Accounting Policies of SoftTech Engineers Ltd. Company

Mar 31, 2025

2. Material accounting policies

i. Basis of preparation

The financial statements of the Company have been prepared in accordance with Indian Accounting
Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (the Act) read with the
Companies Indian Accounting Standards Rules, 2015 as amended and other relevant provisions of the
Act.

The financial statements were authorised for issue by the Board of Directors on 26^th May, 2025.

ii. Basis of measurement

The financial statements have been prepared on a historical cost basis, except for certain items, which
are measured on an alternative basis on each reporting date.

iii. Functional and presentation currency

These financial statements are presented in Indian Rupees (INR), which is the Company''s functional
currency. All financial information is presented in Lakhs in INR, unless otherwise stated.

iv. Current or non-current classification

All assets and liabilities have been classified as current or non-current as per the company''s normal
operating cycle and other criteria as set out in the Division II of Schedule III as amended to the Act.

Based on the nature of products and the time between acquisition of assets for processing and their
realization in cash and cash equivalents, the company has ascertained its operating cycle as 12 months
for the purpose of current or non-current classification of assets and liabilities for product business.

v. Significant accounting judgements, estimates and assumptions

The preparation of financial statements in conformity with Ind AS requires the management to make
judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, current

assets, non-current assets, current liabilities, non-current liabilities and disclosure of the contingent
liabilities at the end of each reporting period. Although these estimates are based on management''s
best knowledge of current events and actions, uncertainty about these assumptions and estimates
could result in the outcomes requiring a material adjustment to the carrying value of assets or liabilities
in future periods.

This note provides an overview of the areas that involved a higher degree of judgement or complexity,
and of items which are more likely to be materially adjusted due to estimates and assumptions turning
out to be different than those originally assessed.

Critical estimates and judgements

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

- Estimation of defined benefit plan

Employee benefit obligations are determined using independent actuarial valuations. An actuarial
valuation involves making various assumptions that may differ from actual results in the future. These
include the determination of discount rate, future salary increase, experience of employee departure
and mortality rates. Due to the complexities involves in the valuation and its long-term nature,
employee benefit obligation is highly sensitive to changes in these assumptions. All assumptions are
reviewed at each reporting date.

- Fair value measurements of financial instruments

When fair value of financial assets and financial liabilities recorded in balance sheet cannot be
measured based on quoted prices in active markets, their fair value is measured using valuation
technique including the Discounted Cash flow ("DCF") model. Th e inputs to these models are taken
from observable markets where possible, but where there is not feasible, a degree of judgement is
required in establishing their values. Judgement includes consideration of inputs such as credit risk
and future projections. Changes in assumptions about these factors could affect the reported fair
values of financial instruments.

- Impairment of investment in subsidiaries and associates

The company reviews its carrying value of investment in subsidiaries carries at cost (net of impairment,
if any) when there is indication of impairment. If the recoverable amount is less than its carrying
amount, the impairment loss is accounted for in the standalone statement of profit and loss. Significant
judgement and estimate is required in determining recoverable amount.

- Impairment of other non-financial assets i.e. Intangible Assets and Intangible Assets under
Development

The Company assesses at each reporting date whether there is an indication that an asset may be
impaired. If any indication exists, or when annual impairment testing for an asset is required, the
company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of its
fair value less cost of disposal and its value in use. Significant judgement and estimate is required in
determining recoverable amount.

- Impairment of Trade Receivables and Contract asset

The Company uses the simplified approach to calculate expected credit losses for impairment on trade
receivables and contract asset. Judgement is involved in determining adjustments for forward looking
adjustments and time value of money.

- Revenue recognition for fixed-price contract

Revenue for fixed-price contracts is recognised over the period of time either using percentage-of-
completion method or over straight-line basis depending upon the contractual terms. The multiple
types of contracts with different terms requires significant judgement in determining whether to
recognise revenue on straight-line basis or percentage of completion basis, identification of milestone
(output) to measure the progress of work, determining accuracy of revenue to be recognised using
different types of outputs.

- Recognition of Intangible assets and its useful life

For an intangible asset to be recognized, it must meet criteria such as identifiability, control over the
resource, and expectation of future economic benefits. Judging whether these criteria are met requires
professional judgment. Estimating the fair value of intangible assets often involves significant
judgment, especially when market-based evidence is not readily available. This may require the use of
valuation techniques like discounted cash flow (DCF) models, which rely on subjective assumptions
about future cash flows, discount rates, and growth rates.

