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IB SUMMARY OF MATERIAL ACCOUNTING POLICIES
(a) Basis of Preparation:
(i) Compliance with Ind AS
These Standalone Financial Statements have
been prepared in accordance with the Indian
Accounting Standards (hereinafter referred
to as the ''Ind AS'') as notified by Ministry of
Corporate Affairs pursuant to Section 133 of
the Companies Act, 2013 (''Act'') read with of
the Companies (Indian Accounting Standards)
Rules, 2015 as amended and other relevant
provisions of the Act.
The Standalone Financial Statements are
based on the classification provisions
contained in Ind AS 1, ''Presentation of Financial
Statements'' and Division II of Schedule III (as
amended) to the Act to the extent applicable.
Further, for the purpose of clarity, various items
are aggregated in the standalone balance
sheet standalone statement of profit and
loss, standalone statement of cash flows and
standalone statement of changes in equity.
Nonetheless, these items are disaggregated
separately in the notes to the Standalone
Financial Statements, where applicable or
required.
(ii) Historical cost convention
The Standalone Financial Statements have
been prepared on a historical cost basis,
except for the following:
a. certain financial assets and liabilities that
are measured at fair value or amortized
cost;
b. defined benefit plans - plan assets are
measured at fair value;
(iii) Current and non-current classification
All assets and liabilities have been classified as
current or non-current as per the company''s
normal operating cycle (twelve months) and
other criteria set out in the Schedule III to the
Act.
All assets and liabilities have been classified as
current or non-current as per the company''s
operating cycle and other criteria set out in
the Schedule III to the Companies Act, 2013.
Based on the nature of services and the time
between the rendering of service and their
realization in cash and cash equivalents, the
company has ascertained its operating cycle
as twelve months for the purpose of current
and non-current classification of assets and
liabilities.
(iv) Rounding of amounts
All amounts disclosed in the Standalone
Financial Statements and notes have been
rounded off to the nearest lakhs as per the
requirement of Schedule III, unless otherwise
stated.
(b) Critical estimates and judgments:
The estimates and judgements used in the
preparation of the financial statements are
continuously evaluated by the Company and are
based on historical experience and various other
assumptions and factors (including expectations
of future events) that the Company believes to
be reasonable under the existing circumstances.
Differences between actual results and estimates
are recognised in the period in which the results are
known/materialised.
The said estimates are based on the facts and
events, that existed as at the reporting date, or that
occurred after that date but provide additional
evidence about conditions existing as at the
reporting date.
i. Lease term - Company as a Lessee
Ind AS 116 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 an assessment
on the expected lease term on a 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 factors such as any significant
leasehold improvements undertaken over the
lease term, costs relating to the termination of
the lease and the importance of the underlying
asset to the Company''s operations taking into
account the location of the underlying building
and the availability of suitable alternatives. The
Company has ascertained lease term as non¬
cancellable term."
ii. Incremental borrowing rate
The initial recognition of lease liabilities at
present value requires the identification of
an appropriate discount rate. The Company
has determined the incremental borrowing
rate based on company''s weighted average
borrowing rate.
iii. Taxes
Deferred tax assets are recognised for the
unused tax losses for which there is probability
of utilization against the future taxable profit.
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,
future tax planning strategies and recent
business performances and developments.
iv. Useful lives of property, plant and equipment
Useful lives and residual values of Property,
plant and equipment represent a material
portion of the Company''s asset base. The
periodic charge of depreciation is derived after
estimating useful life of an asset and expected
residual value at the end of its useful life. The
useful lives and residual values of assets are
estimated by the management at the time the
asset is acquired and reviewed periodically,
including at each financial year end. The lives
are based on various external and internal
factors including historical experience, relative
efficiency and operating costs and change in
technology.
v. Employee benefit obligations
Defined benefit obligations are measured
at fair value for financial reporting purposes.
Fair value determined by actuary is based
on actuarial assumptions. Management
judgement is required to determine such
actuarial assumptions. Such assumptions are
reviewed annually using the best information
available with the Management.
vi. Provisions and contingent liabilities
A provision is recognized when the Company
has a present obligation as a result of past event
and it is probable that an outflow of resources
will be required to settle the obligation, in
respect of which a reliable estimate can
be made. Provisions (excluding retirement
benefits and compensated absences) are
not discounted to its present value and are
determined based on best estimate required
to settle the obligation at the balance sheet
date. These are reviewed the end of each
reporting period and adjusted to reflect the
current best estimates. Contingent liabilities
are not recognized in the financial statements.
