Accounting Policies of Tracxn Technologies Ltd. Company

Mar 31, 2025

1. General information

Tracxn Technologies Limited (the ""Company"") was
incorporated as a private limited Company on 11
August 2012 under the provisions of the
Companies Act 1956. The Company converted
from a Private Limited Company to a Public Limited
Company, pursuant to a special resolution passed
in the extraordinary general meeting of the
shareholders of the Company held on 7 July 2021
and consequently the name of the Company has
been changed to "Tracxn Technologies Limited"
pursuant to a fresh certificate of incorporation
dated 28 July 2021 issued by the Registrar of
Companies.

The Company offers a market intelligence platform
''Tracxn'' on a subscription basis to global customer
base; to provide comprehensive private company
data for deal sourcing, M&A opportunities, deal
diligence, private market analysis and tracking
emerging themes.

2. Basis of preparation

i) Compliance with Indian Accounting Standards
(Ind AS)

The financial statements comply in all material
aspects with Indian Accounting Standards
(hereinafter referred to as the ''Ind AS'') as notified
under Section 133 of the Companies Act, 2013 (''the
Act'') [Companies (Indian Accounting standards)
Rules, 2015, as amended] and other related
provisions of the Act.

ii) Historical cost convention

The Financial Statements have been prepared on a
historical cost basis, except for the following:

a) Certain financial assets and liabilities that
are to be measured at fair value; and

b) Employee share based payments

iii) New and amended standards adopted

The Ministry of Corporate Affairs vide notification
dated 9 September 2024 and 28 September 2024
notified the Companies (Indian Accounting
Standards) Second Amendment Rules, 2024 and
Companies (Indian Accounting Standards) Third
Amendment Rules, 2024, respectively, which
amended/ notified certain accounting standards
(see below), and are effective for annual reporting
periods beginning on or after 1 April 2024:

• Insurance contracts - Ind AS 117; and

• Lease Liability in Sale and Leaseback -
Amendments to Ind AS 116

These amendments did not have any material
impact on the amounts recognised in prior periods
and are not expected to significantly affect the
current or future periods.

iv) Standard issued but not yet effective

MCA notifies new standards or amendments to the
existing standards under Companies (Indian
Accounting Standards) Rules as issued from time
to time. For the year ended March 31, 2025, MCA
has not notified any new standards or amendments
to the existing standards which are applicable to
the Company

v) Operating Cycle

Based on the nature of products/activities of the
Company and the normal time between acquisition
of assets and their realization in cash or cash
equivalents, the Company has determined its
operating cycle as 12 months for the purpose of
classification of its assets and liabilities as current
and non-current.

3. Critical estimates and judgments

The preparation of these financial statements
requires the use of accounting estimates which
could differ from the actual results. Management
also needs to exercise judgment in applying the
Company''s accounting policies. This note provides
an overview of the areas that involved higher degree
of judgment 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. Detailed
information about each of these estimates and
judgments is included in the relevant notes together
with information about the basis of calculation for
each affected line item in the financial statements.

Estimates and judgments are continually evaluated.
They are based on historical data and experience
and other factors, including expectations of future
events that may have a financial impact on the
Company and that are believed to be reasonable
under the circumstances.

The areas involving critical estimates and
judgments are:

i. Defined benefit obligations - Refer Note 12

ii. Recognition and measurement of deferred
tax - Refer Note 8

iii. Impairment of trade receivables - Refer
Note 22A

6. Financial Assets

Accounting Policies

I. Classification of financial assets at amortised cost:

The Company classifies its financial assets at amortised cost only if the following criteria are met:

• The asset is held within a business model whose objective is to collect the contractual cash
flows, and

• The contractual terms give rise to cashflows that are solely payments of principal and interest.
Financial assets classified at amortised cost comprise of trade receivables and other financial assets

II. Classification of financial assets at fair value through profit and loss:

The Company classifies investments in mutual funds at fair value through profit and loss.

See note 33.5 and 33.6 for the other accounting policies relevant to Financial Assets.

6(b) Trade Receivables

Accounting Policies

Trade receivables are amounts due from customers for services rendered in the ordinary course of business and
reflects company''s unconditional right to consideration (that is, payment is due only on the passage of time).
Trade receivables are recognised initially at the transaction price as they do not contain significant financing
components. The company holds the trade receivables with the objective of collecting the contractual cash flows
and therefore measures them subsequently at amortised cost using the effective interest method, less loss
allowance.

The Company classifies the right to consideration in exchange for deliverables as either a receivable or as unbilled
revenue. A receivable is a right to consideration that is conditional only upon passage of time. Revenue in excess
of billings is recorded as unbilled revenue and is classified as a financial asset as only the passage of time is
required before the payment is due.

8. Deferred Tax Asset (net)

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the Financial Statements. Deferred income tax
is determined using tax rates and laws that have been enacted or substantially enacted by the end of the reporting
period and are expected to apply when the related deferred income tax asset is realised or the deferred income
tax liability is settled.

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, if any, and
only if it is probable that future taxable amounts will be available to utilize those temporary differences and
losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and
tax liabilities are offset where the Company has a legally enforceable right to offset and intends either to settle
on a net basis, or to realize the asset and settle the liability simultaneously.

Current and deferred tax are recognised in Statement of Profit and Loss, except to the extent that it relates to
items recognised in other comprehensive income or directly in equity; in which case, tax is also recognised in
other comprehensive income or directly in equity, respectively.

Notes:

1. The deferred tax balance above has been arrived at by applying the tax rate of 25.168% being the rate
substantively enacted as at 31 March 2025 and 31 March 2024.