The Management reviews the estimated useful lives of intangible assets at the end of each reporting
period. Factors such as changes in the expected level of usage and technological developments could
significantly impact the economic useful lives of the asset, consequently leading to a change in the
future amortization charge.

vi. Cash and cash equivalents

Cash at banks, cash on hand and short-term deposits with an original maturity of three months or less
and which are subject to an insignificant risk of changes in value are classified as cash and cash
equivalents.

vii. Property, plant and equipment

Items of property, plant and equipment are measured at cost of acquisition or construction less
accumulated depreciation and/or accumulated impairment loss, if any. The cost of an item of property,
plant and equipment comprises its purchase price, including import duties, and other non-refundable
taxes or levies and any directly attributable cost of bringing the asset to its working condition for its
intended use; any trade discounts and rebates are deducted in arriving at the purchase price.
Borrowing costs such as interest expenses directly attributable to the construction of a qualifying asset
are capitalised as part of the cost.

Parts of an item of property, plant and equipment having different useful lives, (if any) are accounted
for as separate items (major components) of property, plant and equipment.

The cost of internally generated computer software developed for providing services by integrating it
with computer system is recognised as tangible asset. The cost of computer and computer software
for providing such services are grouped as ''Service Cell System''

Property, plant and equipment under construction are disclosed as capital work-in-progress.

Advances paid towards the acquisition of property, plant and equipment outstanding at each reporting
date are disclosed under "Other non-current assets".

â¢ Subsequent costs

The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the part will
flow to the Company, and its cost can be measured reliably. The carrying amount of the replaced part
is derecognized. The costs of the day-to-day servicing of property, plant and equipment are recognised
in the statement of profit and loss as incurred.

â¢ Disposal

An item of property, plant and equipment is derecognized upon disposal or when no future benefits
are expected from its use. Gains and losses on disposal of an item of property, plant and equipment
are determined by comparing the proceeds from disposal with the carrying amount of property, plant
and equipment, and are recognised net within other income/expenses in the statement of profit and
loss.

â¢ Depreciation

Depreciation on property, plant and equipment is provided using the straight-line method based on the
useful lives of assets as estimated by the management. Depreciation is charged on pro-rata basis for assets
purchased/sold during the year.

Right to use assets are depreciated on straight line basis over the lease period or useful life of asset
whichever is lower. However, if the lease transfers ownership of the underlying asset to the Company by
the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a
purchase option, the Company depreciates the right-of-use asset from the commencement date to the end
of the useful life of the underlying asset.

viii. Intangible assets and amortization

â¢ Recognition and measurement

Internally generated Intangible assets (mainly software) are recognised when the asset is identifiable,
is within the control of the Company, it is probable that the future economic benefits that are
attributable to the asset will flow to the Company and cost of the asset can be reliably measured.

Intangible assets acquired by the Company that have finite useful lives are measured at cost less
accumulated amortisation and any accumulated impairment losses.

â¢ Research and development expenditure on new products:

Expenditure on research is expensed under respective heads of account in the period in which it is incurred.
Development expenditure on new products is capitalised as intangible asset, if all of the following can be
demonstrated:

1. the technical feasibility of completing the intangible asset so that it will be available for use or sale;

2. the Company has intention to complete the intangible asset and use or sell it;

3. the Company has ability to use or sell the intangible asset;

4. the manner in which the probable future economic benefits will be generated including the existence
of a market for output of the intangible asset or intangible asset itself or if it is to be used internally,
the usefulness of intangible assets;

5. the availability of adequate technical, financial and other resources to complete the development and
to use or sell the intangible asset; and

6. the Company has ability to reliably measure the expenditure attributable to the intangible asset during
its development.

Development expenditure that does not meet the above criteria is expensed in the period in which it is
incurred. Intangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as
Intangible assets under development.

â¢ Subsequent measurement

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied
in the specific asset to which it relates.

â¢ Amortisation

Amortisation of the asset begins when development is complete and the asset is available for use. Internally
generated intangible assets are amortised on a straight line basis over their estimated useful life of 4 years,
and computer software are amortised on a straight line basis over their estimated useful life of five years.

The amortization period and the amortization method are reviewed at least at each financial year end. If
the expected useful life of the asset is significantly different from previous estimates, the amortization
period is changed accordingly. If there has been a significant change in the expected pattern of economic
benefits from the asset, the amortization method is changed to reflect the changed pattern.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between
the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.

ix. Inventories

Inventories comprise software licenses purchased for resale and are carried at the lower of cost and
net realizable value. Cost is determined using the FIFO method. Net realizable value is the estimated
selling price in the ordinary course of business less selling expenses.

x. Revenue recognition

Sale of Products and Rendering of services

1) Fixed-price contracts: Revenue for fixed-price contracts is recognised over the period of time using
percentage-of-completion method. The percentage of completion is determined by the company using
output method, which is measured by the number of units/plan approved by the customer, the number
of transactions processed from the software etc.

