Accounting Policies of AGS Transact Technologies Ltd. Company

Mar 31, 2024

2. Basis of preparation and Material Accounting Policies

A. Basis of preparation of Financial Statements

The standalone financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention (except for certain financial instruments, ESOP and employee benefit obligation that are measured at fair values at the end of each reporting period) on accrual basis to comply in all material aspects with the Indian Accounting Standards (hereinafter referred to as the ''Ind ASâ) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (âthe Actâ) read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter and relevant provisions of the Act.

The standalone financial statements have been prepared on accrual and going concern basis.

The Company has prepared these standalone financial statements which comprise the Balance Sheet as at 31 March 2024, the Statement of Profit and Loss for the year ended 31 March 2024, the Statement of Cash Flows for the year ended 31 March 2024 and the Statement of Changes in Equity for the year ended as on that date, and accounting

policies and other explanatory information (together hereinafter referred to as ''Standalone Financial Statementsâ).

The standalone financial statements of the Company for year ended 31 March 2024 were approved by the Board of Directors of the Company on 29 May 2024.

B. Functional and presentation currency

These standalone financial statements are presented in Indian Rupees (INR), which is also the entity''s functional currency.

All amounts have been rounded off to the nearest million with two decimals, unless otherwise indicated.

C. Basis of measurement

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

- Certain financial assets and liabilities measured

at fair value (refer accounting policy regarding

financial instruments),

- ESOP

- Net defined benefit (asset) / liability - fair value of plan assets less present value of defined benefit obligations.

D. Key estimates and assumptions

While preparing the standalone financial statements in conformity with Ind AS, the management has made certain estimates and assumptions that require subjective and complex judgments. These judgments affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses, disclosure of contingent liabilities at the Balance Sheet date and the reported amount of income and expenses for the reporting period. Future events rarely develop exactly as forecasted and the best estimates require adjustments, as actual results may differ from these estimates under different assumptions or conditions.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Judgement, estimates and assumptions are required in particular for:

Judgements:

Determining whether an arrangement contains a lease

At inception of an arrangement, the Company determines whether the arrangement is or contains a lease.

At inception or on reassessment of an arrangement that contains a lease, the Company separates payments and other consideration required by the arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Company concludes that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset; subsequently, the liability is reduced as payments are made and an imputed finance cost on the liability is recognised using the Companyâs incremental borrowing rate.

Estimates and assumptions:

Revenue recognition

The Company''s contracts with customers include promises to transfer multiple products and services to a customer. The transaction price could be variable consideration with elements such as net of returns, service level agreement adjustments / credits, non-current warranties, trade discounts, volume rebates, where applicable.

Determination of the estimated useful lives

Useful lives of property, plant and equipment are based on the life prescribed in Schedule II of the Act. In cases, where the useful lives are different from that prescribed in Schedule II and in case of intangible assets, they are estimated by management based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturersâ warranties and maintenance support. All useful lives are reviewed at each reporting period and revised if required.

Recognition and measurement of defined benefit obligations

The period to maturity of the underlying bonds correspond to the probable maturity of the post-employment benefit obligations. Due to complexities involved in the valuation and its long term nature, defined benefit obligation is sensitive to changes in these assumptions. All assumptions are reviewed at each reporting period.

Recognition and measurement of other provisions

The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and circumstances known at the closing date. The actual outflow of resources at a future date may therefore vary from the amount included in other provisions.

Discounting of long-term financial assets / liabilities

All financial assets / liabilities are required to be measured at fair value on initial recognition. In case of financial assets / liabilities which are required to subsequently be measured at amortised cost, interest is accrued using the effective interest method.

Fair value of financial instruments

Derivatives are carried at fair value. Derivatives include foreign currency forward contracts. Fair value of foreign currency forward contracts is determined using the fair value reports provided by respective bankers. The Company designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with foreign currency borrowings arising from changes in foreign exchange rates and interest rates.

Further information about the assumptions made in measuring fair values is included in the following note:

- Impairment test of financial assets: key assumptions underlying recoverable amounts.

Taxes

Significant management judgment is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to

the extent that it is probable that future taxable profits will be available against which they can be used.

E. Measurement of fair values

The Companyâs accounting policies and disclosures require the measurement of fair values for financial instruments.

The Company has an established control framework with respect to the measurement of fair values. The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

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

- Level 2: inputs other than quoted prices included in 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).

When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

The entity has recognised certain assets at fair value and further information is included in the relevant notes.

F. Investments in subsidiaries and associates

Investments in subsidiaries and associates are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries and associates, the difference between net disposal proceeds and the carrying amounts are recognised in the Statement of Profit and Loss.

G. Financial assets

(i) Initial recognition and measurement

Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument. On initial recognition, a financial asset is recognised at fair value, in case of financial assets which are recognised at fair value through profit and loss (FVTPL), its transaction cost is recognised in the Statement of Profit and Loss. In other cases, the transaction cost is attributed to the acquisition value of the financial asset.

(ii) Classification and subsequent measurement

The Company classifies its financial assets into a) financial assets measured at amortised cost, b) financial assets measured at fair value through other comprehensive income (FVOCI), and c) financial assets measured at fair value through profit or loss (FVTPL). Management determines the classification of its financial assets at the time of initial recognition or, where applicable, at the time of reclassification.

(a) Financial assets measured at amortised cost

A financial asset is classified as measured at amortised cost if it is held within a business model whose objective is to

- hold financial asset in order to collect contractual cash flows

- the contractual terms of the financial asset give rise on specific 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 effective interest rate method (EIR). Amortised cost is arrived at after taking into consideration any discount on fees or costs that are an integral part of the EIR. The amortisation of such interests forms part of finance income in the Statement of Profit and Loss. Any impairment loss arising from these assets is recognised in the Statement of Profit and Loss.

(b) Financial assets measured at fair value through other comprehensive income (FVOCI)

Debt investments at FVOCI: These assets are subsequently measured at fair value. Interest income under the effective interest method, foreign exchange gains and losses and impairment are recognised in Statement of Profit and Loss. Other net gains and losses are recognised in other comprehensive income. On de-recognition, gains and losses accumulated in OCI are reclassified to Statement of Profit and Loss.

Equity investments at FVOCI: These assets are subsequently measured at fair value. Dividends are recognised as income in Statement of Profit and Loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in other comprehensive income and are not reclassified to Statement of Profit and Loss. On de-recognition, gains and losses accumulated in OCI are reclassified to Statement of Profit and Loss.