2. The Company has recognised DTA of INR 600.21 lakhs on business losses carried forward from the earlier
years in the income tax return to the extent it is recoverable based on the Company''s projected probable
taxable profits in the forthcoming years. Based on such projections, during the current year the Company
has reversed INR 1,448.67 lakhs of DTA created on the carried forward business losses. The methodology
used by the Company for the projections is largely in line with the methodology used in the previous year.

3. The key assumption used in such business plans and budgets pertains to revenue growth rate, any
decrease in this growth rate by 10 basis points, will lead to a deduction in deferred tax asset by INR 25.98
Lakhs, any increase in growth rate by 10 basis points will lead to an increase in retention of deferred tax
asset by 26.03 Lakhs.

111. Rights, preferences and restrictions attached to shares:

Equity Shares:

The Company has one class of equity shares having par value of INR 1.00 per share. Each holder of equity share
is entitled for one vote per share held.

In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company,
after distribution of all preferential amounts, in proportion to their shareholding.

Each equity shareholder is entitled to dividend as and when proposed by the Board of Directors, subject to
approval of shareholders (except in the case of interim dividend) at the ensuing annual general meeting.

Nature and Purpose of Reserves:

Securities Premium Account

Securities premium is used to record the premium received on issue of shares in excess to the face value of the
shares. The reserve is utilised in accordance with the provisions of the Act.

Employee Stock Option Reserve

The reserve is used to recognise the grant date fair value, net of exercise price, issued to employees under ''Tracxn
Employee Stock Option Plans''. Refer Note 24 for more details

Share Application Money

This represents the amount received by the company towards exercise of employee stock options pending
allotment.

ii) Post-Employment Obligations
a) Gratuity

The Company provides for gratuity, a defined benefit plan covering eligible employees in accordance with the
Payment of Gratuity (Amendment) Act, 2018. The Gratuity Plan provides a lump sum payment to vested
employees at retirement, death, incapacitation or termination of employment, of an amount based on the
respective employee''s salary and the tenure of employment.

The liability or asset recognised in the Balance Sheet in respect of defined benefit gratuity plans is the present
value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The
defined benefit obligation is calculated at the end of the reporting period by an independent actuary using the
projected unit credit method.

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.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation
and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and
Loss.

Note :-

During the year, the Company has registered a trust to fund its gratuity obligation. The amount above represents

Company''s best estimate of contribution next financial year.

Risk Exposure

Through its defined benefit plan, the Company is exposed to a number of risks. The most significant risks are:

(i) Interest rate risk: The defined benefit obligation calculated uses a discount rate based on 5 year (2024: 5
year) government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

(ii) Salary inflation risk: Higher than expected increases in salary will increase the defined benefit obligation.

(iii) Demographic risk: This is the risk of variability of results due to factors like mortality, withdrawal, disability
and retirement. The effect of these on the defined benefit obligation is not linear and depends upon the
combination of salary increase, discount rate and attrition rate

Sensitivity Analysis

The sensitivity of the defined benefit obligation (DBO) to changes in the principal assumptions is as under (as

per the actuarial report):

b) Defined Contribution Schemes

Contributions are made to recognized government provident funds and Employee State Insurance Scheme in
India for employees at a specified percentage of wages as per the regulations. The contributions payable to these
plans by the Company are administered by the Government. The obligation of the Company is limited to the
amount contributed and it has no further contractual nor any constructive obligation. The Company recognised
INR 161.68 (2024: INR 180.45) for Provident Fund contributions, INR 0.86 (2024: INR 6.75) for Employee State
Insurance Scheme contributions and INR 0.27 (2024: INR 0.29) for Labour welfare fund contributions in the
Statement of Profit and Loss.

15. Revenue from Operations

Accounting Policies

i) Sale of Services

The Company receives subscription revenue to its online platform www.tracxn.com for a given duration
(rendering of services).

Revenue from contracts with customers is recognized when services are rendered to the customer at an amount,
net of goods and services tax, that reflects the consideration entitled in exchange for those services and when
no significant uncertainty exists regarding the amount of the consideration that will be derived from rendering
the service. The Company recognizes subscription revenues over time wherein the customer simultaneously
receives and consumes the benefits provided by the Company. The progress is measured using the output
method which measures revenue by comparing ''time elapsed'' to the ''total subscription period''

The invoicing for the services is done upfront for the duration of the subscription with a general credit term of
10-30 days, which is consistent with market practice. The Company does not adjust the transaction prices for
any time value of money as the transfer of the promised services to the customer and payment by the customer
does not generally exceed one year.

ii) Refund Liabilities

The Company recognises a refund liability for the revenue recognized but likely to be cancelled in the subsequent
period. The company estimates the expected cancellations based on acknowledgements from customers or
platform usage data.

iii) Contract Liabilities

A contract liability is the obligation to provide services to a customer, for such future periods for which the
Company has received consideration (or an amount of consideration is due) from the customer. Contract
liabilities are recognised as revenue with the passage of time; when the Company provides services under the
contract. Refer Note 13.

B. Fair Value Hierarchy:

This section explains the judgements and
estimates made in determining the fair values of
the financial instruments that are (a) recognised
and measured at fair value and (b) measured at
amortised cost and for which fair values are
disclosed in the financial statements. To provide
an indication about the reliability of the inputs
used in determining fair value, the Company has
classified its financial instruments into 3
levels/hierarchy prescribed under the accounting
standard.

Level 1: Level 1 hierarchy includes financial
instruments measured using quoted prices. This
includes mutual funds that have quoted price. The
mutual funds are valued using the closing NAV.