The fixed price revenue contracts of the Company are by their nature complex given the significant
judgements involved in estimation of efforts required to complete any particular project.

This estimate has a high inherent uncertainty as it requires consideration of progress of the contract,
efforts input till date and efforts required to complete the remaining contract performance
obligations, and the ability to deliver the contracts within planned timelines. The estimates involved
are reviewed by the management on periodic basis.

Changes in the estimates as contract progresses can result in material adjustments to revenue
recorded by the Company.

2) Operation and maintenance contract: Revenue related to these contracts is recognised based on
time elapsed mode and revenue is straight-lined over the period of performance.

3) Sale of licenses: Revenue from licenses where the customer obtains a "right to use "the licenses is
recognized at the time the license is made available to the customer. Revenue from licenses where the
customer obtains a "right to access" is recognized ove r the access period. Revenue from sale of traded
software licenses is recognised on delivery to the customer. Cost and earnings in excess of billings are
classified as unbilled revenue while billings in excess of cost and earnings are classified as unearned
revenue.

Due to the short nature of credit period given to customers, there is no material financing component
in the contract.

Other income

1) Interest income is recognized on a time proportion basis taking into account the amount outstanding
and the applicable interest rate. Interest income is included under the head "other income" in the
statement of profit and loss.

2) Dividend income is recognized when the right to receive the dividend is established.

xi. Finance costs

Finance costs are interest and other costs that an entity incurs in connection with the borrowing of funds.
It also includes exchange differences in relation to the foreign currency borrowings to the extent those are
regarded as an adjustment to the borrowing costs.

General and specific borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset are capitalised during the period of time that is required to complete and
prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial
period of time to get ready for their intended use or sale which is usually 12 months or more.

Investment income earned on the temporary investment of specific borrowings pending their expenditure
on qualifying assets is deducted from the borrowing costs eligible for capitalization.

All other borrowing costs are expensed in the period in which they are incurred.

xii. Foreign currencies transactions

The financial statements are presented in INR, which is also the company''s functional and presentation
currency.

Transactions and balances

Transactions in foreign currencies are recorded at functional currency spot rates at the date the
transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional
currency spot rates of exchange at the reporting date. Differences arising on settlement or translation
of monetary items are recognised in profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at the date when the fair value is
determined. The gain or loss arising on translation of non-monetary items measured at fair value is
treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e.,
translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are
also recognised in OCI or profit or loss, respectively).

xiii. Employee Benefits
Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the services are classified as shortÂ¬
term employee benefits. Benefits such as salaries, wages, expected cost of bonus, leave travel allowance
etc. are recognized in the period in which the employee renders the related service.

Post-Employment Benefits
Defined Contribution Plans

The Company''s state governed provident fund scheme and employee state insurance scheme are defined
contribution plans. The contribution paid/payable under the scheme is recognized during the period in
which the employee renders the related service.

Defined Benefit Plans

The company operates only one defined benefit plans for its employees, viz., gratuity. The costs of
providing benefits under the plan are determined on the basis of actuarial valuation at each year-end.
Separate actuarial valuation is carried out for the plan using the projected unit credit method.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used
for determining the present value of the obligation under defined benefit plans, is based on the market
yields on Government securities as at the balance sheet date, having maturity periods approximating to
the terms of related obligations.

Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding
amounts included in net interest on the net defined benefit liability and the return on plan assets
(excluding amounts included in net interest on the net defined benefit liability), are recognised
immediately in the balance sheet with a corresponding debit or credit to retained earnings through
OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in
subsequent periods.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognized when the
curtailment or settlement occurs. Past service cost is recognized as expenses on a straight-line basis over
the average period until the benefits become vested. Net interest is calculated by applying the discount
rate to the net defined benefit liability or asset.

Long Term Employee Benefit

The company encourages all its employees to consume their Earned Leaves (EL) during the yearly cycle
itself. No earned leaves shall be carried forward or encashed w.e.f. 1st April, 2024, these should be
consumed with in the same financial year. Therefore no liability arises for compensated absences from the
current financial year.

Employee stock compensation cost

The stock options granted to employees in terms of the Company''s Stock Options Schemes, are measured
at the fair value of the options at the grant date. The fair value of the options is treated as discount and
accounted as employee compensation cost over the vesting period on a straight-line basis. The amount
recognised as expense in each year is arrived at based on the number of grants expected to be vested. If a
grant lapses after the vesting period, the cumulative discount recognised as expense in respect of such
grant is transferred to the retained earnings. The share-based payment equivalent to the fair value as on
the date of grant of employee stock options granted to key managerial personnel is disclosed as a related
party transaction in the year of grant.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of
diluted earnings per share.

xiv. Taxes

Current income tax

Tax on income for the current period is determined based on taxable income after considering various
provisions of the Income Tax Act, 1961 and based on the enacted rate.