This is a residual category for classification. Any asset which does not meet the criteria for classification as at amortized cost or FVOCI, is classified as FVTPL. Financial assets at fair value through profit and loss are measured at fair value, and changes therein are recognised in the Statement of Profit and Loss.

(iii) Trade receivables

Trade receivables are recognised on origination at

transaction price as they do not have a significant

financing component. Trade receivables are tested for impairment on a specific basis after considering the sanctioned credit limits, prior experience, customer profile and expectations about future cash flows.

(iv) De-recognition

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset.

(v) Impairment of Financial Assets

Expected credit losses are recognised for all financial assets subsequent to initial recognition other than financials assets in FVTPL category.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company''s historical experience and informed credit assessment and including forward looking information.

For trade receivables, the Company applies a simplified approach. It recognises impairment loss allowance based on lifetime expected credit losses at each reporting date, right from its initial recognition. Trade receivables are tested for impairment on a specific basis after considering the sanctioned credit limits and expectations about future cash flows.

The impairment losses and reversals are recognised in the

Statement of Profit and Loss.

H. Financial liabilities

(i) Initial recognition and measurement

A financial liability is recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are classified as measured at fair value less any directly attributable transaction cost or FVTPL. A financial liability is classified as at FVTPL if it is held for trading, or it is a derivative or it is designated as such on initial recognition.

(ii) Subsequent measurement

Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in Statement of Profit and Loss. Other financial liabilities are subsequently measured at amortised cost using the EIR method. Interest expense and foreign exchange gains and losses are recognised in Statement of Profit and Loss.

(iii) De-recognition

A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expires.

I. 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 recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

J. Derivative financial instruments

Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in Statement of Profit and Loss. The gain or loss on such derivative is presented in the Statement of Profit and Loss in the same line item as the corresponding foreign exchange loss or gain arising from the hedged transaction.

K. Share capital

(i) Ordinary equity shares

Incremental costs directly attributable to the issue of ordinary equity shares, are recognised as a deduction from equity

(ii) Treasury shares

The Company has created an AGSTTL Employees Welfare Trust (Trust) for providing share-based payment to its employees and those of its subsidiaries. The Trust is used as a vehicle for distributing shares to employees under the employee remuneration schemes. The Trust buys shares of the Company for giving shares to employees. The Company treats Trust as its extension and shares held by Trust are treated as treasury shares. Treasury shares are recognised at cost and deducted from equity. No gain or loss is recognised in Statement of Profit and Loss on the purchase, sale, issue or cancellation of the Companyâs own equity instruments.

Any difference between the carrying amount and the

consideration, if reissued, is recognised in Capital Reserve.

Share options exercised during the reporting period are

deducted from treasury shares.

.. Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost, less accumulated depreciation and accumulated impairment losses, and there are future economic benefits associated with the items and cost can be measured reliably. On transition to Ind AS, the WDV of assets was considered as the deemed cost of the assets.

Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located, after deducting trade discounts and rebates if any.

Pre-operative expenses such as salaries, brokerage, legal and professional fees, etc. incurred during installation period are capitalised under the respective asset head as part of the indirect installation cost, to the extent to which the expenditure is allocable / apportioned to the asset-head. In case of composite contract involving acquisition of property, plant and equipment and providing services, the property, plant and equipment are capitalised at the respective fair value of the asset acquired.

Stores and spares include tangible items used as rotables in supply of goods or services and are expected to be used for a period more than 1 year.

Demo assets includes assets which are given for training, testing and demonstration to various current and prospective customers for supply of goods or services and are expected to be used for a period more than 1 year.

Any gain or loss on disposal of an item of property, plant and equipment is recognised in the Statement of Profit and Loss.

Plant and equipment which are not ready for intended use as on the reporting date are disclosed as âCapital work-in-progressâ.

Advances paid towards the acquisition of property, plant and equipment outstanding at each reporting date are classified as Capital advances.

Freehold land is carried at historical cost less any accumulated impairment losses.

(ii) Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that future economic benefits associated with the expenditure will flow to the entity and cost can be measure reliably

(iii) Depreciation

Depreciation on property, plant and equipment

Depreciation is provided on the cost of the assets less residual value using Written Down Value (''WDVâ) method, except in the case of Building, ATM, ATM sites, Demo assets and Stores and spares where the StraightLine Method (''SLMâ) is used, over the estimated useful life of each asset as determined by the management. Depreciation is provided on a pro-rata basis i.e. from the date on which asset is ready for intended use/ till the date the asset is disposed off.

* ATM/CRM machines and others assets at ATM sites are depreciated over the estimated useful lives of 10 years and 7 years respectively, whereas life as per Schedule II is 15 years.

# The Management has estimated, supported by independent assessment by professionals, the useful lives of these classes of assets.

Leasehold improvements are amortised over the primary period of lease i.e. lease period which ranges from 3 to 8 years as per the agreement or the life of respective assets, whichever is lower.

Depreciation method, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.

M. Asset held for sale

Assets are classified as held for sale if their carrying amount will be recovered principally through sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at lower of their carrying amount or fair value less cost to sell.

N. Intangible assets

(i) Recognition and measurement

Intangible assets acquired separately are measured on initial recognition at cost.

Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in the Statement of Profit and Loss in the year in which the expenditure is incurred

Intangibles which are not ready for intended use as on the reporting date are disclosed as âIntangible under developmentâ.

(ii) Subsequent expenditure

After initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment loss, if any.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit and loss as incurred.

(iii) Service concession arrangements

The Company recognises an intangible asset arising from a service concession arrangement to the extent it has a right to charge for use of the concession infrastructure. The fair value, at the time of initial recognition of such an intangible asset received as consideration for providing construction or upgrade services in a service concession arrangement, is regarded to be its cost. Subsequent to initial recognition, the intangible asset is measured at cost, less any accumulated amortisation and accumulated impairment losses, if any.

(iv) Amortisation

Intangible assets are amortised on a straight line basis over the estimated useful economic life. The estimated useful lives are as follows:

The estimated useful life of an intangible asset in a service concession arrangement is the period of the contract.

The amortisation period and the amortisation method are reviewed at each reporting date. If the expected useful life of the asset is significantly different from previous estimates, the amortisation period is changed accordingly.