Level 2: The fair value of financial instruments
that are not traded in an active market is
determined using valuation techniques which
maximize the use of observable market data and
rely as little as possible on entity-specific
estimates. If all significant inputs required to fair
value an instrument are observable, the
instrument is included in level 2.

Level 3: If one or more of the significant inputs is
not based on observable market data, the
instrument is included in level 3.

There are no transfers between the levels during
the year.

C. Valuation Process:

The Company performs the valuation of financial
assets and liabilities required for financial
reporting purposes, including those classified
under Level 3 of the fair value hierarchy. These
valuations are performed by the finance
department, which operates under established
governance protocols and reports directly to the
Chief Financial Officer. The valuation process is
designed to ensure that fair value measurements
are consistently applied in accordance with
applicable accounting standards.

D. Valuation Techniques:

For Level 1 and Level 2 financial instruments, the
Company uses observable market data, historical
trends, and internal estimates to determine fair
value.

The fair value of investments in mutual fund units
is based on the net asset value (''NAV'') as stated
by the issuers of these mutual fund units in the
published statements as at each reported
balance sheet date. NAV represents the price at
which the issuer will issue further units of mutual
fund and the price at which issuers will redeem
such units from the investors.

For Level 3 instruments measured at amortised
cost, the carrying amounts of trade receivables,
trade payables, cash and cash equivalents, other
financial assets and other financial liabilities are
considered to be the same as their fair values due
to their short term nature. For financial assets and
liabilities that are measured at fair value, the
carrying amounts are equal to the fair values.

The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates.
The Company uses judgement in making these assumption and selecting the inputs to the impairment
calculations, based on the Company''s past history and existing market conditions as well as forward- looking
estimates at the end of each reporting period.

The Company is also exposed to credit risk in respect of cash and cash equivalents, deposits with banks and
investment in mutual funds. As a policy, the Company places its cash and cash equivalents and deposits with
well established banks and financial institutions. Management has evaluated and determined expected credit
loss for cash and cash equivalents, deposits with banks, security deposits and other financial assets to be
insignificant.

B. Liquidity Risk

Liquidity risk is a risk that the Company may not be able to meet its financial obligations associated with its
financial liabilities on a timely basis through:

a) Primary source - cash and cash equivalents i.e. cash generated from operations,

b) Secondary source - mutual fund investments and bank deposits (liquid investments realisable in short
term).

A material and sustained shortfall in cash flows generated from operation could expose the company to liquidity
risk. The company manages the liquidity risk by monitoring rolling cash flow forecasts and maturity profiles of
its financial assets and liabilities.

i) Maturities of Financial Liabilities

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months
are equal to the carrying balances as the impact of discounting is not significant.

ii) Market Price Risk

a) Exposure

The Company''s exposure to price risk arises from investments held by the Company and classified in the
Balance Sheet at fair value through profit or loss. To manage its price risk arising from investments in debt
mutual funds, the Company diversifies its portfolio across liquid and arbitrage funds and also across
different Asset Management Companies.

b) Sensitivity

The table below summarizes the impact of increase/decrease of the index on the company''s equity and
profit for the year. The analysis is based on the assumption that the NAV increases by 5% or decreases by
5% with all other variables held constant.

24. Employee Stock Option Expense

Tracxn Employee Stock Option Plan 2016 ("ESOP 2016" or "the Plan"): The Board vide its resolution dated 3
October 2016 approved ESOP 2016 for granting Employee Stock Options in the form of Equity Shares linked to
the completion of a minimum period of continued employment to the eligible employees of the Company. The
eligible employees for the purpose of ESOP 2016 will be determined by the Board of Directors. Pursuant to the
Extraordinary General Meeting held on 5 October 2016, the Board of Directors have been authorized to introduce,
offer, issue and allot options to eligible employees of the Company under the ESOP 2016. The maximum number
of shares under this Plan shall not exceed 1,21,52,582 shares. These Options shall vest not less than one year
and not more than 4 years from the date of grant of such Options.

Tracxn Employee Stock Option Plan 2024 ("ESOP 2024" or "the Plan"): The Board vide its resolution dated 8
November 2024 approved ESOP 2024 for granting Employee Stock Options in the form of Equity Shares linked to
the completion of a minimum period of continued employment to the eligible employees of the Company. The
eligible employees for the purpose of ESOP 2024 will be determined by the Board of Directors. The Board of
Directors have been authorized to introduce, offer, issue and allot options to eligible employees of the Company
under the ESOP 2024. The maximum number of shares under this Plan shall not exceed 30,00,000 shares. These
Options shall vest not less than one year and not more than 5 years from the date of grant of such Options.

Set out below is a summary of options granted under the ESOP 2016 plan:

Notes:

1. The Company did not have any debt outstanding as at 31 March 2025 and 31 March 2024. Accordingly, the
debt-equity ratio and the debt service coverage ratio have not been disclosed.

2. The business model of the company is services oriented hence there is no inventory. Accordingly the
inventory turnover ratio is not applicable.

3. In the current year, profit after tax was lower compared to previous year largely due to reversal of deferred
tax asset created on brought forward losses.

4. Increase due to significant improvement in outstanding receivables

5. Increase in this ratio is due to improvement in payment cycles in FY 25

6. In the current year, profit after tax was lower compared to previous year primarily due to reversal of deferred
tax asset created on brought forward losses.

7. Decreased due to lower Profit before tax on account of higher increase in expenses than income

31. Leases

The Company has taken office premises on lease. Rental contracts are typically made for 1 to 3 years, and
extendable for further periods upon mutual agreement. The notice period for such leases is 2-3 months where
either party can terminate the lease without any significant penalty or loss. Extension options have not been
included in the lease term as exercising this option is currently not reasonably certain. Accordingly, the Company
has elected to treat such leases as short term leases and taken an exemption from recognition of right-of-use
assets and related lease liabilities in accordance with Ind AS 116.