Current income tax relating to items recognised outside profit or loss is recognised outside profit or
loss. Current tax items are recognised in correlation to the underlying transaction either in OCI or
directly in equity.

Deferred tax

Deferred tax is provided using the balance sheet method on temporary differences between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes at the
reporting date. Deferred tax liabilities are recognised for all taxable temporary differences.

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of
unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it
is probable that taxable profit will be available against which the deductible temporary differences,
and the carry forward of unused tax credits and unused tax losses can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of
the deferred tax asset to be utilised. Unrecognized deferred tax assets are re-assessed at each
reporting date and are recognised to the extent that it has become probable that future taxable profits
will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss.
Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly
in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity
and the same taxation authority.

Mar 31, 2024

1. Corporate information

The equity shares of the Company have been listed in the SME portal of National Stock Exchange of India Limited (''NSE'') on 11 May 2018. The company has migrated to the main board of the National Stock Exchange and Bombay Stock Exchange w.e.f. 25th February, 2022 from NSE-SME platform.

The Company is an information technology and software services organisation, delivering end to end solution in Architectural-Engineering-Construction (AEC) space, catering to government bodies, municipalities, property developers, municipal corporations, investors, real estate companies, contractors, architects and consultants.

2. Material accounting policies

i. Basis of preparation

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (the Act) read with the Companies Indian Accounting Standards Rules, 2015 as amended and other relevant provisions of the Act.

The financial statements were authorised for issue by the Board of Directors on 24^th May, 2024.

ii. Basis of measurement

The financial statements have been prepared on a historical cost basis, except for certain items, which are measured on an alternative basis on each reporting date.

Items

Measurement

basis

Defined benefit plan assets

Fair value

Certain financial instruments (refer note 33)

Fair value

iii. Functional and presentation currency

These financial statements are presented in Indian Rupees (INR), which is the Company''s functional currency. All financial information is presented in Lakhs in INR, unless otherwise stated.

iv. Current or non-current classification

All assets and liabilities have been classified as current or non-current as per the company''s normal operating cycle and other criteria as set out in the Division II of Schedule III as amended to the Act.

Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities for product business.

v. Significant accounting judgements, estimates and assumptions

The preparation of financial statements in conformity with Ind AS requires the management to make judgments, estimates

and assumptions that affect the reported amounts of revenue, expenses, current assets, non-current assets, current liabilities, non-current liabilities and disclosure of the contingent liabilities at the end of each reporting period. Although these estimates are based on management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying value of assets or liabilities in future periods.

This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed.

Critical estimates and judgements

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

> Estimation of defined benefit plan

Employee benefit obligations are determined using independent actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual results in the future. These include the determination of discount rate, future salary increase, experience of employee departure and mortality rates. Due to the complexities involves in the valuation and its longterm nature, employee benefit obligation is highly sensitive to changes

in these assumptions. All assumptions are reviewed at each reporting date.

> Fair value measurements of financial instruments

When fair value of financial assets and financial liabilities recorded in balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation technique including the Discounted Cash flow ("DCF") model. The inputs to these models are taken from observable markets where possible, but where there is not feasible, a degree of judgement is required in establishing their values. Judgement includes consideration of inputs such as credit risk and future projections. Changes in assumptions about these factors could affect the reported fair values of financial instruments.

> Impairment of investment in subsidiaries and associates

The company reviews its carrying value of investment in subsidiaries carries at cost (net of impairment, if any) when there is indication of impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for in the standalone statement of profit and loss. Significant judgement and estimate is required in determining recoverable amount.

> Impairment of other non-financial assets i.e. Contract Asset, Intangible Assets and Intangible Assets under Development

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of its fair value less cost of disposal and its

value in use. Significant judgement and estimate is required in determining recoverable amount.

> Impairment of Trade Receivables

The Company uses the simplified approach to calculate expected credit losses for impairment on trade receivables and other financial assets, providing for them where necessary. The majority of the customer of the Company is Government and Government Authorities, therefore the credit risk is very low and case by case analysis is performed for impairment testing which requires significant judgement.

> Revenue recognition for fixed-price contract

Revenue for fixed-price contracts is recognised over the period of time either using percentage-of-completion method or over straight-line basis depending upon the contractual terms. The multiple types of contracts with different terms requires significant judgement in determining whether to recognise revenue on straight-line basis or percentage of completion basis, identification of milestone (output) to measure the progress of work, determining accuracy of revenue to be recognised using different types of outputs.