(v) Expenditure on research and development

Expenditure on research activities is recognised in the Statement of Profit and Loss as incurred.

Development expenditure is capitalised as part of the cost of the resulting intangible asset only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognised in Statement of Profit and Loss as incurred.

Following the initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses, if any. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised on a straight line basis over the period of expected future benefit from the related project. Amortisation is recognised in the Statement of Profit and Loss.

During the period of development, the asset is tested for impairment annually.

O. Government Grants

Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received.

Government grants are recognised in the Statement of Profit and Loss as other income on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate.

P. Inventories

Raw materials, finished goods, stores, spares (other than those capitalised in property, plant and equipment), traded items and consumables are carried at the lower of cost and net realisable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are sold at or above cost. The comparison of cost and net realisable value is made on an item-by-item basis.

In determining cost of raw materials, finished goods, traded items, stores, spares and consumables, weighted average cost method is used. Cost of inventory comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated

costs of completion and the estimated costs necessary to make the sale.

Cost of finished goods includes the cost of raw materials, an appropriate share of fixed and variable production overheads and other costs incurred in bringing the inventories to their present location and condition.

Q. Impairment of non-financial assets

The Companyâs non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assetâs recoverable amount is estimated.

For impairment testing, assets that do not generate independent cash inflows are grouped together into cashgenerating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU (or the asset).

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss. Impairment loss recognised in respect of a CGU is allocated to the carrying amounts of the other assets of the CGU on a pro rata basis.

In respect of assets for which impairment loss has been recognised in prior periods, the Company reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

R. Revenue

(i) Sale of goods

Revenue from sale of goods is measured at transaction price allocated to that performance obligation of the consideration received or receivable, net of returns, service level adjustment/credits, non-current warranties, trade discounts, goods and service tax and volume rebates, where applicable.

Revenue is recognised when the Company satisfies performance obligation by transferring the goods to the customers. The Company ''transfers'' goods to the customers when the customer obtains control of that goods which generally coincides with the delivery of the goods (i.e. at a point in time).

(ii) Rendering of services

Revenue from contracts with customers net of service level adjustment/credits is recognised when the Company satisfies performance obligation by transferring the services to the customers.

The revenue from ATM and management services is disclosed net of service level adjustment/credits, one-time upfront fees and premium on purchase of property, plant and equipment. One time upfront fees and premium on purchase of property, plant and equipment is amortised over the respective contract period.

Revenue from maintenance contracts is recognised pro-rata over the period of the contract as and when services are rendered. Revenue from upgrades and digital payment services is recognised as and when services are rendered.

The Company collects goods and service tax on behalf of the government and therefore, these are not economic benefits flowing to the Company.

(iii) Service concession arrangements

Revenue related to construction or upgrade services provided under a service concession arrangement is recognised based on the stage of completion of the work performed. Operation or service revenue is recognised in the period in which the services are provided by the Company.

(iv) Multiple deliverable arrangements

At contract inception, the Company assesses the goods or services explicitly or implicitly promised in a contract and identify as a performance obligation each promise to transfer a distinct good or service. A good or service that is promised in a contract is ''distinct'' if both of the following criteria are met:

a) The customer can benefit from the good or service either on its own or together with other resources that are ''readily available'' to the customer.

b) The entity''s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.

The Company, at contract inception, allocates the transaction price to each performance obligation on the basis of relative stand-alone selling price.

Contract assets are recognised when there are excess of revenues earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms.

Deferred revenue (âcontract liabilityâ) is recognised when there are billings in excess of revenues.

With effect from 1 April 2018, the Company has adopted Ind AS 115 Revenue from contracts with customers.

S. Recognition of insurance claim, dividend income, interest income or expense

Insurance claims are accounted for on the basis of claims admitted and to the extent that there is no uncertainty in receiving the claims.

Dividend income is recognised in Statement of Profit and Loss on the date on which the Companyâs right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of dividend can be measured reliably.

For all financial instruments measured at amortised cost, interest income or expense is recorded using the effective interest rate (EIR), which is the rate that discounts the estimated future cash payments or receipts through the expected life of the financial instruments or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in Other income in the Statement of Profit and Loss.

Lease interest expense is recognised upon commencement of the lease agreement using constant periodic rate of return over the period of the agreement

T. Foreign currency transactions

(i) Initial recognition

Foreign currency transactions are recorded in the functional currency, by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction.

(ii) Subsequent measurement

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Exchange differences are recognised in Statement of Profit and Loss in the period in which they arise.

(iii) Fair value gains / (loss) of derivative contracts

Foreign exchange difference on foreign currency borrowings, settlement gain / (loss) and fair value gain / (loss) on derivative contracts relating to borrowings are accounted and disclosed under Finance cost.

U. Employee benefits

(i) Short-term employee benefits

For the amount expected to be paid, the Company recognises undiscounted liability if they have a present legal or constructive obligation to pay the amount as a result of past service provided by employees, and the obligation can be estimated reliably.

(ii) Defined contribution plan

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. The Company makes specified monthly contributions towards Government administered Provident Fund Scheme and Employee State Insurance Corporations. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in the Statement of Profit and Loss in the periods during which the related services are rendered by employees.

(iii) Gratuity - Defined benefit plan

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. Gratuity is a defined benefit plan. The gratuity plan provides for a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employeeâs eligible salary and the tenure of employment with the Company.

The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan (''the asset ceilingâ).

(asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in the Statement of Profit and Loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service (''past service costâ or ''past service gainâ) or the gain or loss on curtailment is recognised immediately in the Statement of Profit and Loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iv) Compensated absences

Compensated absences which are not expected to occur within twelve months after the end of the year in which the employee renders the related services are recognised as a liability at the present value of the estimated liability for leave as a result of services rendered by employees, which is determined at each reporting date based on an actuarial valuation by an independent actuary using the projected unit credit method. The discount rates used for determining the present value of the obligation under other long term employee benefits, are based on the market yields on Government of India securities as at the reporting date. Re-measurement gains and losses are recognised immediately in the Statement of Profit and Loss.

The Company presents the above liability as current in the Balance Sheet.

(v) Employee stock compensation cost

The grant date fair value of equity settled share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognised as expense is based on the estimate of the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that do meet the related service and nonmarket vesting conditions at the vesting date.

