Provisions

A provision is recognised when the Company has a
present legal or constructive obligation as a result
of past event and it is probable that an outflow of
resources embodying economic benefits will be
required to settle the obligation and a reliable estimate
can be made of the amount of the obligation. The
expense relating to a provision is presented in the
Statement of Profit and Loss.

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.

Provisions are reviewed at each Balance Sheet date
and adjusted to reflect the current best estimates.

i) Foreign currency transactions

Functional and presentation currency

Items included in the financial statements of the company
are measured using the currency of the primary economic
environment in which the company operates ('the functional
currency'). The financial statements are presented in Indian
rupee (?) in crores ('Cr'), which is E-Commerce Ventures
Limited's functional and presentation currency.

Foreign currency transactions and balances

(i) Initial recognition

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

(ii) Conversion

Foreign currency monetary items are retranslated using
the exchange rate prevailing at the reporting date.
Non-monetary items, which are measured in terms of
historical cost denominated in a foreign currency, are
reported using the exchange rate at the date of the
transaction. Non-monetary items, which are measured
at fair value or other similar valuation denominated in
a foreign currency, are translated using the exchange
rate at the date when such value was determined.

(iii) Exchange differences

Exchange differences arising on settlement or
translation of other monetary items or on reporting
monetary items at rates different from those at
which they were initially recorded during the period/
year, or reported in previous financial statements, are
recognised as income or as expenses in the Statement
of Profit and Loss in the period/year in which they arise.

) Share based payments

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).

The cost of equity-settled transactions is determined by
the fair value at the date when the grant is made using an
appropriate valuation model.

The cost of equity-settled transactions is determined by
the fair value at the date when the grant is made using
an appropriate valuation model. That cost is recognised,
together with a corresponding increase in share options
outstanding reserves in equity, over the period in which
the performance and/or service conditions are fulfilled
in employee benefits expense. The cumulative expense
recognised 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 Statement of Profit and Loss expense or credit for
a period represents the movement in cumulative expense

recognised as at the beginning and end of that period and
is recognised in employee benefits expense.

When the terms of an equity-settled award are modified,
the minimum expense recognised is the expense had the
terms had not been modified, if the original terms of the
award are met. An additional expense is recognised for any
modification that increases the total fair value of the share-
based payment transaction or is otherwise beneficial to the
employee as measured at the date of modification. Where
an award is cancelled by the entity or by the counterparty,
any remaining element of the fair value of the award is
expensed immediately through profit or loss.

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

k) Employee benefits

Short-term employee benefits

All short-term employee benefits such as salaries, incentives,
medical benefits which are expected to be settled wholly
within 12 months after the end of the period in which the
employee renders the related services which entitles him
to avail such benefits are recognised on an undiscounted
basis and charged to the Statement of Profit and Loss.

Post-employment benefits

i. Defined Contribution Plans

Retirement benefit in the form of Provident Fund is
a defined contribution scheme and the contributions
are charged to the Statement of Profit and Loss of
the period/year when the contribution to the funds
is due. There are no other obligations other than
the contribution payable to the fund. The Company
recognises contribution payable to the provident fund
scheme as expenditure, when an employee renders
the related service.

ii. Defined Benefit Plans
Gratuity

The Company has an obligation towards gratuity, a
defined benefit plan covering eligible employees. The
plan provides for a lump-sum payment to vested
employees at retirement, death while in employment or
on termination of employment of an amount equivalent
to 15 days salary payable for each completed year of
service. Vesting occurs upon completion of five years
of service. The gratuity benefits are unfunded.

Gratuity liability is provided for on the basis of an
actuarial valuation on projected unit credit method
made at the end of each financial period/year. The

present value of the defined benefit obligation is
determined by discounting the estimated future cash
outflows by reference to market yields at the end of the
reporting period on government bonds that have terms
approximating to the terms of the related obligation.

Net interest is calculated by applying the discount
rate to the net defined benefit liability. The Company
recognises the following changes in the net defined
benefit obligation as an expense in the Statement of
Profit and Loss:

• Service costs comprising current service costs,
past-service costs, gains and losses on curtailments
and non-routine settlements; and

• Net interest expense or income

Re-measurements, comprising of actuarial gains and
losses, 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 'Other
comprehensive income' in the period in which they
occur. Re-measurements are not reclassified to profit
or loss in subsequent periods.