A contingent asset is neither recognized nor
disclosed in the financial statements.
vii. Fair value Measurement
I n measuring the fair value of certain assets
and liabilities for financial reporting purpose,
the Company uses market observable data to
the extent available. Where such Level 1 inputs
are not available, the Company establish
appropriate valuation techniques and inputs
to the model. The inputs to these models are
taken from observable markets where possible,
but where this is not feasible, a degree of
judgment is required in establishing fair values.
Judgments 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
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
⢠I n 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.
A fair value measurement of a non-financial asset
takes into account a market participant''s ability to
generate economic benefits by using the asset in
its highest and best use or by selling it to another
market participant that would use the asset in its
highest and best use.
The company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximizing the use of relevant observable inputs
and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is
measured or disclosed in the Standalone Financial
Statements are categorized within the fair value
hierarchy, as described below, based on the lowest
level input that is significant to the fair value
measurement as a whole:
Level 1: Quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2: Inputs other than the quoted prices
included within Level 1 that are observable for the
asset or liability, either directly or indirectly.
Level 3: Input that is significant to the value
measurement is unobservable.
For assets and liabilities that are recognized in the
Standalone Financial Statements on a recurring
basis, the company determines whether transfers
have occurred between levels in the hierarchy by
re-assessing categorization (based on the lowest
level input that is significant to the fair value
measurement as a whole) at the end of each
reporting period.
The company''s management determines the
policies and procedures for both recurring fair value
measurement and for non-recurring measurement.
External valuers are involved for valuation of
significant assets. Involvement of external valuers
is decided upon annually by the management
after discussion with and approval by the Board
of directors. Selection criteria include market
knowledge, reputation, independence and
whether professional standards are maintained.
The management decides, after discussions with
the Company''s external valuers, which valuation
techniques and inputs to use for each case.
At each reporting date, the management analyses
the movements in the values of assets and liabilities
which are required to be re-measured or re¬
assessed as per the Company''s accounting policies.
For this analysis, the management verifies the major
inputs applied in the latest valuation by agreeing
the information in the valuation computation to
contracts and other relevant documents.
The management, in conjunction with the
Company''s external valuers, also compares the
change in the fair value of each asset and liability
with relevant external sources to determine whether
the change is reasonable on yearly basis.
For the purpose of fair value disclosures, the
Company has determined classes of assets and
liabilities on the basis of the nature, characteristics
and risks of the asset or liability and the level of the
fair value hierarchy, as explained above.
(d) Property Plant &Equipment:
Property, plant and equipment is recognised
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.
Cost comprises of the purchase price including
freight and non-refundable taxes, and directly
attributable expenses incurred to bring the asset
to the location and condition necessary for it to be
capable of being operated in the manner intended
by management.
Property, plant and equipment not ready for
intended use on the date of balance sheet are
disclosed as "capital work-in-progress".
Borrowing costs that are directly attributable
to the acquisition or construction of qualifying
assets are capitalized as part of the cost of such
assets. A qualifying asset is one that necessarily
takes substantial period of time to get ready for its
intended use.
Depreciation methods, estimated useful lives
and residual value
Depreciable amount for assets is the cost of an
asset, or other amount substituted for cost, less its
estimated residual value. Residual value is estimated
to be five percent of total cost of asset.
The Company depreciates its property, plant and
equipment using the straight-line method over the
useful life in the manner prescribed in Schedule II to
the Act, and management believe that useful life of
assets is same as those prescribed in Schedule II to
the Act.
Useful life considered for calculation of depreciation
for various assets class are as follows-
lives, residual values and / or depreciation method
is accounted prospectively, and accordingly the
depreciation is calculated over the PPE''s remaining
revised useful life.
Capital work in progress is stated at cost less
impairment losses. Such expenditure includes the
cost of materials and goods purchased or acquired
with the intention of creating any capital asset and
the project site and cost incurred for expected fit-
out period which is attributed to the property, plant
and equipment.
Intangible assets are recognised when it is probable
that the future economic benefits that are
attributable to the asset will flow to the Company
and the cost of the asset can be measured reliably.
Intangible assets purchased are measured at
cost (net of tax/duty credits availed, if any) or fair
value as of the date of acquisition, as applicable,
less accumulated amortization and accumulated
impairment, if any.
Intangible assets are amortized on basis of straight¬
line method over their estimated useful life as given
below. The method of amortization and useful life
are reviewed at the end of each financial year with
the effect of any changes in the estimate being
accounted for on a prospective basis.