Mar 31, 2023

SIGNIFICANT ACCOUNTING POLICIES1, | REPORTING ENTITY

AGS Transact Technologies Limited (the âCompanyâ) is a company domiciled in India with its registered office situated at Lower Parel, Mumbai. The Company is in the business of supplying, installing and managing technology-based payment solutions, automation products and providing related services to its customers in Banking, Petroleum, Colour and Retail sectors. The Company also provides complete ATM Outsourcing, Intelligent Cash Deposit (ICD), ATM Managed Services, Digital payment services which includes toll and transit solutions, services through point of sale (POS) machine, transaction switching and processing services to various banks, financial institutions and other companies.

The Non-Convertible Debentures (âNCDâ) of the Company were listed on National Stock Exchange (âNSEâ) from 26 March 2021 and were delisted on 05 February 2022.

The Equity Shares of the Company were listed on National Stock Exchange (âNSEâ) and Bombay Stock Exchange (âBSEâ) on 31 January 2022.

2. | BASIS OF PREPARATION AND SIGNIFICANTACCOUNTING POLICIES

A. Basis of preparation of Financial Statements

The standalone financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention (except for certain financial instruments, ESOP and employee benefit obligation that are measured at fair values at the end of each reporting period) on accrual basis to comply in all material aspects with the Indian Accounting Standards (hereinafter referred to as the âInd ASâ) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (âthe Actâ) read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter and relevant provisions of the Act.

The standalone financial statements have been prepared on accrual and going concern basis.

The Company has prepared these standalone financial statements which comprise the Balance Sheet as at 31 March 2023, the Statement of Profit and Loss for the year ended 31 March 2023, the Statement of Cash Flows for the year ended 31 March 2023 and the Statement of Changes in Equity for the year ended as on that date, and accounting policies and other explanatory information (together hereinafter referred to as âStandalone Financial Statementsâ).

The standalone financial statements of the Company for year ended 31 March 2023 were approved by the Board of Directors of the Company on 26 May 2023.

B. Functional and presentation currency

These standalone financial statements are presented in Indian Rupees (INR), which is also the entityâs functional currency.

All amounts have been rounded off to the nearest million with two decimals, unless otherwise indicated.

C. Basis of measurement

The Standalone Financial Statements have been

prepared on historical cost basis, except for the following assets and liabilities which have been measured at fair value:

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

- ESOP

- Net defined benefit (asset) / liability - fair value of plan assets less present value of defined benefit obligations.

D. Key estimates and assumptions

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Judgement, estimates and assumptions are required in particular for:

Revenue recognition

The Companyâs contracts with customers include promises to transfer multiple products and services to a customer. Judgment is required to determine the transaction price for the contract. The transaction price could be variable consideration with elements such as net of returns, service level agreement adjustments /

credits, non-current warranties, trade discounts, volume rebates, where applicable.

Determination of the estimated useful lives

Recognition and measurement of defined benefit obligations

The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation, actuarial rates and life expectancy. The discount rate is determined by reference to market yields at the end of the reporting period on government bonds. The period to maturity of the underlying bonds correspond to the probable maturity of the postemployment benefit obligations. Due to complexities involved in the valuation and its long term nature, defined benefit obligation is sensitive to changes in these assumptions. All assumptions are reviewed at each reporting period.

Recognition and measurement of other provisions

Discounting of long-term financial assets / liabilities

Determining whether an arrangement contains a lease

At inception of an arrangement, the Company determines whether the arrangement is or contains a lease.

At inception or on reassessment of an arrangement that contains a lease, the Company separates payments and other consideration required by the arrangement

into those for the lease and those for other elements on the basis of their relative fair values. If the Company concludes that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset; subsequently, the liability is reduced as payments are made and an imputed finance cost on the liability is recognised using the Companyâs incremental borrowing rate.

Fair value of financial instruments

Further information about the assumptions made in measuring fair values is included in the following note:

- Impairment test of financial assets: key assumptions underlying recoverable amounts.

Taxes

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used.

E. Measurement of fair values

The Companyâs accounting policies and disclosures require the measurement of fair values for financial instruments.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

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

- Level 2: inputs other than quoted prices included in 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).

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

The entity has recognised certain assets at fair value and further information is included in the relevant notes.

F. Investments in subsidiaries and associates

G. Financial assets

(i) Initial recognition and measurement

(ii) Classification and subsequent measurement

(a) Financial assets measured at amortised cost

A financial asset is classified as measured at amortised cost if it is held within a business model whose objective is to

- hold financial asset in order to collect contractual cash flows

- the contractual terms of the financial asset give rise on specific 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 effective interest rate method (EIR). Amortised cost is arrived at after taking into consideration any discount on fees or costs that are an integral part of the EIR. The amortisation of such interests forms part of finance income in the Statement of Profit and Loss. Any impairment loss arising from these assets is recognised in the Statement of Profit and Loss.

(b) Financial assets measured at fair value through other comprehensive income (FVOCI)

Equity investments at FVOCI: These assets are subsequently measured at fair value. Dividends

are recognised as income in Statement of Profit and Loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in other comprehensive income and are not reclassified to Statement of Profit and Loss. On de-recognition, gains and losses accumulated in OCI are reclassified to Statement of Profit and Loss.

This is a residual category for classification. Any asset which does not meet the criteria for classification as at amortizeised cost or FVOCI, is classified as FVTPL. Financial assets at fair value through profit and loss are measured at fair value, and changes therein are recognised in the Statement of Profit and Loss.

(iii) Trade receivables

Trade receivables are recognised on origination at transaction price. Subsequently, these assets are held at amortised cost, using the effective interest rate (EIR) method. The EIR is the rate that discounts estimated future cash income through the expected life of financial instrument. Trade receivables are tested for impairment on a specific basis after considering the sanctioned credit limits, prior experience, customer profile and expectations about future cash flows.

(iv) De-recognition

(v) Impairment of Financial Assets

Expected credit losses are recognised for all financial assets subsequent to initial recognition other than financials assets in FVTPL category.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Companyâs historical experience and informed credit assessment and including forward looking information.

The impairment losses and reversals are recognised in the Statement of Profit and Loss.

H. Financial liabilities

(i) Initial recognition and measurement

(ii) Subsequent measurement

(iii) De-recognition

A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expires.