> Recognition of Intangible assets and its useful life

For an intangible asset to be recognized, it must meet criteria such as identifiability, control over the resource, and expectation of future economic benefits. Judging whether these criteria are met requires professional judgment. Estimating the fair value of intangible assets often involves significant judgment, especially when market-based evidence is not readily available. This may require the use of valuation techniques like discounted cash flow

(DCF) models, which rely on subjective assumptions about future cash flows, discount rates, and growth rates.

The Management reviews the estimated useful lives of intangible assets at the end of each reporting period. Factors such as changes in the expected level of usage and technological developments could significantly impact the economic useful lives of the asset, consequently leading to a change in the future amortization charge.

vi. Cash and cash equivalents

Cash at banks, cash on hand and short-term deposits with an original maturity of three months or less and which are subject to an insignificant risk of changes in value are classified as cash and cash equivalents.

vii. Property, plant and equipment

Items of property, plant and equipment are measured at cost of acquisition or construction less accumulated depreciation and/or accumulated impairment loss, if any. The cost of an item of property, plant and equipment comprises its purchase price, including import duties, and other nonrefundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price.

Borrowing costs such as interest expenses directly attributable to the construction of a qualifying asset are capitalised as part of the cost.

Parts of an item of property, plant and equipment having different useful lives, (if any) are accounted for as separate items (major components) of property, plant and equipment.

The cost of internally generated computer software developed for providing services by integrating it with computer system is recognised as tangible asset. The cost of computer and computer software for providing such services are grouped as ''Service Cell System''.

Property, plant and equipment under construction are disclosed as capital work-inprogress.

Advances paid towards the acquisition of property, plant and equipment outstanding at each reporting date are disclosed under "Other non-current assets".

> Subsequent costs

The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-today servicing of property, plant and equipment are recognised in the statement of profit and loss as incurred.

> Disposal

An item of property, plant and equipment is derecognized upon disposal or when no future benefits are expected from its use. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income/expenses in the statement of profit and loss.

> Depreciation

Depreciation on property, plant and equipment is provided using the straight-line method based on the useful lives of assets as estimated by the management. Depreciation is charged on pro-rata basis for assets purchased/sold during the year.

The following assets are depreciated at a rate which are in line with Schedule II of the Companies Act, 2013 considering the estimated useful life of the assets and obsolescence except Service cell system:

Class of assets	Useful life as followed by the Company (in Years)
Furniture, fixtures and	10
fittings
Vehicles	8
Office equipment	5
Computers	3
Servers	6
Service cell system	5
Leasehold	Over the lease
improvements	period

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

Right to use assets are depreciated on straight line basis over the lease period or useful life of asset whichever is lower. However, if the lease transfers ownership of the underlying asset to the Company by the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a purchase option, the Company depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset.

viii. Intangible assets and amortization > Recognition and measurement

Internally generated Intangible assets (mainly software) are recognised when the asset is identifiable, is within the control of the Company, it is probable that the future

economic benefits that are attributable to the asset will flow to the Company and cost of the asset can be reliably measured.

Intangible assets acquired by the Company that have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses.

> Research and development expenditure on new products:

Expenditure on research is expensed under respective heads of account in the period in which it is incurred. Development expenditure on new products is capitalised as intangible asset, if all of the following can be demonstrated:

1. the technical feasibility of completing the intangible asset so that it will be available for use or sale;

2. the Company has intention to complete the intangible asset and use or sell it;

3. the Company has ability to use or sell the intangible asset;

4. the manner in which the probable future economic benefits will be generated including the existence of a market for output of the intangible asset or intangible asset itself or if it is to be used internally, the usefulness of intangible assets;

5. the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

6. the Company has ability to reliably measure the expenditure attributable to the intangible asset during its development.

Development expenditure that does not meet the above criteria is expensed in the period in which it is incurred. Intangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as Intangible assets under development.

> Subsequent measurement

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.

> Amortisation

Amortisation of the asset begins when development is complete and the asset is available for use. Internally generated intangible assets are amortised on a straight line basis over their estimated useful life of 4 years, and computer software are amortised on a straight line basis over their estimated useful life of five years.

The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortization period is changed accordingly. If there has been a significant change in the expected pattern of economic benefits from the asset, the amortization method is changed to reflect the changed pattern.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

ix. Revenue recognition

Sale of Products and Rendering of services

1) Fixed-price contracts: Revenue for fixed-price contracts is recognised over the period of time using percentage-of-completion method. The percentage of completion is determined by the company using output method, which is measured by the number of units/plan approved by the customer, the number of transactions processed from the software etc.

The fixed price revenue contracts of the Company are by their nature complex given the significant judgements involved in estimation of efforts required to complete any particular project.