The useful lives, residual values and depreciation
method of PPE are reviewed, and adjusted
appropriately, at least as at each financial year
end so as to ensure that the method and period
of depreciation are consistent with the expected
pattern of economic benefits from these assets.
The effect of any change in the estimated useful
(f) Cash and Cash Equivalents:
For the purpose of presentation in the statement
of cash flows, cash and cash equivalents includes
cash on hand, cash at bank, deposits held at call
with financial institutions, 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.
(g) Financial Instruments - initial recognition and
subsequent measurement:
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.
i. Financial assets(1) Classification
The Company classifies its financial assets
in the following measurement categories:
⢠Those to be measured subsequently
at fair value (either through other
comprehensive income, or through
profit or loss) and
⢠Those measured at amortized cost.
The classification depends on the entity''s
business model for managing the financial
assets and the contractual terms of the
cash flows.
For assets measured at fair value, gains
and losses will either be recorded in profit
or loss or other comprehensive income.
For investments in debt instruments,
this will depend on the business model
in which the investment is held. For
investments in equity instruments, this
will depend on whether the Company has
made an irrevocable election at the time
of initial recognition to account for the
equity investment at fair value through
other comprehensive income.
The Company reclassifies debt
investments when and only when its
business model for managing those
assets changes.
The Company has elected to account for
its investments in subsidiaries, associates
and joint venture at cost less impairment
loss.
Regular way purchases and sales of
financial assets are recognized on
trade-date, being the date on which the
Company commits to purchase or sale
the financial asset. Trade receivable that
do not contain a significant financing
component are measured at transaction
price.
At initial recognition, the Company
measures a financial asset at its fair value
plus, in the case of a financial asset not at
fair value through profit or loss, transaction
costs that are directly attributable to
the acquisition of the financial asset.
Transaction costs of financial assets
carried at fair value through profit or loss
are expensed in Statement of profit and
loss.
Financial assets with embedded
derivatives are considered in their
entirety when determining whether their
cash flows are solely payment of principal
and interest.
Subsequent measurement of debt
instruments depends on the Company''s
business model for managing the asset
and the cash flow characteristics of the
asset. The Company classifies its debt
instruments as follows:
Amortized cost: Assets that are held
for collection of contractual cash flows
where those cash flows represent solely
payments of principal and interest are
measured at amortized cost. A gain or loss
on a debt investment that is subsequently
measured at amortized cost and is
not part of a hedging relationship is
recognized in profit or loss when the asset
is derecognized or impaired. Interest
income from these financial assets
is included in other income using the
effective interest rate method.
The Company subsequently measures
equity investment at fair value. The
Company''s Management elects to present
fair value gains and losses on equity
investments in other comprehensive
income on an instrument by instrument
basis.
Equity investment in subsidiaries,
associates and joint venture are carried
at historical cost as per the accounting
policy choice given by IND AS 27.
Impairment of financial assets
The Company assesses on a forward¬
looking basis the expected credit loss
associated with its assets carried
at amortized cost. The impairment
methodology applied depends on
whether there has been a significant
increase in credit risk.
For trade receivables, the Company
applies the simplified approach permitted
by Ind AS 109 Financial Instruments, which
requires expected lifetime losses to be
recognized from initial recognition of the
receivables.
Derecognition of financial assets
A financial asset is derecognized only
when
⢠The Company has transferred the
rights to receive cash flows from the
financial asset or
⢠retains the contractual rights to
receive the cash flows of the financial
asset, but assumes a contractual
obligation to pay the cash flows to
one or more recipients.
Where the entity has transferred an
asset, the Company evaluates whether
it has transferred substantially all risks
and rewards of ownership of the financial
asset. In such cases, the financial asset
is derecognized. Where the entity has
not transferred substantially all risks and
rewards of ownership of the financial asset,
the financial asset is not derecognized.
Where the entity has neither transferred
a financial asset nor retains substantially
all risks and rewards of ownership of
the financial asset, the financial asset
is derecognized if the Company has not
retained control of the financial asset.
Where the Company retains control of the
financial asset, the asset is continued to
be recognized to the extent of continuing
involvement in the financial asset.
Financial liabilities and equity
instruments
(a) Classification of debt or equity
Debt and equity instruments issued
by a Company 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.
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 a Company
entity are recognised at the proceeds
received, net of direct issue costs.
(i) Classification
The Company classifies all financial
liabilities as subsequently measured
at amortised cost.
(ii) Initial recognition and
measurement
Financial liabilities are classified,
at initial recognition, as financial
liabilities at fair value through profit or
loss, loans and borrowings, payables,
as appropriate.