Compensated absences

The Company provides for the encashment of leave or
leave with pay subject to certain rules. The employees
are entitled to accumulate leave subject to certain
limits, for future encashment. The liability is provided
based on the number of days of unutilised leave at each
Balance Sheet date on the basis of an independent
actuarial valuation using the projected unit credit
method at the reporting date. Actuarial gains/losses are
immediately taken to the Statement of Profit and Loss
and are not deferred. The obligations are presented
as current liabilities in the Balance Sheet if the entity
does not have an unconditional right to defer the
settlement for at least 12 months after the reporting
date, regardless of when the actual settlement.

l) Fair value measurement

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

• In the principal market for the asset or liability or

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

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

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

The Company uses valuation techniques that are appropriate
in the circumstances and for which sufficient data are
available to measure fair value, maximising the use of
relevant observable inputs and minimising the use of
unobservable inputs.

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

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

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

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

For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Company determines
whether transfers have occurred between levels in the
hierarchy by re-assessing categorisation (based on the
lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.
The management assessed that cash and cash equivalents,
trade receivables, advances, trade payables, bank overdraft
and other financial liabilities approximate their carrying
amounts largely due to the short-term maturities of
these instruments. The management selects appropriate
valuation techniques using discounted cash flow model
when the fair value of the financial assets and liabilities
recorded in the Balance Sheet cannot be measured based
on quoted prices in active markets. The inputs to these
models are taken from observable markets where possible,
but where this is not feasible, a degree of judgement is
required in establishing fair values. External valuers are
involved for valuation of significant assets and liabilities.
The management selects external valuer on various criteria
such as market knowledge, reputation, independence and
whether professional standards are maintained by valuer.
The management decides, after discussions with the
Company's external valuers, which valuation techniques
and inputs to use for each case.

For the purpose of fair value disclosures, the Company has
determined classes of assets and liabilities on the basis of
the nature, characteristics and risks of the asset or liability
and the level of the fair value hierarchy as explained above.

m) Income taxes

Tax expense comprises current and deferred tax.

Current income tax

Current income-tax is measured at the amount expected
to be paid to the tax authorities in accordance with the
Income-tax Act, 1961 enacted in India.

Deferred tax

Deferred tax is provided using the liability 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, except:

• When the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in a
transaction that is not a business combination and, at the
time of the transaction, affects neither the accounting
profit nor taxable profit or loss and does not give rise
to equal taxable and deductible temporary differences.

• In respect of taxable temporary differences associated
with investments in subsidiaries, associates and interests
in joint ventures, when the timing of the reversal of the
temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the
foreseeable future.

Deferred tax assets are recognised for all deductible
temporary differences and the carry forward of 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 losses can be utilised except:

• When the deferred tax asset relating to the deductible
temporary difference arises from the initial recognition
of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or
loss and does not give rise to equal taxable and deductible
temporary differences.

• In respect of deductible temporary differences
associated with investments in subsidiaries, associates
and interests in joint ventures, deferred tax assets are
recognised only to the extent that it is probable that the
temporary differences will reverse in the foreseeable

future and taxable profit will be available against which
the temporary differences can be utilised.

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

Current tax and deferred tax are measured using the tax
rates and tax laws enacted or substantively enacted, at the
reporting date. Current income tax and deferred tax relating
to items recognised outside profit and loss is recognised
outside profit and loss (either in OCI or in equity). The
Company periodically evaluates positions taken in the tax
returns with respect to situations in which applicable tax
regulations are subject to interpretation and considers
whether it is probable that a taxation authority will accept
an uncertain tax treatment. The Company shall reflect the
effect of uncertainty for each uncertain tax treatment by
using either most likely method or expected value method,
depending on which method predicts better resolution of
the treatment.

n) Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise
cash at banks and on hand and short-term deposits with
an original maturity of three months or less, and other
short term highly liquid investments which are subject to
an insignificant risk of changes in value.

