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Shaping the future of software driven business
Consolidated Financials •
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lessor. Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for
all leases with a term of more than twelve months, unless the underlying asset is of low value. Currently, operating lease
expenses are charged to the statement of Profit & Loss. The Standard also contains enhanced disclosure requirements for
lessees. Ind AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17.
The effective date for adoption of Ind AS 116 is annual periods beginning on or after April 1, 2019. The standard permits
two possible methods of transition:
• Full retrospective – Retrospectively to each prior period presented applying Ind AS 8 Accounting Policies, Changes in
Accounting Estimates and Errors
• Modified retrospective – Retrospectively, with the cumulative effect of initially applying the Standard recognized at the
date of initial application.
Under modified retrospective approach, the lessee records the lease liability as the present value of the remaining lease
payments, discounted at the incremental borrowing rate and the right of use asset either as:
• Its carrying amount as if the standard had been applied since the commencement date, but discounted at lessee’s
incremental borrowing rate at the date of initial application or
• An amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments related to that
lease recognized under Ind AS 17 immediately before the date of initial application.
Certain practical expedients are available under both the methods.
On completion of evaluation of the effect of adoption of Ind AS 116, the Group is proposing to use the ‘Modified Retrospective
Approach’ for transitioning to Ind AS 116, and take the cumulative adjustment to retained earnings, on the date of initial
application (April 1, 2019). Accordingly, comparatives for the year ended March 31, 2019 will not be retrospectively adjusted.
The Group has elected certain available practical expedients on transition.
The effect of adoption as on transition date would majorly result in an increase in Right of use asset approximately by
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611.38 million and an increase in lease liability approximately by
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764.46 million.
(k) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable taking into account the amount of any
trade discounts and volume rebates allowed by the Group. Revenue is recognized to the extent it is probable that the
economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition
criteria must also be met before revenue is recognized:
(i) Income from software services
Effective April 1, 2018, the Group adopted Ind AS 115 “Revenue from Contracts with Customers” using the cumulative
catch-up transition method, applied to contracts that were not completed as of April 1, 2018. In accordance with the
cumulative catch-up transition method, the previous year’s amounts have not been retrospectively adjusted. The
following is a summary of new and/or revised significant accounting policies related to revenue recognition. The
effect on adoption of Ind AS 115 was insignificant.
The Group derives revenues primarily from IT services comprising of software development and related services and
from the licensing of software products.
Revenue is recognized upon transfer of control of promised products or services to customers in an amount that
reflects the consideration expected to receive in exchange for those products or services.
Arrangements with customers for software related services are either on a time-and-material or a fixed-price basis.
Revenue on time-and-material contracts are recognized as and when the related services are performed. Revenue
from fixed-price contracts, where the performance obligations are satisfied over time and where there is no
uncertainty as to measurement or collectability of consideration, is recognized as per the percentage-of-completion
method. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed
until such uncertainty is resolved.
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.
Notes forming part of consolidated financial statements (Contd.)