All financial liabilities are recognized
initially at fair value and, in the
case of loans and borrowings and
payables, net of directly attributable
transaction costs.
The Company''s financial liabilities
include trade and other payables,
loans and borrowings.
Loans and borrowings: After initial
recognition, interest-bearing loans
and borrowings are subsequently
measured at amortised cost using the
Effective Interest Rate (EIR) method.
Gains and losses are recognised in
the Standalone Statement of Profit
and Loss when the liabilities are
derecognised. Amortised cost is
calculated by taking into account any
discount or premium on acquisition
and transactions costs. The EIR
amortisation is included as finance
costs in the Standalone Statement of
Profit and Loss.
(iii) Subsequent measurement of
financial liabilities
The measurement of financial
liabilities depends on their
classification, as described below:
⢠Financial liabilities at fair value
through profit or loss or
⢠Financial liabilities at amortized
cost.
(iv) Offsetting of financial instruments
Financial assets and financial liabilities
are offset and the net amount is
reported in the balance sheet if there
is a currently enforceable legal right
to offset the recognized amounts
and there is an intention to settle on
a net basis, to realize the assets and
settle the liabilities simultaneously.
(v) Derecognition of financial liabilities
The Company derecognises
financial liabilities when, and only
when, the Company''s obligations
are discharged, cancelled or have
expired.
Borrowing costs directly attributable to the
acquisition, construction or production of an asset
that necessarily takes a substantial period of time to
get ready for its intended use or sale are capitalized
as part of the cost of the asset. All other borrowing
costs are expensed in the period in which they
occur. Borrowing costs consist of interest and other
costs that an entity incurs in connection with the
borrowing of funds. Borrowing cost also includes
exchange differences to the extent regarded as an
adjustment to the borrowing costs.
Revenue from operations includes income for
the use of co-working space, along with related
Ancillary services, Payroll Management Services,
Facility Management, Designing and Execution
service and other services.
Revenue from contracts with customers is
recognised when control of the goods or services
are transferred to the customer, at an amount that
reflects the consideration to which the Company
expects to be entitled in exchange for those goods
or services. The Company has generally concluded
that it is the principal in its revenue arrangements
because it typically controls the goods or services
before transferring them to the customers.
At contract inception, the Company assess the
goods and a service promised in contracts with
customers and identifies various performance
obligations to provide distinct goods and services
to the customers. The company has determined
following distinct goods and services that represent
its primary performance obligation.
The transaction price of goods sold and services
rendered is net of variable consideration on account
of various elements like discounts etc. offered by
the company as part of the contract.
The company sells memberships to individuals and
organizations that provide access to office space,
use of a shared internet connection and access
to certain facilities. The price of each membership
is based on factors such as the particular
characteristics of the workspace occupied by the
member, the geographic location of the workspace
and the size of the workspace.
Service revenue are the additional billings to the
members for ancillary business services consisting
of other chargeable services like rent of conference
room, printing charges, parking charges, etc. Income
from service is recognised in the Standalone
Financial Statements when the services are
provided at the end of each month.
A receivable represents the company''s right to an
amount of consideration that is unconditional (i.e.,
only the passage of time is required before payment
of the consideration is due). Refer to accounting
policies of financial assets in financial instruments
- initial recognition and subsequent measurement.
A contract liability is the obligation to deliver
services to a customer for which the Company
has received consideration or part thereof (or
an amount of consideration is due) from the
customer. If a customer pays consideration before
the company deliver services to the customer, a
contract liability is recognised when the payment is
made or the payment is due (whichever is earlier).
Contract liabilities are recognised as revenue when
the company performs under the contract.
Interest income from a financial asset is recognized
when it is probable that the economic benefits
will flow to the Company and the amount of
income can be measured reliably. Interest income
is accrued on a time basis, by reference to the
principal outstanding and at the effective interest
rate applicable, which is the rate that exactly
discounts estimated future cash receipts through
the expected life of the financial asset to that
asset''s net carrying amount on initial recognition.
On disposal of an investment, the difference
between the carrying amount and the disposal
proceeds, net of expenses, is recognized in the
Standalone Statement of Profit and Loss.
Dividend income is accounted for in the period in
which the right to receive the same is established.
Other items of income are accounted as and when
the right to receive arises and it is probable that the
economic benefits will flow to the Company and
the amount of income can be measured reliably.
The company operates in a provision single
segment and in line with Ind AS - 108 - "Operating
Segments", the operation of the company falls
under "Renting and of Co-working spaces" business
which is considered to be the only reportable
business segment.
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