I. Offsetting of financial instruments

J. Derivative financial instruments

K. Share capital

(i) Ordinary equity shares

Incremental costs directly attributable to the issue of ordinary equity shares, are recognised as a deduction from equity

(ii) Treasury shares

The Company has created an AGS Transact Employees Welfare Trust (Trust) for providing share-based payment to its employees and those of its subsidiaries. The Trust is used as a vehicle for distributing shares to employees under the employee remuneration schemes. The Trust buys shares of the Company for giving shares to employees. The Company treats Trust as its extension and shares held by Trust are treated as treasury shares. Treasury shares are recognised at cost and deducted from equity. No gain or loss is recognised in Statement of Profit and Loss on the purchase, sale, issue or cancellation of the Companyâs own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in Capital Reserve. Share options exercised during the reporting period are deducted from treasury shares.

L. Property, plant and equipment

(i) Recognition and measurement

Pre-operative expenses such as salaries, brokerage, legal and professional fees, etc. incurred during installation period are capitalised under the respective asset head as part of the indirect

installation cost, to the extent to which the expenditure is allocable / apportioned to the asset-head. In case of composite contract involving acquisition of property, plant and equipment and providing services, the property, plant and equipment are capitalised at the respective fair value of the asset acquired.

Stores and spares include tangible items used as rotables in supply of goods or services and are expected to be used for a period more than 1 year.

Any gain or loss on disposal of an item of property, plant and equipment is recognised in the Statement of Profit and Loss.

Plant and equipment which are not ready for intended use as on the reporting date are disclosed as âCapital work-in-progressâ.

Advances paid towards the acquisition of property, plant and equipment outstanding at each reporting date are classified as Capital advances.

Freehold land is carried at historical cost less any accumulated impairment losses.

(ii) Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that future economic benefits associated with the expenditure will flow to the entity and cost can be measure reliably

(iii) Depreciation

Depreciation on property, plant and equipment

Depreciation is provided on the cost of the assets less residual value using Written Down Value (âWDVâ) method, except in the case of Building, ATM, ATM sites, Demo assets and Stores and spares where the Straight-Line Method (âSLMâ) is used, over the estimated useful life of each asset as determined by the management. Depreciation is provided on a pro-rata basis i.e. from the date on which asset is put to use/till the date the asset is disposed off.

Freehold land is not depreciated.

The estimated useful lives and method of depreciation of items of property, plant and equipment are as follows:

Asset	Method of Depreciation	Usefullife (years)
Buildings	SLM	30 / 60
ATM/CRM machines*#	SLM	5 - 10
Others assets at ATM Sites*#	SLM	7
Demo assets#	SLM	2 - 5
Stores and spares#	SLM	5
Plant and machinery	WDV	15
Furniture and fixtures	WDV	10
Office equipment, electrical installation and air conditioners	WDV	5 - 10
Computers	WDV	3 - 6
Vehicles	WDV	8

* ATM/CRM machines and others assets at ATM sites are depreciated over the estimated useful lives of 10 years and 7 years respectively, whereas life as per Schedule II is 15 years .

# The Management has estimated, supported by independent assessment by professionals, the useful lives of these classes of assets.

Leasehold improvements are amortised over the primary period of lease i.e. lease period which ranges from 3 to 8 years as per the agreement or the life of respective assets, whichever is lower.

Depreciation method, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.

M. Asset held for sale

N. Intangible assets

(i) Recognition and measurement

Intangible assets acquired separately are measured on initial recognition at cost.

Intangibles which are not ready for intended use as on the reporting date are disclosed as âIntangible under developmentâ.

(ii) Subsequent expenditure

After initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment loss, if any.

(iii) Service concession arrangements

(iv) Amortisation

Intangible assets are amortised on a straight line basis over the estimated useful economic life. The estimated useful lives are as follows:

Asset

Useful life

(years)

Technical know-how

Software

The estimated useful life of an intangible asset in a service concession arrangement is the period of the contract.

(v) Expenditure on research and development

Expenditure on research activities is recognised in the Statement of Profit and Loss as incurred.

future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognised in Statement of Profit and Loss as incurred.

During the period of development, the asset is tested for impairment annually.

O. Government Grants

Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received.

P. Inventories

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Q. Impairment of non-financial assets

For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.

R. Revenue

(i) Sale of goods

Revenue from sale of goods is measured at transaction price allocated to that performance obligation of the consideration received or receivable, net of returns, service level adjustment/ credits, non-current warranties, trade discounts, goods and service tax and volume rebates, where applicable.

Revenue is recognised when the Company satisfies performance obligation by transferring the goods to the customers. The Company âtransfersâ goods to the customers when the customer obtains control of that goods which generally coincides with the delivery of the goods (i.e. at a point in time).

(ii) Rendering of services

Revenue from contracts with customers net of service level adjustment/credits is recognised when the Company satisfies performance obligation by transferring the services to the customers.

The Company collects goods and service tax on behalf of the government and therefore, these are not economic benefits flowing to the Company.

(iii) Service concession arrangements

(iv) Multiple deliverable arrangements

At contract inception, the Company assesses the goods or services explicitly or implicitly promised in a contract and identify as a performance obligation each promise to transfer a distinct good or service. A good or service that is promised in a contract is âdistinctâ if both of the following criteria are met:

a) The customer can benefit from the good or service either on its own or together with other resources that are âreadily availableâ to the customer.

b) The entityâs promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.

The Company, at contract inception, allocates the transaction price to each performance obligation on the basis of relative stand-alone selling price.

Deferred revenue (âcontract liabilityâ) is recognised when there are billings in excess of revenues.

With effect from 01 April 2018, the Company has adopted Ind AS 115 Revenue from contracts with customers.

S. Recognition of insurance claim, dividend income, interest income or expense

Insurance claims are accounted for on the basis of claims admitted and to the extent that there is no uncertainty in receiving the claims.

Lease interest expense is recognised upon commencement of the lease agreement using constant periodic rate of return over the period of the agreement

T. Foreign currency transactions

(i) Initial recognition

(ii) Subsequent measurement

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting

date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Exchange differences are recognised in Statement of Profit and Loss in the period in which they arise.

(iii) Fair value gains / (loss) of derivative contracts

U. Employee benefits

(i) Short-term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified shortterm employee benefits and they are recognised in the year in which the employee renders the related services. For the amount expected to be paid, the Company recognises undiscounted liability if they have a present legal or constructive obligation to pay the amount as a result of past service provided by employees, and the obligation can be estimated reliably.

(ii) Defined contribution plan

(iii) Gratuity - Defined benefit plan

on the respective employeeâs eligible salary and the tenure of employment with the Company.

Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in Other Comprehensive Income. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in the Statement of Profit and Loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service (âpast service costâ or âpast service gainâ) or the gain or loss on curtailment is recognised immediately in the Statement of Profit and Loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iv) Compensated absences

The Company presents the above liability as current in the Balance Sheet.

(v) Employee stock compensation cost

The grant date fair value of equity settled share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognised as expense is based on the estimate of the number of awards for which the related service and nonmarket vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that do meet the related service and non-market vesting conditions at the vesting date.

V. Provisions (other than for employee benefits)

A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the reporting date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

Provision for warranties:

Provision for current warranty-related costs is recognised when the related product is sold. Provision is based on technical estimates which are based on historical experience. The estimates of such warranty-related costs are reviewed and revised annually.

W. Contingent liabilities and contingent assets

Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the control of the Company, or present obligations where it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured with sufficient reliability.

Contingent liabilities are not recognised in the financial statements but are disclosed unless the possibility of an outflow of economic resources is considered remote.

A contingent asset is not recognised but disclosed in the Financial Statements where an inflow of economic benefit is probable.

Contingent liabilities and contingent assets are reviewed at each reporting date.

X. Leases

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

As a lessee

The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Companyâs incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the fixed payments, including insubstance fixed payments.

The lease liability is measured at amortised cost using the effective interest method.

Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term.

Right-of-use assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.

Under Ind AS 116, the Company recognised a right-of-use asset and a lease liability for the sale and leaseback transaction, measured in the same way as other right-of-use assets and lease liabilities at that date and adjusted the leaseback right-of-use of asset for proportionate gains and losses recognised in statement of profit and loss.

The Company has used number of practical expedients when applying Ind AS 116: - Short-term leases, leases of low-value assets and single discount rate

The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. The Company applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date. The Company has used hindsight when determining the lease term and did not recognise right of use asset for leases to which the lease term end within 12 months of date of initial application.

Lease liability and ROU assets have been separately presented in Balance Sheet and lease payments have been classified as financing cash flows.

Y. Income tax

Income tax comprises current and deferred tax. It is recognised in the Statement of Profit and Loss except to the extent that it relates to an item recognised directly in equity or in other comprehensive income.

(i) Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.

(ii) Deferred tax

Deferred tax is recognised in respect of temporary differences arising between the carrying amounts of

assets and liabilities for financial reporting purposes and tax base of assets and liabilities. Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilised.

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves. Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be utilised.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

Z. Finance Cost

Finance costs include interest and other borrowing costs incurred in connection with the borrowing of funds. Interest cost on financial liabilities is measured at amortizeised cost such as borrowings from banks and others or bonds or similar instruments etc. calculated as per the effective interest method. Interest and other dues on statutory liabilities that are compensatory in nature are measured at the interest rates as applicable under the Statue. Other borrowing cost includes processing fees, bill discounting charges, commission or charges paid for letter of credit and bank guarantees, exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs etc.

AA. Operating segments

(i) Basis for segmentation

An operating segment is a component of the entity that engages in business activities from which it may earn and incur expenses, including revenues and expenses that relate to transactions with any of the Ccompanyâs other components and for which discrete financial information is available. Such decision is taken by chief operating decision maker (CODM).

(ii) Business segment

The Companyâs operating businesses are organised and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products or services and serves different markets. Accordingly, the Company has identified âPayment Solutionsâ, âBanking Automation Solutionsâ and âOther Automation Solutionsâ segments as the primary reportable segments.

(iii) Geographical segment

The Companyâs business is primarily within India. Hence no separate geographical disclosure is considered necessary.

(iv) Segment information

â¢ Inter-segment transfers: The Company

generally accounts for inter-segment sales and transfers at cost plus appropriate margins.

â¢ Allocation of common costs: Common

allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

â¢ Unallocated items: Unallocated items include general corporate income and expense items which are not allocated to any business segment.

â¢ Segment accounting policies: The Company

prepares its segment information in

conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

AB. 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. Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the year is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares), if any, that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

AC. Dividend

The Company recognises a liability for any dividend declared but not distributed at the end of the reporting period when the distribution is authorised and the distribution is no longer at the discretion of the Company on or before the end of the reporting period. A corresponding amount is recognised directly in equity.

AD. Measurement of earnings before interest, tax, depreciation and amortisation (EBITDA)

The Company has opted to present earnings before interest (Finance Cost), tax, depreciation and amortisation (EBITDA) as a separate line item on the face of the Statement of Profit and Loss. The Company measures EBITDA on the basis of profit/loss from continuing operations including other income.

AE. Cash and cash equivalents

Cash and cash equi

Mar 31, 2011

1. Basis of preparation of financial statement.

(a) Basis of Accounting:

The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting to comply with the accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 and with the relevant provisions of the Companies Act, 1956.

(b) Use of Estimates:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements.

2. Fixed A ssets & Depreciation.

(a) Fixed assets are carried at the cost of acquisition or construction, less accumulated depreciation. The cost of fixed assets includes taxes (other than those subsequently recoverable from tax authorities), duties, freight and other directly attributable cost related to the acquisition and installation of the respective assets. Interest on borrowed funds directly attributable to the qualifying assets up to the period such assets are put to use, is included in the cost.

(b) Depreciation on all fixed assets is provided under Written Down Value Method. The rates of depreciation prescribed in scheduleXIV to the Companies Act, 1956 are considered as the minimum rates. If themanagements estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the managements estimate of the useful life/remaining useful life. Pursuant to this policy, depreciation on following assets has been provided at rates which are higher than the corresponding rates prescribed in ScheduleXIV.

Plant & Machinery ( Outsource & Lease ) : 14.28% SLM (7years)

Software with Customers : 14.28% SLM (7years)

Plant & Machinery : 15.33% WDV

Other Software : 25.00% SLM (4years)

Lease hold Improvements : 20.00% SLM (5years)

(c) Assets costing less than Rs. 5,000 are fully charged to the profit and loss account in the year of acquisition.

(d) At Balance Sheet date, an assessment is done to determine whether there is any indication of impairment in the carrying amount of the Companys fixed assets. If any such indication exists, theassets recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount.

An assessment is also done at each Balance Sheet date whether there is any indication that an impairment loss recognised for an asset in prior accounting periods may no longer exist or may have decreased. If any such indication exists the assets recoverable amount is estimated. The carrying amount of thefixed asset is increased to the revised estimate of its recoverable amount but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss is recognised in the Profit and Loss Account.