This estimate has a high inherent uncertainty as it requires consideration of progress of the contract, efforts input till date and efforts required to complete the remaining contract performance obligations, and the ability to deliver the contracts within planned timelines. The estimates involved are reviewed by the management on periodic basis.

Changes in the estimates as contract progresses can result in material adjustments to revenue recorded by the Company.

2) Operation and maintenance contract: Revenue related to these contracts is recognised based on time elapsed mode and revenue is straight-lined over the period of performance.

3) Sale of licenses: Revenue from licenses where the customer obtains a "right to use "the licenses is recognized at the time the license is made available to the customer. Revenue from licenses where the customer obtains a "right to access" is recognized over the access period. Revenue from sale of traded software licenses is recognised on delivery to the customer. Cost and earnings in excess of billings are classified as unbilled revenue while billings in excess of cost and earnings are classified as unearned revenue.

Due to the short nature of credit period given to customers, there is no

material financing component in the contract.

Other income

1. Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "other income" in the statement of profit and loss.

2. Dividend income is recognized when the right to receive the dividend is established.

x. Finance costs

Finance costs are interest and other costs that an entity incurs in connection with the borrowing of funds. It also includes exchange differences in relation to the foreign currency borrowings to the extent those are regarded as an adjustment to the borrowing costs.

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale which is usually 12 months or more.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

All other borrowing costs are expensed in the period in which they are incurred.

xi. Foreign currencies transactions

The financial statements are presented in INR, which is also the company''s functional and presentation currency.

Transactions and balances

Transactions in foreign currencies are recorded at functional currency spot rates at the date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognised in profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Nonmonetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).

xii. Employee Benefits

Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the services are classified as short-term employee benefits. Benefits such as salaries, wages, expected cost of bonus, leave travel allowance etc. are recognized in the period in which the employee renders the related service.

Post-Employment Benefits

Defined Contribution Plans

The Company''s state governed provident fund scheme and employee state insurance scheme are defined contribution plans. The contribution paid/payable under the scheme is recognized during the period in which the employee renders the related service.

Defined Benefit Plans

The company operates only one defined benefit plans for its employees, viz., gratuity. The costs of providing benefits under the plan are determined on the basis of actuarial valuation at each year-end. Separate actuarial valuation is carried out for the plan using the projected unit credit method.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.

Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognized when the curtailment or settlement occurs. Past service cost is recognized as expenses on a straight-line basis over the average period until the benefits become vested. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset.

Long Term Employee Benefit

The company encourages all its employees to consume their Earned Leaves (EL) during the yearly cycle itself. No earned leaves shall be carried forward or encashed w.e.f. 1st April,

2024, these should be consumed with in the same financial year. Therefore no liability arises for compensated absences from the current financial year.

Employee stock compensation cost

Employees (including senior executives) of the company receive remuneration in the form of share based payment transactions, whereby employees render services as consideration for equity instruments (equity-settled

transactions).

In accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and the Guidance Note on Accounting for Employee Share-based Payments, the cost of equity-settled transactions is measured using the intrinsic value method. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the company''s best estimate of the number of equity instruments that will ultimately vest. The expense or credit recognized in the statement of profit and loss for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in employee benefits expense.

Where the terms of an equity-settled transaction award are modified, the minimum expense recognized is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total intrinsic value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

xiii. Taxes

Current income tax

Tax on income for the current period is determined based on taxable income after considering various provisions of the Income Tax Act, 1961 and based on the enacted rate.

Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss. Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Deferred tax

Deferred tax is provided using the balance sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences.

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are

measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

xiv. Provisions and contingent liabilities

A Provision is recognized when the Company has a present obligation as a result of a past event and it is probable that an outflow of resources is expected to settle the obligation, in respect of which a reliable estimate can be made.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Provision for warranty is recognized when the product is sold. Provision is made on historical experience. The estimate of such warranty related costs is revised annually.

Contingent liability is disclosed in case of

a) a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation.

b) present obligation arising from past events, when no reliable estimate is possible

c) a possible obligation arising from past events where the probability of outflow of resources is not remote.

Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.

xv. Leases

Lease is a contract that provides to the customer (lessee) the right to use an asset for a period of time in exchange for consideration.

Company as a Lessee

A lessee is required to recognize assets and liabilities for all leases with a term that is greater than 12 months, unless the underlying asset is of low value, and to recognize depreciation of leased assets separately from interest on lease liabilities in the statement of Profit and Loss.