For the purpose of the statement of cash flows, cash and
cash equivalents consist of cash and short-term deposits,
as defined above, net of outstanding bank overdrafts as
they are considered an integral part of the Company's
cash management.

o) Contingent Liabilities

A contingent liability is a possible obligation that arises
from past events whose existence will be confirmed by the
occurrence or non-occurrence of one or more uncertain
future events beyond the control of the Company or a
present obligation that is not recognised because it is not
probable that an outflow of resources will be required to

settle the obligation. A contingent liability also arises in
extremely rare cases where there is a liability that cannot
be recognised because it cannot be measured reliably.
The Company does not recognise a contingent liability but
discloses its existence and other disclosures in the notes
to the financial statements unless the possibility of any
outflow in settlement is remote.

p) Earnings per share

Basic earnings per share is computed 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. 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, except where the
result would be anti-dilutive.

q) Segment reporting

In accordance with Ind AS 108 'Operating Segments',
segment information has been given in the consolidated
financial statements of the Group and therefore, no separate
disclosure on segment information is given in standalone
financial statements.

r) Business combination:

Business combinations involving entities or businesses
under common control are accounted for using the pooling
of interest method. Under pooling of interest method,
the assets and liabilities of the combining entities or
businesses are reflected at their carrying amounts after
making adjustments necessary to harmonise the accounting
policies. The financial information in the financial statements
in respect of prior periods is restated as if the business
combination had occurred from the beginning of the
preceding period in the financial statements, irrespective
of the actual date of the combination. The identity of
the reserves is preserved in the same form in which they
appeared in the financial statements of the transferor and
the difference, if any, between the amount recorded as share
capital issued plus any additional consideration in the form
of cash or other assets and the amount of share capital of
the transferor is transferred to capital reserve.

3. Significant accounting judgments, 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 revenues, expenses, assets and liabilities
and the accompanying disclosures, and the disclosure of
contingent liabilities, at the end of the reporting period.
Such judgments, estimates and associated assumptions are
evaluated based on historical experience and various other
factors, including estimation of the effects of uncertain
future events, which are believed to be reasonable under
the circumstances. Actual results may differ from these
estimates. The estimates and underlying assumptions are
reviewed on an on-going basis. Revisions to accounting
estimates are recognised in the period in which the estimate
is revised if the revision affects only that period or in the
period of the revision and future periods if the revision
affects both current and future periods.

Uncertainty about these assumptions and estimates could
result in outcomes that require a material adjustment to
the carrying amount of assets or liabilities affected in
future periods.

The following are the critical judgements and estimates
that have been made by the management in the process of
applying the Company's accounting policies and that have
the most significant effect on the amount recognised in
the financial statements and/or key sources of estimation
uncertainty that may have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year.

I. Judgemnts:

Determining the lease term of contracts
with renewal and termination options — the
Company as lessee

The Company determines the lease term as the non¬
cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably
certain to be exercised, or any periods covered by an option
to terminate the lease, if it is reasonably certain not to be
exercised. It considers all relevant factors that create an
economic incentive for it to exercise either the renewal
or termination.

The Company determines the lease term as the non¬
cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably
certain to be exercised, or any periods covered by an option
to terminate the lease, if it is reasonably certain not to
be exercised.

The Company has several lease contracts that include
extension and termination options. The Company applies
judgement in evaluating whether it is reasonably certain
whether or not to exercise the option to renew or terminate
the lease. That is, it considers all relevant factors that create
an economic incentive for it to exercise either the renewal
or termination.

The Company included the renewal period as part of the lease
term for leases of property with shorter non-cancellable
period (i.e., 3 to 5 years). The Company typically exercises
its option to renew for these leases because there will be
a significant negative effect on business if a replacement
alternate property is not readily available. The renewal
periods for leases of property with longer non-cancellable
periods (i.e., 6 to 10 years) are not included as part of
the lease term as these are not reasonably certain to be
exercised. Furthermore, the periods covered by termination
options are included as part of the lease term only when
they are reasonably certain not to be exercised.