After recognition of impairment loss or reversal of impairment loss as applicable, the depreciation charge for the asset is adjusted in future periods to allocate the assets revised carrying amount, less its residual value (if any), on WDV / SLM basis, as the case maybe, over its remaining useful life.

3. Revenue Recognition

(a) Revenue is recognised only when it can be reliably measured & it is reasonable to expect ultimate collection. The amount recognised as sale is exclusive of sales tax/VAT and is net of returns. Sales are stated gross of excise duty as well as net of excise duty; excise duty being the amount included in the amount of gross turnover.

(b) Revenue from service is recognised on rendering of services to customers.

(c) Revenue from Assets given to customer under agreement is accounted on accrual basis under the terms of the agreement based on usage of the assets.

(d) Dividend income is recognized when the right to receive payment is established.

(e) Interest income is recognized on the time proportion basis.

4. Lease Accounting

Assets taken on operating lease:

Lease rentals on assets taken on operating lease are recognised as expense in the Profit and Loss Account on an accrual basis over the lease term.

Assets given on operating lease:

The Company has provided Automatic Teller Machines to Customers on an operating lease basis.Revenue from same are accounted on accrual basis in accordance with the respective lease agreements.

5. Inventory

(a) Raw materials, work in progress, finished goods, stores, spares, traded items and consumables are carried at the lower of cost and net realisable value. The comparison of cost and net realisable value is made on an item-by-item basis. Damaged, unserviceable and inert stocks are suitably depreciated.

(b) In determining cost of raw materials, traded items, stores, spares and consumables, weighted average cost method is used. Cost of inventory comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to their present location and condition.

(c) Cost of finished goods and work-in-process includes the cost of raw materials, an appropriate share of fixed and variable production overheads, excise duty as applicable and other costs incurred in bringing the inventories to their present location and condition. Fixed production overheads are allocated on the basis of normal capacity of production facilities.

6. Investments

Long term investments are carried at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary in the opinion of the management. Current investments are carried at lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments.

Profit and loss on sale of investments is determined on a first-in-first-out (FIFO) basis.

7. Transactions in Foreign E xchange

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Profit and Loss Account of the year.

Monetary assets and liabilities denominated in foreign currencies, which are outstanding as at the year end are translated at the closing exchange rate and the resultant exchange differences are recognised in the Profit and Loss Account.

The premium or discount on forward exchange contracts is recognized over the period of the contracts in the Profit and Loss Account.

8. Sundry Debtors

Sundry debtors are stated after writing off debts considered as bad. Adequate provision is made for debts considered doubtful.

9. Employee Benefits

A. Short Term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognised in the period in which the employee renders the related service. The Company recognises the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.

B. Post-Employment Benefits.

Companys contribution to Recognised Provident Fund is charged to Profit & Loss A/c.

Provision for Gratuity is recognised at the present value of the amount payable based on actuarial valuation carried out using the Projected Unit Credit Method at the end of the financial year and is charged to companys Profit & Loss A/c. The defined benefit obligation recognised in the balance sheet represent the present value of the defined obligation as adjusted for unrecognised actuarial gains and losses and unrecognised past service cost, and as reduced by the fair value of plan assets, if applicable.

Provision for Leave Encashment is made based on actuarial valuation carried out using Projected Accrued Benefit Method which is same as the Projected Unit Credit Method in respect of past services on unutilized leave due to employees at the end of the financial year.

10. Provision for Taxation

Tax expense comprises of current tax (i.e. amount of tax for the period determined in accordance with the Income Tax Act, 1961) & deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period).

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the Balance Sheet date.

Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each Balance Sheet date to reassess realisation.

11. Provisions and Contingencies

The Company creates a provision when there exists a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.

12. Earnings Per Share

The Basic and Diluted Earnings Per Share (EPS) is computed by dividing the net profit after tax for the year by weighted average number of equity shares outstanding during the year.

13. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised 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. All other borrowing costs are charged to Profit and Loss account.

14. Proposed Dividend

Dividend recommended by the Board of directors, if any, is provided for in the accounts, pending approval at the Annual General Meeting.

Mar 31, 2010

1. Basis of preparation of financial statement.

(a) Basis of Accounting:

The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting to comply with the accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 and with the relevant provisions of the Companies Act, 1956.

(b) Use of Estimates:

The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements.

2. Fixed Assets & Depreciation

(a) Fixed assets are carried at the cost of acquisition or construction, less accumulated depreciation. The cost of fixed assets includes taxes (other than those subsequently recoverable from tax authorities), duties, freight and other incidental expenses related to the acquisition and installation of the respective assets. Interest on borrowed funds directly attributable to the qualifying assets up to the period such assets are put to use, is included in the cost,

(b) Depreciation on all fixed assets is provided under Written Down Value Method. The rates of depreciation prescribed in schedule X(V to the Companies Act, 1956 are considered as the minimum rates. If the management''s estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the management''s estimate of the useful life remaining useful life. Pursuant to this policy depreciation or following assets has been provided at rates which are higher than the corresponding rates prescribed in Schedule XIV,

Automatic Teller Machine with Customers : 14.23% SLM (7 years)

Software with Customers : 14.28% SLM (7years)

Plant & Machinery : 15.33% WDV

(c) Assets costing less than Rs. 5,000 are fully charged to the profit and loss account in the year of acquisition.

(d) At Balance Sheet date, an assessment is done to determine whether there is any indication of impairment in the carrying amount of the Company''s fixed assets. If any such indication exists, the asset''s recoverable amount is estimated. An impairment fuss recognised whenever the carrying amount of an asset exceeds its recoverable amount.

An assessment is also done at each Balance Sheet date whether there is any indication that an impairment loss recognised for an asset in prior accounting periods may no longer exist or may have decreased. If any such indication exists the asset''s recoverable amount is estimated. The carrying amount of the fixed asset is increased to the revised estimate of its recoverable amount but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss is recognised in the Profit and Loss Account.

After recognition of impairment loss or reversal of impairment loss as applicable, the depreciation charge for the asset is adjusted in future periods to allocate the asset''s revised carrying amount, less its residual value (if any), on WDV basis.