Initial Measurement Right to use asset

At the commencement date, the Company measures the right-of-use asset at cost. The cost of the right-of-use asset shall comprise:

> the amount of the initial measurement of the lease liability

> any lease payments made at or before the commencement date, less any lease incentives received;

> any initial direct costs incurred by the lessee; and

> an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories. The lessee incurs the obligation for those costs either at the commencement date or as a consequence

of having used the underlying asset during a particular period.

Lease liability

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

Lease payments included in the measurement of the lease liability comprise the following payments:

> fixed payments (including in-substance fixed payments), less any lease incentives receivable;

> variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

> amounts expected to be payable by the Company under residual value guarantees;

> the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and

> payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

Subsequent measurement

Right to use asset

Subsequently the Company measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses.

Lease Liability

Subsequently the Company measures the lease liability by:

> increasing the carrying amount to reflect interest on the lease liability at the interest rate implicit in the lease, if that rate can be

readily determined or the Company''s incremental borrowing rate.

> reducing the carrying amount to reflect the lease payments made; and

> re-measuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised insubstance fixed lease payments.

xvi. Impairment of non-financial assets

The company assesses at each balance sheet date whether there is any indication that an asset or cash generating unit (CGU) may be impaired. If any such indication exists, the company estimates the recoverable amount of the asset. The recoverable amount is the higher of an asset''s or CGU''s net selling price or its value in use. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses are recognized in the statement of profit and loss.

xvii. Fair value measurement

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm''s length transaction. Quoted market prices, when available, are used as the measure of fair value. In cases where quoted market prices are not available, fair values are determined using present value estimates or other valuation techniques which maximize the use of relevant observable inputs and minimize the use of unobservable inputs, for example, the present value of estimated expected future cash flows using discount rates commensurate with the risks involved. Fair value estimation techniques normally incorporate assumptions that market participants would use in their estimates of values, future revenues, and future expenses, including assumptions about interest rates, default, prepayment and volatility. Because assumptions are inherently subjective in nature, the estimated fair values cannot be

substantiated by comparison to independent market quotes and, in many cases, the estimated fair values would not necessarily be realised in an immediate sale or settlement of the instrument.

For cash and other liquid assets, the fair value is assumed to approximate to book value, given the short-term nature of these instruments. For those items with a stated maturity exceeding twelve months, fair value is calculated using a discounted cash flow methodology.

The financial instruments carried at fair value are categorized under the three levels of the Ind AS fair value hierarchy as follows:

Level 1: Quoted market prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. This level of the fair value hierarchy provides the most reliable evidence of fair value and is used to measure fair value whenever available.

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

Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). These inputs reflect the Company''s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). These inputs are developed based on the best information available in the circumstances, which include the Company''s own data. The Company''s own data used to develop unobservable inputs is adjusted if information indicates that market participants would use different assumptions.

xviii. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of

another entity.

Financial assets: Initial recognition and measurement

All financial assets except Trade Receivables are recognised initially at fair value. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

a. Debt instruments at amortised cost

b. Debt instruments at fair value through other comprehensive income (FVTOCI)

c. Debt instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL)

d. Equity instruments measured at fair value through other comprehensive income (FVTOCI)

Derecognition

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the company neither transfers nor retain substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

Impairment of financial asset

Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

> Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance

> Financial assets that are debt instruments and are measured as at FVTOCI

> Lease receivables

> Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115

> Loan commitments which are not measured as at FVTPL

> Financial guarantee contracts which are not measured as at FVTPL

The company follows ''simplified approach'' for recognition of impairment loss allowance on Trade receivables or contract revenue receivables

The application of simplified approach does not require the company to track changes in credit risk. Rather, it recognises impairment loss allowance based on expected lifetime loss at each reporting date, right from its initial recognition.

For recognition of impairment loss on other financial assets and risk exposure, the company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used.

Financial liabilities: Initial recognition and measurement

The company initially recognises loans and advances, deposits, debt securities issued and subordinated liabilities at their fair value on the date on which they are originated. All other financial instruments (including regular-way purchases and sales of financial assets) are recognised on the trade date,

which is the date on which the company becomes a party to the contractual provisions of the instrument.

A financial liability is measured initially at fair value minus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue. Transaction costs of financial liabilities carried at fair value through profit or loss are expensed in profit or loss.

Subsequent Measurement

For purposes of subsequent measurement, financial liabilities are classified and measured as follows:

1) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risks are recognized in OCI. These gains/ loss are not subsequently transferred to P&L. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit and loss. The Company has not designated any financial liability as at fair value through profit and loss.

2) Loans and Borrowings at amortised Cost

This is the category most relevant to the Company. After initial recognition, interest-bearing borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit and loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or when it expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated 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 realize the assets and settle the liabilities simultaneously.

xix. Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period as reduced by number of shares bought back, if any. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) 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 period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

xx. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decision.