33. Other Accounting Policies

Other than the material accounting policies given earlier, this note provides a list of other accounting policies
adopted in the preparation of these financial statements. These accounting policies have been consistently
applied to all the years presented, unless otherwise stated.

33.1. Segment Reporting

Operating segments are reported in a manner
consistent with the internal reporting provided to
the chief operating decision maker(s).

Refer Note 25 for segment information presented.

33.2. Foreign Currency Translation

i) 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 (INR), which is the Company''s functional
and presentation currency.

ii) Transactions and Balances

Foreign currency transactions are translated into
the functional currency using the exchange rates
at the dates of the transactions. Foreign
exchange gains and losses resulting from the
settlement of such transactions and from the
translation of monetary assets and liabilities
denominated in foreign currencies at year end
exchange rates are recognised in the Statement
of Profit and Loss on a net basis within other
gains/ (losses).

33.3. Income Tax

The income tax expense or credit for the period is
the tax payable on the current period''s taxable
income based on the applicable income tax rate
adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences
and to unused tax losses, if any.

The current income tax charge is calculated on
the basis of the tax laws enacted or substantively
enacted at the end of the reporting period.
Management periodically evaluates positions
taken in tax returns with respect to situations in
which applicable tax regulation is subject to
interpretation and considers whether it is
probable that a taxation authority will accept an
uncertain tax treatment. The Company measures
its tax balances either based on the most likely
amount or the expected value, depending on
which method provides a better prediction of the
resolution of the uncertainty.

33.4. Leases

Leases are recognised as a Right-of-use asset
and a corresponding liability at the date at which
the leased asset is available for use by the
company.

Assets and liabilities arising from a lease are
initially measured on a present value basis. Lease

liabilities include the net present value of the
following lease payments:

• fixed payments (including in substance fixed
payments), less any incentives receivable

• variable lease payments that are based 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 company
exercising that option.

Extension and termination options are included in
many of the leases. In determining the lease term
the management considers all facts and
circumstances that create an economic incentive
to exercise an extension option, or not exercise a
termination option. Lease payments to be made
under reasonably certain extension options are
also included in the measurement of the liability.
The lease payments are discounted using the
company''s incremental borrowing rate, which is
the rate that the Company would have to pay to
borrow the funds necessary to obtain an asset of
similar value to the right-of-use asset in a similar
economic environment with similar terms,
security and conditions.

If a readily observable amortising loan rate is
available to the Company (through recent
financing or market data) which has a similar
payment profile to the lease, then that rate is used
as the incremental borrowing rate.

Lease payments are allocated between principal
and finance cost. The finance cost is charged to
Statement of Profit and Loss over the lease period
so as to produce a constant periodic rate of
interest on the remaining balance of the liability
for each period.

Lease payments that represent payments based
on actual utilisation of common facilities of the
leased asset are recognised in the Statement of
Profit and Loss as and when they are incurred.

Right-of-use assets are measured at cost
comprising the following:

• the amount of initial measurement of lease
liability

• any lease payments made on or before the
commencement date less any lease
incentives received

• any initial direct costs, and

• restoration costs

Right-of-use assets are generally depreciated
over the shorter of the asset''s useful life and the
lease term on a straight-line basis.

33.5. Financial Instruments

Financial assets and financial liabilities are
recognized when a Company becomes a party to
the contractual provisions of the instruments.

Financial assets (excluding trade receivables
which do not contain significant financing
component) and financial liabilities are initially
measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of
financial assets and financial liabilities (other
than financial assets and financial liabilities at fair
value through profit or loss) are added to or
deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on
initial recognition. Transaction costs directly
attributable to the acquisition of financial assets
or financial liabilities at fair value through profit or
loss are recognized immediately in profit or loss.

33.6. Investments and Other Financial Assets.

A. Classification

The Company classifies its financial assets in the
following measurement categories:

• those to be measured subsequently at fair
value (either through other comprehensive
income, or through profit or loss), and

• those measured at amortised cost.

The classification depends on entity''s business
model for managing the financial assets and the
contractual terms of the cash flow. For assets
measured at fair value, gains and losses will
either be recorded in profit or loss or other
comprehensive income. For investments in debt
instruments, this will depend on the business
model in which the investment is held. For
investments in equity instruments, this will
depend on whether the Company has made an
irrevocable election at the time of initial
recognition to account for the equity investment
at fair value through other comprehensive
income. The Company reclassifies debt
investments when and only when its business
model for managing those assets changes.

B. Recognition

Regular way purchases and sales of financial
assets are recognised on trade-date, the date on
which the Company commits to purchase or sell
the financial asset.

C. Subsequent Measurement

i) At Amortised Cost

Assets that are held for collection of contractual
cash flows where those cash flows represent
solely payments of principal and interest are
measured at amortised cost. Interest income
from these financial assets is included in the
statement of profit and loss using the effective
interest rate method. Any gain or loss arising on
derecognition is recognised directly in the
statement of profit and loss. Impairment losses
are presented in the statement of profit and loss.

ii) Fair Value through Other Comprehensive Income
(FVOCI)

Assets that are held for collection of contractual
cash flows and for selling the financial assets,
where the assets'' cash flow represent solely
payments of principal and interest, are measured
at fair value through other comprehensive income
(FVOCI). Movements in the carrying amount are
taken through OCI, except for the recognition of
impairment gains or losses, interest revenue and
foreign exchange gains and losses which are
recognized in profit and loss. When the financial
asset is derecognized, the cumulative gain or loss
previously recognized in OCI is reclassified from
equity to the statement of profit and loss and
recognised under other income/ other expenses.
Interest income from these financial assets is
included in other income using the effective
interest rate method.

iii) Fair Value through Profit and Loss (FVPL)

Assets that do not meet the criteria for amortized
cost or FVOCI are measured at fair value through
profit or loss. A gain or loss on a debt investment
that is subsequently measured at fair value
through profit or loss and is not part of a hedging
relationship is recognized in profit or loss and
presented net in the statement of profit and loss
in the period in which it arises. Interest income
from these financial assets is included in other
income.

D. Impairment of Financial Assets

The Company recognizes a loss allowance for
expected credit losses on financial assets that are
measured at amortised cost. The credit loss is
difference between all contractual cash flows that
are due to an entity in accordance with the
contract and all the cash flows that the entity
expects to receive (i.e., all cash shortfalls),
discounted at the original effective interest rate.
This is assessed on an individual or collective
basis after considering all reasonable and
supportable information including that which is
forward-looking.

The losses arising from impairment are
recognized in the Statement of Profit and Loss.

E. Derecognition

A financial asset is derecognized only when

• the Company has transferred the rights to
receive cash flows from the financial asset
or

• retains the contractual rights to receive the
cash flows of the financial asset, but
assumes a contractual obligation to pay the
cash flows to one or more recipients.

Where the entity has transferred an asset, the
Company evaluates whether it has transferred
substantially all risks and rewards of ownership of
the financial asset. In such cases, the financial
asset is derecognized. Where the entity has not
transferred substantially all risks and rewards of
ownership of the financial asset, the financial
asset is not derecognized. Where the entity has
neither transferred a financial asset nor retains
substantially all risks and rewards of ownership of
the financial asset, the financial asset is
derecognized if the Company has not retained
control of the financial asset. Where the Company
retains control of the financial asset, the asset is
continued to be recognized to the extent of
continuing involvement in the financial asset.

F. Interest Income

Interest income is recognised using effective
interest method. The effective interest rate is the
rate that exactly discounts estimated future cash
receipts through the expected life of the financial
asset to the gross carrying amount of a financial
asset.

33.7. Cash and Cash Equivalents

For the purpose of presentation in the statement
of cash flows, cash and cash equivalents include
cash on hand, deposits held at call with financial
institutions, other short-term, highly liquid
investments (exluding investment in debt mutual
funds e.g. liquid funds which are shown
separately as Investments) with original
maturities of three months or less that are readily
convertible to known amounts of cash and which
are subject to an insignificant risk of changes in
value.

33.8. Financial Liabilities

A. Classification

Financial liability and equity instruments issued
by a Company are classified as either financial
liabilities or as equity in accordance with the
substance of the contractual arrangements and
the definitions of a financial liability and an equity
instrument.

B. Subsequent Measurement

Financial liabilities are subsequently measured at
amortised cost using the effective interest rate
method unless at initial recognition, they are
classified as fair value through profit or loss.

C. Derecognition

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

33.9. Trade and Other Payables

These amounts represent liabilities for goods and
services provided to the Company prior to the end
of financial year, which are unpaid. The amounts
are unsecured and are usually paid within the
credit period. Trade and other payables are
presented as current liabilities unless payment is
not due within twelve months after the reporting
period. They are recognised initially at their fair
value and subsequently measured at amortised
cost using the effective interest method. For trade
and other payables maturing within one year from
the balance sheet date, the carrying amounts
approximate fair value due to the short maturity
of these instruments.

33.10. Property, Plant and Equipment

Historical cost includes expenditure that is
directly attributable to the acquisition of the
assets.

Subsequent costs are included in the asset''s
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that
future economic benefits associated with the
item will flow to the Company and the cost of the
item can be measured reliably. The carrying
amount of any component accounted for as a
separate asset is derecognised when replaced.
All other repairs and maintenance are charged to
profit or loss during the reporting period in which
they are incurred.

The assets'' residual value and useful life are
reviewed, and adjusted if appropriate, at the end
of each reporting period. An asset''s carrying
amount is written down immediately to
recoverable amount if the asset''s carrying amount
is greater than its estimated recoverable amount.
Gains and iosses on disposals are determined by
companng proceeds with carrying amount. These
are included in the Statement of Profit and Loss
within Other gains/ (losses).

33.11. Intangible Assets
Software:

Operating software is capitalised along with the
related fixed assets. Costs associated with
maintaining the software are recognised as an
expense as incurred. Development costs that are

directly attributable to the design and testing of
identifiable and unique software products
controlled by the company are recognised as
intangible assets where the following criteria are
met:

• it is technically feasible to complete the
software so that it will be available for use

• management intends to complete the
software and use or sell it

• there is an ability to use or sell the software

• it can be demonstrated how the software
will generate probable future economic
benefits

• adequate technical, financial and other
resources to complete the development and
to use or sell the software are available, and

• the expenditure attributable to the software
during its development can be reliably
measured.

Amortisation methods and periods:

The Company amortizes software with a finite
useful life using the straight line method over
three years and the useful life is reviewed at end
of each reporting period, and adjusted if
appropriate. The amortisation method and the
estimated useful life of intangible assets are
reviewed at each reporting period.

33.12. Impairment of Non-financial Assets

Assets are tested for impairment whenever
events or changes in circumstances indicate that
the carrying amount may not be recoverable.
Intangible assets under development are tested
for impairment on an annual basis. An
impairment loss is recognized for the amount by
which the asset''s carrying amount exceeds its
recoverable amount. The recoverable amount is
the higher of an asset''s fair value less cost of
disposal and value in use. For the purposes of
assessing impairment, assets are grouped at the
lowest levels for which there are separately
identifiable cash inflows which are largely
independent of the cash inflows from other
assets or groups of assets (cash-generating
units). Non-financial assets that have suffered an
impairment are reviewed for possible reversal of
the impairment at the end of each reporting
period.

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Mar 31, 2024

1 General information

Tracxn Technologies Limited (the "Company") was incorporated as a private limited Company on 11 August 2012 under the provisions of the Companies Act 1956. The Company converted from a Private Limited Company to a Public Limited Company, pursuant to a special resolution passed in the extraordinary general meeting of the shareholders of the Company held on 7 July 2021 and consequently the name of the Company has been changed to "Tracxn Technologies Limited" pursuant to a fresh certificate of incorporation dated 28 July 2021 issued by the Registrar of Companies.

The Company offers a market intelligence platform ''Tracxn'' on a subscription basis to global customer base; to provide comprehensive private company data for deal sourcing, M&A opportunities, deal diligence, private market analysis and tracking emerging themes."

2 Basis of preparationi) Compliance with indian accounting standards (Ind AS)

The financial statements comply in all material aspects with Indian Accounting Standards (hereinafter referred to as the ''Ind AS'') as notified under Section 133 of the Companies Act, 2013 (‘the Act’) [Companies (Indian Accounting standards) Rules, 2015, as amended] and other related provisions of the Act.

ii) Historical cost convention

The Financial Statements have been prepared on a historical cost basis, except for the following:

(a) certain financial assets and liabilities that are measured at fair value; and

(b) Employee share based payments

iii) New and amended standards adopted

The Ministry of Corporate Affairs has vide notification dated 31 March 2023 notified Companies (Indian Accounting Standards) Amendment Rules, 2023 (the ‘Rules’) which amended certain accounting standards, (see below) and are effective 1 April 2023:

(i) Disclosure of accounting policies -amendments to Ind AS 1

(ii) Definition of accounting estimates -amendments to Ind AS 8

(iii) Deferred tax related to assets and liabilities arising from a single transaction -amendments to Ind AS 12

The other amendments to Ind AS notified by these rules are primarily in the nature of clarifications.

These amendments did not have any material impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods. Specifically, no changes would be necessary as a consequence of amendments made to Ind AS 12 as the company’s accounting policy already complies with the now mandatory treatment."

iv) New and amended standards issued but not yet effective

MCA notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards as applicable to the Company.

v) Operating cycle

Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classificatlon of its assets and liabilities as current and non-current.

3 Critical estimates and judgements

The preparation of these financial statements requires the use of accounting estimates which could differ from the actual results. Management also needs to exercise judgement in applying the Company''s accounting policies. This note provides an overview of the areas that involved 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. Detailed information

about each of these estimates and judgements is included in the relevant notes together with information about the basis of calculation for each affected line item in the financial statements.

Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact

on the Company and that are believed to be reasonable under the circumstances.

The areas involving critical estimates and judgments are:

i) Defined benefit obligations - Refer Note 12

ii) Recognition and measurement of deferred tax - Refer Note 8

iii) Impairment of trade receivables -Refer Note 23A

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Mar 31, 2023

1. GENERAL INFORMATION

Tracxn Technologies Limited (formerly known as Tracxn Technologies Private Limited) (the "Company") was incorporated as a private limited Company on 11 August 2012 under the provisions of the Companies Act 1956. The Company converted from a Private Limited Company to a Public Limited Company, pursuant to a special resolution passed in the extraordinary general meeting of the shareholders of the Company held on 7 July 2021 and consequently the name of the Company has been changed to "Tracxn Technologies Limited" pursuant to a fresh certificate of incorporation dated 28 July 2021 issued by the Registrar of Companies.

The Company offers Tracxn ''Platform'' (which tracks and curates data of millions of startups) on a subscription basis to global customer base; which helps Venture Capital, Private Equity Investors and Corporate Development teams to find startups across highly investable sectors.

2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the periods/ years presented, unless otherwise stated.

2.1 Basis of preparation

i) Compliance with Indian Accounting Standards (Ind AS)

The financial statements comply in all material aspects with Indian Accounting Standards (hereinafter referred to as the ''Ind AS'') as notified under Section 133 of the Companies Act, 2013 (''the Act'') [Companies (Indian Accounting standards) Rules, 2015, as amended] and other related provisions of the Act.

ii) Historical cost convention

The Financial Statements have been prepared on a historical cost basis, except for the following:

(a) certain financial assets and liabilities that are measured at fair value; and

(b) Employee share based payments

iii) New and amended standards adopted

The Ministry of Corporate Affairs had vide notification dated 23 March 2022 notified Companies (Indian Accounting Standards) Amendment Rules, 2022 which amended certain accounting standards, and are effective 1 April 2022. These amendments did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

2.2 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

The Board of Directors of the Company assesses the financial performance and position of the Company and makes strategic decisions. Accordingly, the Board has been identified as the chief operating decision maker. Refer note 26 for segment information presented.

2.3 Foreign currency translation

i) Functional and presentation currency

I tems 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 (INR), which is the Company''s functional and presentation currency.

ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in the Statement of Profit and Loss.

Foreign exchange gains and losses are presented in the Statement of Profit and Loss on a net basis within other gains/ (losses).