II. Estimates and assumptions:

a) Estimation of useful life of property,
plant and equipment and intangible asset

Property, plant and equipment and intangible assets
represent a significant proportion of the asset base
of the Company. The charge in respect of periodic
depreciation is derived after determining an estimate
of an asset's expected useful life and the expected
residual value at the end of its life. The useful lives
and residual values of assets are determined by
management at the time the asset is acquired and
reviewed periodically, including at each financial period/
year end. The lives are based on historical experience
with similar assets.

b) Fair Value measurement of financial
instruments

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

c) Estimation of defined benefit obligation
and compensated absences

The cost of the defined benefit gratuity plan,
compensated absences and the present value of the
gratuity obligation are determined using actuarial
valuations. An actuarial valuation involves making
various assumptions that may differ from actual
developments in the future. These include the
determination of the discount rate, future salary
increases and mortality rates. All assumptions are
reviewed at each reporting date.

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

Future salary increases are based on expected future
inflation rates. The mortality rate is based on publicly
available mortality tables for the country. Those
mortality tables tend to change only at interval in
response to demographic changes.

d) Income taxes

Significant judgments are involved in determining
the provision for income taxes including judgment on
whether tax positions are probable of being sustained
in tax assessments. A tax assessment can involve
complex issues, which can only be resolved over
extended time periods.

e) Deferred Taxes

Deferred tax assets are recognised for unused tax
losses to the extent that it is probable that future
taxable profit will be available against which the
losses can be utilised. In assessing the probability, the
Company considers whether the entity has sufficient
taxable temporary differences relating to the same
taxation authority and the same taxable entity,
which will result in taxable amounts against which
the unused tax losses or unused tax credits can be
utilised before they expire. Significant management
judgement is required to determine the amount of
deferred tax assets that can be recognised, based
upon the likely timing and the level of future taxable
profits together with future tax planning strategies.
The Company has recognised deferred tax assets on

the unused tax losses and other deductible temporary
differences since the management is of the view that it
is probable the deferred tax assets will be recoverable
using the estimated future taxable income based on
the approved business plans and budgets.

f) Provision

Provisions and liabilities are recognised in the period
when it becomes probable that there will be a future
outflow of funds resulting from past operations or
events and the amount of cash outflow can be reliably
estimated. The timing of recognition and quantification
of the liability require the application of judgement to
existing facts and circumstances, which can be subject
to change. The carrying amounts of provisions and
liabilities are reviewed regularly and adjusted to take
account of changing facts and circumstances.

g) Impairment of financial assets:

The impairment provisions for financial assets
depending on their classification are based on
assumptions about risk of default, expected cash loss
rates, discounting rates applied to these forecasted
future cash flows, recent transactions and independent
valuer's report. The Company uses judgement in
making these assumptions and selecting the inputs
to the impairment calculation, based on Company's
history, existing market conditions as well as forward
looking estimates at the end of each reporting period.

h) Provision for expected credit losses of
trade receivables and contract assets:

The Company uses a simplified approach to determine
impairment loss allowance on the portfolio of trade
receivables. This is based on its historically observed
default rates over the expected life of the trade
receivable and is adjusted for forward looking estimates.
At every reporting date, the historical observed
default rates are updated and changes in the forward¬
looking estimates are analysed. The assessment of
the correlation between historical observed default
rates, forecast economic conditions and ECLs is a
significant estimate. The amount of ECLs is sensitive
to changes in circumstances and of forecast economic
conditions. The Company's historical credit loss
experience and forecast of economic conditions may
not be representative of customer's actual default in
the future.

i) Leases — Estimating the incremental
borrowing rates:

The Company cannot readily determine the interest rate
implicit in the lease, therefore, it uses its incremental
borrowing rate (IBR) to measure lease liabilities.

The IBR is the rate of interest that the Company would
have to pay to borrow over a similar term, and with a
similar security, the funds necessary to obtain an asset
of a similar value to the right-of-use asset in a similar
economic environment. The IBR therefore reflects
what the Company 'would have to pay', which requires

estimation when no observable rates are available or
when they need to be adjusted to reflect the terms
and conditions of the lease.

The Company estimates the IBR using observable inputs
(such as market interest rates) when available and is
required to make certain entity-specific estimates
(such as the Company's credit rating).

j. Other estimates:

The share-based compensation expense is determined
based on the Company's estimate of equity instruments
that will eventually vest.