realised or intended to be
sold or consumed in normal operating
cycle.

2 Held primarily for the purpose of trading.

3 Expected to be realised within twelve
months after the reporting period, or

4 Cash or cash equivalents unless restricted
from being exchanged or used to settle a
liability for at least twelve months after the
reporting period.

All other assets are classified as non - current.
ii A liability is current when:

1. Expected to be settled in normal operating
cycle.

2. Held primarily for the purpose of trading.

3. Due to be settled within twelve months after
the reporting period, or

4. There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period.

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

Note- 1.24 Critical and significant accounting judgements,

estimates and assumptions

(i) Critical estimates and judgements

The following are the critical judgements, apart from
those involving estimations that the management
have made in the process of applying the Company's
accounting policies and that have the most
significant effect on the amounts recognised in the
financial statements. Actual results may differ from
these estimates. These estimates and underlying
assumptions are reviewed on an ongoing basis.

Revisions to the accounting estimates in the period
in which the estimate is revised if the revision affects
only that period, or in the period of the revision and
future periods if the revision affects both current and
future periods.

Useful lives of property, plant and equipment and
intangible assets:

Management reviews the useful lives of depreciable
assets at each reporting. As at 31 March, 2023
management assessed that the useful lives represent
the expected utility of the assets to the Company.
Further, there is no significant change in the useful
lives as compared to previous year.

Allowance for expected credit losses:

The expected credit allowance is based on the aging
of the days receivables are due and the rates derived
based on past history of defaults in the provision
matrix.

Income taxes:

Significant judgements are involved in determining
the provision for income taxes, including amount
expected to be paid/recovered for uncertain tax
positions.

(ii) Significant accounting judgements, estimates and
assumptions

The preparation of the Company's financial statements
requires management to make judgements, estimates
and assumptions that affect the reported amounts
of revenues, expenses, assets and liabilities, and
the accompanying disclosures, and the disclosure
of contingent liabilities. Uncertainty about these
assumptions and estimates could result in outcomes
that require a material adjustment to the carrying
amount of assets or liabilities affected in future
periods.

Judgements

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

Determination of lease term & discount rate:

I nd AS 116 leases requires lessee to determine the
lease term as the non-cancellable period of a lease
adjusted with any option to extend or terminate the
lease, if the use of such option is reasonably certain.
The Company makes assessment on the expected
lease term on lease by lease basis and thereby

assesses whether it is reasonably certain that any
options to extend or terminate the contract will be
exercised. In evaluating the lease term, the Company
considers factor such as any significant leasehold
improvements undertaken over the lease term, costs
relating to the termination of lease and the importance
of the underlying to the Company's operations taking
into account the location of the underlying asset and
availability of the suitable alternatives. The lease term
in future period is reassessed to ensure that the lease
term reflects the current economic circumstances.

The discount rate is generally based on the incremental
borrowing rate specific to the lease being evaluated or
for a portfolio of leases with similar characteristics.

Estimates and assumptions

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 next financial year, are described
below. The Company based on its assumptions and
estimates on parameters available when the financial
statements were prepared. 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.

Impairment of non-financial assets

Impairment exists when the carrying value of an
asset or cash generating unit exceeds its recoverable
amount, which is the higher of its fair value less costs
of disposal and its value in use. The fair value less
costs of disposal calculation is based on available data
from binding sales transactions, conducted at arm's
length, for similar assets or observable market prices
less incremental costs for disposing of the asset.
The value in use calculation is based on a Discounted
Cash Flow model. The cash flows are derived from
the budget for the next five years and do not include
activities that the Company is not yet committed to
or significant future investments that will enhance
the asset's performance of the Cash Generating Unit
being tested. The recoverable amount is sensitive to
the discount rate used for the Discounted Cash Flow
model as well as the expected future cash-inflows
and the growth rate used for extrapolation purposes.

Taxes

Deferred tax assets are recognised for unused tax
losses to the extent that it is probable that taxable

profit will be available against which the losses can
be utilised. Significant management judgement is
required to determine the amount of deferred tax
assets that can be recognised, based upon the likely
timing and the level of future taxable profits together
with future tax planning strategies.

Provision and contingent liability

On an ongoing basis, Company reviews pending
cases, claims by third parties and other contingencies.
For contingent losses that are considered probable,
an estimated loss is recorded as an accrual in
financial statements. Loss Contingencies that
are considered possible are not provided for but
disclosed as Contingent liabilities in the financial
statements. Contingencies the likelihood of which is
remote are not disclosed in the financial statements.
Gain contingencies are not recognised until the
contingency has been resolved and amounts are
received or receivable.

1.25 Recent pronouncements

MCA notifies Companies (Indian Accounting
Standards) Amendment Rules, 2023 vide Notification
No. G.S.R 242(E) Dated: 31 March, 2023 and
further amended Companies (Indian Accounting
Standards) Rules, 2015, which shall come into
force with effect from 1st day of April, 2023.
'The MCA has carried amendments to the following
existing standards which will be effective from
01 April, 2023. The Company is not expecting any
significant impact in the financial statements from
these amendments. The quantitative impacts would
be finalised based on a detailed assessment which
has been initiated to identify the key impacts along
with evaluation of appropriate transition options.