3. Revenue Recognition

(a) Revenue is recognised only when it can be reliably measured & it is reasonable to expect ultimate collection. The amount recognised as sale is exclusive of VAT and is net of returns. Sates are stated gross of excise duty as well as net of excise duty; excise duty being the amount included in the amount of gross turnover.

(b) Revenue from service is recognised on rendering of services to customers.

(c) Dividend income is recognised when the right to receive payment is established,

(d) Interest income is recognised on the time proportion basis.

4. Lease Accounting

(a) Assets taken on operating lease:

Lease rentals on assets taken on operating lease are recognised as expense in the Profit and Loss Account on an accrual basis over the lease term.

(b) Assets given on operating lease:

The Company has provided Automatic Teller Machines to Customers on an operating lease basis. Revenue from same are accounted on accrual basis in accordance with the respective lease agreements.

5. Inventory

(a) Raw materials, work in progress, finished goods, stores, spares, traded items and consumables are carried at the (owner of cost and net realisable value. The comparison of cost and net realisable value is made on an item-by-item basis. Damaged, unserviceable and inert stocks are suitably depreciated.

(b) In determining cost of raw materials, traded items, stores, spares and consumables, weighted average cost method is used. Cost of inventory comprises all costs of purchase, duties, taxes {other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to their present location and condition.

(c) Cost of finished goods and work-in-process includes the cost of raw materials, an appropriate share of fixed and variable production overheads, excise duty as applicable and other costs incurred in bringing the inventories to their present location and condition. Fixed production overheads are allocated on the basis of normal capacity of production facilities.

6. Investments

Long term investments are carried at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary in the opinion of the management. Current investments are carried at Lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments.

Profit and loss on sale of investments is determined on a first-in-first- out (FIFO) basis.

7. Transactions in Foreign Exchange

(a) Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Profit and Loss Account of the year

(b) Monetary assets and liabilities denominated in foreign currencies, which are outstanding as at the yearend are translated at the closing exchange rate and the resultant exchange differences are recognised in the Profit and Loss Account

(c) The premium or discount on forward exchange contracts is recognized over the period of the contracts in the Profit and Loss Account.

8. Sundry Debtors

Sundry debtors are stated after writing off debts considered as bad. Adequate provision is made for debts considered doubtful,

9. Employee Benefits

A. Short Term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognised in the period in which the employee renders the related service. The Company recognises the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.

B, Post-Employment Benefits,

Company''s contribution to Recognised Provident fund is charged to Profit & Loss A/c.

Provision for Gratuity is recognised at the present value of the amount payable based on Actuarial valuation carried out using the Projected Unit Credit Method at the end of the financial year & is charged to company''s Profit & Loss A/c. The defined benefit obligation recognised in the balance sheet represent the present value of the defined obligation as adjusted for unrecognised actuarial gains and losses and unrecognised past service cost, and as reduced by the fair value of plan assets, if applicable.

Provision for Leave Encashment is made based on Actuarial Valuation carried out using the Projected Accrued Benefit Method which is same as the Projected Unit Credit Method in respect of past services on unutilized Leave due to employees at the end of the financial year.

10, Provision for Taxation

Tax expense comprises of current tax {I.e. amount of tax for the period determined in accordance with the Income Tax Act, 1961) & deferred tax charge or credit {reflecting the tax effects of timing differences between accounting income and taxable income for the period).

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the Balance Sheet date.

Deferred tax assets are recognised only to the extent there fs reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each Balance Sheet date to reassess realisation.

11, Provisions and Contingencies

The Company creates a provision when there exists a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.

12, Earnings Per Share

The Basic and Diluted Earnings Per Share ("EPS''1) is computed by dividing the net profit after tax for the year by weighted average number of equity shares outstanding during the year.

13, Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised 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. All other borrowing costs are charged to Profit and Loss account.

14. Proposed Dividend

Dividend recommended by the Board of directors if any is provided for in the accounts, pending approval at the Annual General Meeting.

14 Interest income induces interest need of Rs,26285/- on account of completion/disposal of various assessments/appeal during the year. (Previous year Rs. Nil)

15 The company is in the process of obtaining details from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid at the year end, together with the interest paid / payable as required under the said Act is not possible.

16 Pursuant to the Accounting Standard {AS 29) - Provisions, Contingent Liabilities and Contingent Assets, the disclosure relating to provisions made in the accounts for the year ended 31st March 2010, is as follows :

17 The Company has recognised deferred tax arising on account of timing differences, being the deference between the taxable income and accounting income, that originates in one period and is capable of reversal in one or more subsequent period(s) in compliance with Accounting Standard (AS 22) ~ Accounting for Taxes on Income .

The major components of deferred tax (Liabilities/assets arising on account of timing Differences as at 31st March are as follows.

18 Employee Benefits;

1 Short term employee benefits:

the liability towards short term employee benefits for the year ended 31st March, 2010 has been recognised in the Profit and Loss Account.

2 Poet -employment benefits:

The following disclosures are made in accordance with AS 15 (Revised) pertaining to defined Benefits Plans:

3 The Liability towards compensated absences (Leave Encashment) for the year ended 3V3/2010 based qn actuarial valuation, carried out using the projected accrual benefit method amounting to Rs, 31,61, B15/- for the year is recognized i n the Profit and Loss accou nt.

19 Pursuant to Accounting Standard (AS 19) - Leases, the following information is given:

(a) The Company has provided A.T.M to its customers on an operating tease basis. The lease period is for three years & Lease rentals are payable monthly by the dealers.''

The information pertaining to future minimum lease rentals receivable is based on the lease agreements entered into between the Company and the dealers and variation made thereto. Lease rentals are reviewed periodically taking into account prevailing market conditions.

(c) Total amount of contingent rents recognised as income - Mil.

(d) The initial direct cost relating to acquisition of ATM is capitalised.

(e) The information on gross amount of leased assets, depreciation and impairment is given in Schedule D to the Balance Sheet.

20 Pursuant to Accounting Standard ( AS 16 } Borrowing Cost an amount of borrowing cost of Rs.47,85,289/- [Previous year Mil) attributable to the acquisition & construction of qualifying assets are capitalized during the year.

21 The Company has converted into public limited company and changed its name to AGS TRANSACT TECHNOLOGIES LTD and ROC approval is received on 20/7/2010. The Company has raised its authorized capital to Rs.35,00,00,000/- (35000000 equity share of Rs. 101- each).

22 Previous year figures have been regrouped, wherever necessary.

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