2.4 Revenue from contract with customers

i) Sale of services

The Company receives subscription revenue from rendering of services through its platform. Revenue from contracts with customers is recognized when services are rendered to the customer at an amount that reflects the consideration entitled in exchange for those services. The Company recognizes subscription revenues over time wherein the customer simultaneously receives and consumes the benefits provided by the Company. The progress is measured using the output method which measures revenue by comparing ''time elapsed'' to the ''total subscription period.

Revenue is recognised, net of goods and services tax, when no significant uncertainty exists regarding the amount of the consideration that will be derived from rendering the service. The Company estimates the refund liability on the basis of their past experience and future expectation, as that is the amount of consideration for which the entity does not expect to be entitled.

The invoicing for the services is done upfront irrespective of the duration of the subscription with a general credit term of 10-30 days, which is consistent with market practice. The Company does not adjust the transaction prices for any time value of money as the transfer of the promised services to the customer and payment by the customer does not generally exceed one year.

ii) Contract liabilities

A contract liability is the obligation to transfer services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. Contract liabilities are recognised as revenue when the Company performs under the contract. Contract Liabilities are disclosed in Note 13.

2.5 Income tax

The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses, if any.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Company measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in The Financial Statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recog nised for all deductible temporary differences and unused tax losses, if any, only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities

are offset where the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Current and deferred tax are recognised in Statement of Profit and Loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

2.6 Leases

Leases are recognised as a Right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the company.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

• fixed payments (including in substance fixed payments), less any incentives receivable

• variable lease payments that are based 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 company exercising that option.

Extension and termination options are included in many of the leases. In determining the lease term the management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the company''s incremental borrowing rate, which is the rate that the Company would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. If a readily observable amortising loan rate is available to the Company (through recent financing or market data) which has a similar payment profile to the lease, then the Company uses that rate as the incremental borrowing rate.

Lease payments are allocated between principal and finance cost. The finance cost is charged to Statement of Profit and Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Lease payments that represent payments based on actual utilisation of common facilities of the leased asset are recognised in the Statement of Profit and Loss as and when they are incurred.

Right-of-use assets are measured at cost comprising the following:

• the amount of initial measurement of lease liability

• any lease payments made on or before the commencement date less any lease incentives received

• any initial direct costs, and

• restoration costs

Right-of-use assets are generally depreciated over the shorter of the asset''s useful life and the lease term on a straight-line basis.

Payments associated with short-term leases are recognised on a straight-line basis as an expense in the Statement of Profit and Loss. Short-term leases are leases with a term of 12 months or less. The lease contracts also include non -lease components which are charged to the Statement of Profit and Loss as and when incurred.

2.7 Financial instruments

Financial assets and financial liabilities are recognized when a Company becomes a party to the contractual provisions of the instruments.

Financial assets (excluding trade receivables which do not contain a significant financing component) and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

2.8 Investments and other financial assets

A) Classification

The Company classifies its financial assets in the following measurement categories:

- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and

- those measured at amortised cost.

The classification depends on entity''s business model for managing the financial assets and the contractual terms of the cash flow. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. The Company reclassifies debt investments when and only when its business model for managing those assets changes.

B) Recognition

Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Company commits to purchase or sell the financial asset.

C) Subsequent measurementi) At amortised cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in the statement of profit and loss using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in the statement of profit and loss. Impairment losses are presented in the statement of profit and loss.

ii) Fair Value through Other Comprehensive Income (FVOCI)

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flow represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in profit and loss. When the

financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to the statement of profit and loss and recognised under other income/ other expenses. Interest income from these financial assets is included in other income using the effective interest rate method.

iii) Fair Value through Profit and Loss (FVPL)

Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognized in profit or loss and presented net in the statement of profit and loss in the period in which it arises. Interest income from these financial assets is included in other income.

D) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortised cost. The credit loss is difference between all contractual cash flows that are due to an entity in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original effective interest rate. This is assessed on an individual or collective basis after considering all reasonable and supportable information including that which is forward-looking.

For trade receivables, the Company applies the simplified approach permitted by Ind AS 109 "Financial Instruments", which requires expected lifetime losses to be recognized from initial recognition of the receivables.

The losses arising from impairment are recognized in the Statement of Profit and Loss.

E) Derecognition

A financial asset is derecognized only when

- the Company has transferred the rights to receive cash flows from the financial asset or

- retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized. Where the entity has neither transferred a financial asset nor

retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognized if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognized to the extent of continuing involvement in the financial asset.

F) Interest income

Interest income is recognised using effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset.

2.9 Trade receivables

Trade receivables are amounts due from customers for services rendered in the ordinary course of business and reflects company''s unconditional right to consideration (that is, payment is due only on the passage of time). Trade receivables are recognised initially at the transaction price as they do not contain significant financing components. The company holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method, less loss allowance.

The Company classifies the right to consideration in exchange for deliverables as either a receivable or as unbilled revenue. A receivable is a right to consideration that is conditional only upon passage of time. Revenue in excess of billings is recorded as unbilled revenue and is classified as a financial asset as only the passage of time is required before the payment is due.

Invoicing in excess of earnings are classified as contract liabilities which is disclosed as deferred revenue.

Trade receivables and unbilled revenue are presented net of impairment in the Balance Sheet.

2.10 Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

2.11 Financial liabilities

A) Classification

Financial liability and equity instruments issued by a Company are classified as either financial liabilities or as

equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

B) Subsequent measurement

Financial liabilities are subsequently measured at amortised cost using the effective interest rate method unless at initial recognition, they are classified as fair value through profit or loss.

C) Derecognition

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

2.12 Trade and other payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year, which are unpaid. The amounts are unsecured and are usually paid within the credit period. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

2.13 Property, plant and equipment

All items of property, plant and equipment are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the assets.

Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Depreciation methods, estimated useful life and residual value: Depreciation is calculated using the written down value method to allocate their cost, net of their residual values, over their estimated useful life as follows:

Management estimate of useful life Computer equipments: 3 years Furniture and fittings: 5 years

Office equipments: 3-5 years

Based on a technical evaluation, the management believes that the useful lives of the above assets best represent the period over which the management expects to use these assets. Hence, the useful lives for some of these assets is different from the useful lives as prescribed under Schedule II to the Companies Act, 2013.

The assets'' residual value and useful life are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset''s carrying amount is written down immediately to its recoverable amount if the asset''s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of Profit and Loss within other gains/ (losses).

2.14 Intangible Assets Software:

Operating software is capitalised along with the related fixed assets. Costs associated with maintaining the software are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the company are recognised as intangible assets where the following criteria are met:

• it is technically feasible to complete the software so that it will be available for use

• management intends to complete the software and use or sell it

• there is an ability to use or sell the software

• it can be demonstrated how the software will generate probable future economic benefits

• adequate technical, financial and other resources to complete the development and to use or sell the software are available, and

• the expenditure attributable to the software during its development can be reliably measured.

Amortisation methods and periods:

The Company amortizes software with a finite useful life using the straight line method over three years and the useful life is reviewed at end of each reporting period, and adjusted if appropriate. The amortisation method and the estimated useful life of intangible assets are reviewed at each reporting period.

2.15 Impairment of non-financial assets

Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Intangible assets under development are tested for impairment on an annual basis. An impairment loss is recognized for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s fair value less cost of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that have suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

2.16 Provisions and contingent liabilities

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. In case of long term provisions, they are disclosed by discounting at the rate used to determine the present value, which is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation, that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.

2.17 Employee benefits

i) Short term obligations:

Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligation in the Balance Sheet.

ii) Other long-term employee benefit obligations

The liabilities for earned leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in statement of profit and loss. Past service costs are recognised immediately in the Statement of Profit and Loss.

The obligations are presented as current liabilities in the Balance Sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.

iii) Post employment obligations:

The Company operates the following post-employment schemes:

a) Defined benefit plans (gratuity)

The Company provides for gratuity, a defined benefit plan covering eligible employees in accordance with the Payment of Gratuity (Amendment) Act, 2018. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment.

The liability or asset recognised in the Balance Sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by an independent actuary using the projected unit credit method.

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.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and Loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the Balance Sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.

b) Defined contribution plan such as provident fund and employees state insurance

The Company pays provident fund contributions to publicly administered provident funds and employees state insurance funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and recognised as employee benefit expense when they are due.

iv) Bonus plans

The Company recognises a liability and an expense for bonuses. The Company recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

v) Share-based payments

The fair value of options granted under the Tracxn Employee Stock Option Plan 2016" is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted:

• i ncluding any market performance conditions (e.g., the entity''s share price)

• excluding the impact of any service and non-market performance vesting conditions (e.g. profitability, sales growth targets and remaining an employee of the entity over a specified time period), and

• including the impact of any non-vesting conditions (e.g. the requirement for employees to save or hold shares for a specific period of time).

The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

2.18 Earnings per share

Basic earnings per share is 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.

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 is adjusted for the effects of all dilutive potential equity shares.

Ordinary shares that will be issued upon the conversion of a mandatorily convertible instrument are included in the calculation of basic earnings per share from the date these mandatorily convertible instruments are classified as equity.

2.19 Contributed equity

Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

The transaction costs incurred with respect to the IPO of the Company is recognised as an asset to the extent considered recoverable from the selling shareholders. Remaining costs attributable to listing of existing shares is recognised in profit or loss.

2.20 Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

2.21 Exceptional Items

When an item of income or expense within Statement of profit and loss from ordinary activity is of such size, nature or incidence that its disclosure is relevant to explain the performance of the Company for the year, the nature and amount of such items is disclosed as exceptional items.

2.22 Rounding of amounts

All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as permitted by Schedule III of Companies Act, 2013, unless otherwise stated. Amounts mentioned as "0.00" in the financial statements denote amounts rounded off, being less than INR 5000.

3. CRITICAL ESTIMATES AND JUDGEMENTS

The preparation of these financial statements requires the use of accounting estimates which could differ from the actual results. Management also needs to exercise judgement in applying the Company''s accounting policies. This note provides an overview of the areas that involved 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. Detailed information about each of these estimates and judgements is included in the relevant notes together with information about the basis of calculation for each affected line item in the financial statements.

Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgment in applying the Company''s accounting policies.

This note provides an overview of the areas that involved a higher degree of judgment 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. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.

The areas involving critical estimates and judgments are:

i) Defined benefit obligations - Refer Note 12

ii) Recognition and measurement of deferred tax - Refer Note 8(b)

iii) Valuation of employee share based options - Refer Note

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iv) Impairment of trade receivables - Refer Note 23A

4. STANDARD ISSUED BUT NOT YET EFFECTIVE

The Ministry of Corporate Affairs has vide notification dated 31 March 2023 notified Companies (Indian Accounting standards) Amendment Rules, 2023 (the ''Rules'') which amends certain accounting standards, and are effective 1 April 2023. The Rules predominantly amend Ind AS 12, Income taxes, and Ind AS 1, Presentation of financial statements. The other amendments to Ind AS notified by these rules are primarily in the nature of clarifications. These amendments are not expected to have a material impact on the company in the current or future reporting periods and on foreseeable future transactions. Specifically, no changes would be necessary as a consequence of amendments made to Ind AS 12 as the Company''s accounting policy already complies with the now mandatory treatment.