Segment accounting policies are in line with the accounting policies of the Company.

Mar 31, 2023

1. CORPORATE INFORMATION

SoftTech Engineers Limited (the "Company") was founded in 1996 and is based out of Pune. The registered and corporate address was changed w.e.f 15^th January, 2021 to SoftTech Towers, S NO 1/1A/7 8 15 16 17, Baner, Pune - 411045, Maharashtra, India. The equity shares of the Company have been listed in the SME portal of National Stock Exchange of India Limited (''NSE'') on 11 May 2018. The company has migrated to the main board of the National Stock Exchange and Bombay Stock Exchange w.e.f. 25th February, 2022 from NSE-SME platform.

The Company is an information technology and software services organisation, delivering end to end solution in Architectural-Engineering-Construction (AEC) space, catering to property developers, municipal corporations, investors, real estate companies, contractors, architects and consultants.

2. SIGNIFICANT ACCOUNTING POLICIESi. Basis of preparation

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (the Act) read with the Companies Indian Accounting Standards Rules, 2015 as amended and other relevant provisions of the Act.

The financial statements were authorized for issue by the Board of Directors on 25^th May, 2023.

ii. Basis of measurement

The financial statements have been prepared on a historical cost basis, except for certain items, which are measured on an alternative basis on each reporting date.

Items	Measurement basis
Defined benefit plan assets	Fair value
Certain financial instruments
(refer note 34)	Fair value

iii. Functional and presentation currency

These financial statements are presented in Indian Rupees (INR), which is the Company''s functional currency. All financial information is presented in Lakhs in INR, unless otherwise stated.

iv. Current or non-current classification

All assets and liabilities have been classified as current or non-current as per the company''s normal operating cycle and other criteria as set out in the Division II of Schedule III as amended to the Act.

Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities for product business.

v. Significant accounting judgements, estimates and assumptions

The preparation of financial statements in conformity with Ind AS requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, current assets, non-current assets, current liabilities, non-current liabilities and disclosure of the contingent liabilities at the end of each reporting period. Although these estimates are based on management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying value of assets or liabilities in future periods.

This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed.

Critical estimates and judgements

The areas involving critical estimates or judgements are:

> Estimation of defined benefit plan

> Useful lives of Property, plant and equipment

> Creation of deferred tax asset

> Provision for litigation and claims

> Fair value measurements of financial instruments

> Revenue recognition

> Recognition of Intangible assets.

vi. Cash and cash equivalents

Cash at banks, cash on hand and short-term deposits with an original maturity of three months or less and which are subject to an insignificant risk of changes in value are classified as cash and cash equivalents.

vii. Property, plant and equipment

Items of property, plant and equipment are measured at cost of acquisition or construction less accumulated depreciation and/or accumulated impairment loss, if any. The cost of an item of property, plant and equipment comprises its purchase price, including import duties, and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price.

Borrowing costs such as interest expenses directly attributable to the construction of a qualifying asset are capitalised as part of the cost.

Parts of an item of property, plant and equipment having different useful lives, (if any) are accounted for as separate items (major components) of property, plant and equipment.

The cost of internally generated computer software developed for providing services by integrating it with computer system is recognised as tangible asset. The cost of computer and computer software for providing such services are grouped as ''Service Cell System''

Property, plant and equipment under construction are disclosed as capital work-in-progress.

Advances paid towards the acquisition of property, plant and equipment outstanding at each reporting date are disclosed under "Other non-current assets".

Subsequent costs

The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of property, plant and equipment are recognised in the statement of profit and loss as incurred.

Disposal

An item of property, plant and equipment is derecognized upon disposal or when no future benefits are expected from its use. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income/expenses in the statement of profit and loss.

Depreciation

Depreciation on property, plant and equipment is provided using the straight-line method based on the useful lives of assets as estimated by the management. Depreciation is charged on pro-rata basis for assets purchased/sold during the year.

Class of assets	Useful life as followed by the Company (in Years)
Furniture, fixtures and fittings	10
Vehicles	8
Office equipment	5
Computers	3
Servers	6
Service cell system	5
Leasehold improvements	Over the lease period

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

Right to use assets are depreciated on straight line basis over the lease period or useful life of asset whichever is lower. However, if the lease transfers ownership of the underlying asset to the Company by the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a purchase option, the Company depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset

viii. Intangible assets and amortization

Recognition and measurement

Intangible assets are recognised when the asset is identifiable, is within the control of the Company, it is probable that the future economic benefits that are attributable to the asset will flow to the Company and cost of the asset can be reliably measured.

Intangible assets acquired by the Company that have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses.

Research and development expenditure on new products: