Physicswallah Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

2 Material accounting policies

2.1 Basis of preparation of financial statements

The financial statements of the Company have been
prepared in accordance with Indian Accounting
Standards (Ind AS) notified under the Companies (Indian
Accounting Standards) Rules, 2015 (as amended
from time to time) and presentation requirements of
Division II of Schedule III to the Companies Act, 2013,
(Ind AS compliant Schedule III), as applicable to the
financial statements.

The financial statements have been prepared on a
historical cost basis, except for certain financial assets
and liabilities measured at fair value and amortised cost
(refer accounting policies on financial instruments and
Share-based payments).

Accounting policies have been consistently applied
except where a newly-issued accounting standard is
initially adopted or a revision to an existing accounting
standard requires a change in the accounting policy
hitherto in use.

All the amounts included in the financial statements
are presented in Indian Rupees (''Rupees'' or ''Rs.'' or
''INR'') and are rounded to the nearest crores upto two
decimal places, except per share data and unless
stated otherwise.

Effective March 31, 2026, the Company has opted
to present amounts in INR crores. Accordingly,
corresponding comparative period amounts have also
been changed and presented in INR crores from being
presented in INR millions earlier.

The Company has prepared the standalone financial
statements on the basis that it will continue to operate
as a going concern.

2.2 Summary of material accounting policies

a. Current versus non-current classification

The Company presents assets and liabilities
in the balance sheet based on current/ non¬
current classification. An asset is treated as
current when it is:

• Expected to be realised or intended to be
sold or consumed in normal operating cycle

• Held primarily for the purpose of trading

• Expected to be realised within twelve months
after the reporting period, or

• Cash or cash equivalent unless restricted
from being exchanged or used to settle a
liability for at least twelve months after the
reporting period

All other assets are classified as non-current. A
liability is current when:

• It is expected to be settled in normal
operating cycle

• It is held primarily for the purpose of trading

• It is due to be settled within twelve months
after the reporting period, or

• It does not have the right at the end of the
reporting period to defer the settlement of
the liability for at least twelve months after
the reporting period All other liabilities are
classified as non-current

Deferred tax assets and liabilities are classified as
non-current assets and liabilities.

The operating cycle is the time between the
acquisition of assets for processing and their
realisation in cash or cash equivalents. Based on
the nature of operations and the time between
the acquisition of assets for processing and their
realisation in cash and cash equivalents, the
Company has ascertained its operating cycle
being a period of 12 months for the purpose of
classification of assets and liabilities as current
and non- current.

b. Fair value measurement

Company''s accounting policies and disclosures
require the measurement of fair values for both
financial and non-financial assets and liabilities.
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 liabilities takes place either
in the principal market for the asset or liability
or in absence of principal market, in the most
advantageous market for the asset or liability.

A fair value measurement of a non-financial asset
takes into account a market participant''s ability to
generate economic benefits by using the asset in
its highest and best use or by selling it to another
market participant that would use the asset in its
highest and best use.

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

All assets and liabilities for which fair value is
measured or disclosed in the financial statements
are categorized 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) marked prices in the
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 recognized in
the financial statements on a recurring basis, the
Company determines whether transfers have
occurred between levels in the hierarchy by re¬
assessing categorization (based on the lowest
level input that is significant to the fair value
measurement as a whole) at the end of each
reporting period.

At each reporting date, the management analyses
the movements in the values of assets and
liabilities which are required to be re-measured
or re-assessed as per the Company''s accounting
policies. For this analysis, the management or its
specialist verifies the major inputs applied in the
latest valuation by agreeing the information in
the valuation computation to contracts and other
relevant documents.

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.

c. Revenue recognition

The Company derives revenue primarily from
coaching classes and related sale of products
like study material and merchandise. Revenue is
measured based on the consideration specified
in a contract with a customer (transaction price)
which is the amount of consideration received
from the customer excluding amounts collected
on behalf of third parties (for example, indirect
taxes). Revenue is only recognized to the extent
that it is highly probable that a significant reversal
will not occur.

When two or more revenue generating activities
or deliverables are provided under a single
arrangement, each deliverable that is considered to
be a separate deliverable is accounted separately.
Where the contracts include multiple performance
obligations, the transaction price is allocated
to each performance obligation based on the
standalone selling prices. Where the standalone
selling prices are not directly observable, these
are estimated based on expected cost plus margin
or residual method to allocate the total transaction
price. In cases of residual method, the standalone
selling price is estimated by reference to the total
transaction price less the sum of the observable
standalone selling prices of other goods or
services promised in the contract

Sale of services

Revenue from services provided under fixed price
contracts is primarily recognized over a period
of time in the accounting period in which the
services are rendered, thus income from coaching
services is recognized over the period of delivery.
Where courseware is not considered a separate
component under a contract, revenue from the
composite course is recognized over the period
of the coaching or the contract period, depending
upon the terms and conditions. The customer pays
the fixed amount based on a payment schedule.
If the services rendered by the Company exceed
the payment, a contract asset is recognized. If
the payment exceeds the services rendered, a
contract liability is recognized.

Sale of products

Revenue in respect of sale of courseware and
other physical deliverables is recognized at a
point in time when these are delivered, the legal
title is passed and the customer has accepted the
courseware and other physical deliverables.

Advertisement income

Revenue from advertisements is recognized at a
point in time when the performance obligation
is satisfied. This typically occurs upon user
interaction with the ads, such as views or clicks.

Interest income

For all debt instruments measured either at
amortized cost or at fair value through other
comprehensive income, interest income is recorded
using the effective interest rate (EIR). EIR is the rate
that exactly discounts the estimated future cash
payments or receipts over the expected life of the
financial instrument or a shorter period, where
appropriate, to the gross carrying amount of the
financial asset or to the amortized cost of a financial
liability. When calculating the effective interest
rate, the Company estimates the expected cash
flows by considering all the contractual terms of
the financial instrument but does not consider the
expected credit losses. Interest income is included
in other income in the statement of profit and loss.

Contract balances Contract assets

A contract asset is initially recognised for revenue
earned from installation services because the
receipt of consideration is conditional on successful
completion of the installation. Upon completion of
the installation and acceptance by the customer, the
amount recognised as contract assets is reclassified
to trade receivables.

Contract assets are subject to impairment
assessment. Refer to accounting policies on
impairment of financial assets in section t)
Financial instruments - initial recognition and
subsequent measurement.

Contract liabilities

A contract liability is recognised if a payment is
received or a payment is due (whichever is earlier)
from a customer before the Company transfers
the related goods or services. Contract liabilities
are recognised as revenue when the Company
performs under the contract (i.e., transfers control
of the related goods or services to the customer).

d. Trade receivable

Trade receivables are amounts due from learners
for services performed 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
recognized 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
amortized cost using the effective interest method,
less loss allowance.

e. Inventories

Inventories are valued at the lower of cost and net
realisable value.

Costs incurred in bringing each product to its
present location and condition are accounted
for as follows:

• Raw materials: cost includes cost of purchase
and other costs incurred in bringing the
inventories to their present location and
condition. Cost is determined on first in,
first out basis.

• Traded goods: cost includes cost of purchase
and other costs incurred in bringing
the inventories to their present location
and condition. Cost is determined on
weighted average basis.

Net realisable value is the estimated selling price
in the ordinary course of business, less estimated
costs of completion and the estimated costs
necessary to make the sale. Provisions are made
for slow-moving and obsolete stock.

f. Taxes

Income tax expense comprises current tax
expense and the net change in the deferred
tax asset or liability during the reporting period.
Current and deferred taxes are recognized in
statement of profit and loss, except when they
relate to items that are recognized in other
comprehensive income or directly in equity, in
which case, the current and deferred tax are also
recognized in other comprehensive income or
directly in equity, respectively.

Current income tax

Current income tax assets and liabilities are
measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax
rates and tax laws used to compute the amount are
those that are enacted or substantively enacted,
at the reporting date in the countries where the
Company operates and generates taxable income.

Management 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 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.

Advance taxes and provisions for current income
taxes are presented in the balance sheet after off¬
setting advance tax paid and income tax provision

Deferred income 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, the carry
forward of unused tax credits and any unused
tax losses. Deferred tax assets are recognised to
the extent that it is probable that taxable profit
will be available against which the deductible
temporary differences, and the carry forward of
unused tax credits and unused tax losses can be
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 liabilities are measured
at the tax rates that are expected to apply in the
period when the asset is realised, or the liability is
settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the
reporting date.

Deferred tax relating to items recognised outside
profit or loss is recognised outside profit or loss
(either in other comprehensive income or in

equity). Deferred tax items are recognised in
correlation to the underlying transaction either
in OCI ("Other comprehensive income") or
directly in equity.

The Company offsets deferred tax assets and
deferred tax liabilities if and only if it has a legally
enforceable right to set off current tax assets and
current tax liabilities and the deferred tax assets and
deferred tax liabilities relate to income taxes levied
by the same taxation authority on either the same
taxable entity which intends either to settle current
tax liabilities and assets on a net basis, or to realise
the assets and settle the liabilities simultaneously,
in each future period in which significant amounts
of deferred tax liabilities or assets are expected to
be settled or recovered.

Goods and service taxes paid on acquisition of
assets or on incurring expenses

Expenses and assets are recognised net of the
amount of good and services taxes paid, except:

• When the tax incurred on a purchase of
assets or services is not recoverable from
the taxation authority, in which case, the
tax paid is recognised as part of the cost
of acquisition of the asset or as part of the
expense item, as applicable;

• When receivables and payables are stated
with the amount of tax included.

g. Property, plant and equipment

Capital work in progress is stated at cost, net of
accumulated impairment loss, if any.

Plant and equipment are stated at cost, net of
accumulated depreciation and accumulated
impairment losses, if any. Property, plant
and equipment is depreciated on a written-
down value basis to its residual value over its
estimated useful life.

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

Subsequent costs are capitalized on the carrying
amount or recognized as a separate asset, as
appropriate, only when future economic benefits

associated with the item are probable to flow
to the Company and cost of the item can be
measured reliably. When significant parts of
property, plant and equipment are required to be
replaced at intervals, the Company depreciates
them separately based on their specific useful
lives. The carrying amount of any component
accounted for as a separate asset is derecognized
when replaced. All repair and maintenance are
charged to statement of profit and loss during the
reporting period in which they are incurred.

Advances paid towards the acquisition of property,
plant and equipment outstanding at each balance
sheet date is classified as capital advances and the
cost of assets not ready to use before such date
are disclosed under ''Capital work in progress''.

The gain or loss arising on the disposal or retirement
of an item of property, plant and equipment is
determined as the difference between the sales
proceeds and the carrying amount of the asset
and is recognized in the statement of profit and
loss on the date of disposal or retirement.

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.

Depreciation is calculated on cost of items of
property, plant and equipment less their estimated
residual values over their estimated useful lives
using the written-down value and is generally
recognized in the statement of profit and loss.
The management has determined the estimated
useful lives of the property, plant and equipment
based on the consideration of useful lives as
prescribed under part C of Schedule II of the Act.
Estimated useful lives of items of property, plant
and equipment for the current and comparative
periods are as follows:

Leasehold improvements are depreciated over
the shorter of their useful life or the lease term,
unless the entity expects to use the assets beyond
the lease term.

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

h. Intangible assets

Separately acquired intangible assets, such as
software are measured initially at cost. Following
initial recognition, intangible assets are carried
at cost less accumulated amortization and
accumulated impairment losses, if any. Costs
associated with maintaining software programs
are recognized as an expense as incurred.

Research and development costs

Development costs that are directly attributable to
the design and testing of identifiable and unique
software products controlled by the Company
are recognized 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 or sale

• 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.

Directly attributable costs that are capitalized as
part of the software include employee costs.

Research expenditure and development
expenditure that do not meet the criteria above
are recognized as an expense as incurred.
Development costs previously recognized as
an expense are not recognized as an asset in a
subsequent period.

Amortization methods and periods

Amortization of intangible assets begins when
development is complete and the asset is available
for use. Software, licenses acquired and internally
generated software are amortized on a straight
line basis over their estimated useful lives which
are as follows:

The amortization period and the amortization
method are reviewed at least at each financial
year end. Changes in the expected useful life or
the expected pattern of consumption of future
economic benefits embodied in the asset are
considered to modify the amortization period or
method, as appropriate, and are treated as changes
in accounting estimates. The amortization expense
on intangible assets is recognized in the statement
of profit and loss unless such expenditure forms
part of carrying value of another asset.

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

Goodwill

Goodwill is not amortized but it is tested for
impairment annually, or more frequently if events
or changes in circumstances indicate that it
might be impaired, and is carried at cost less
accumulated impairment losses. Gains and losses
on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.

Impairment testing of non-financial assets

Goodwill is allocated to cash-generating units
for the purpose of impairment testing. The
allocation is made to those cash-generating units
that are expected to benefit from the business
combination in which the goodwill arose. The
units are identified at the lowest level at which
goodwill is monitored.

Other assets are tested for impairment whenever
events or changes in circumstances indicate that
the carrying amount may not be recoverable. 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 costs 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).

In assessing value in use, the estimated future cash
flows are discounted to their present value using a
pre-tax discount rate that reflects current market
assessments of the time value of money and the
risks specific to the asset. In determining fair value
less costs of disposal, recent market transactions
are taken into account. If no such transactions
can be identified, an appropriate valuation model
is used. These calculations are corroborated
by valuation multiples, quoted share prices for
publicly traded companies or other available fair
value indicators.

An impairment loss is reversed if there has been
a change in the estimates used to determine the
recoverable amount. Such a reversal is made only
to the extent that the asset''s carrying amount
does not exceed the carrying amount that would
have been determined, net of depreciation
or amortization, if no impairment loss had
been recognized.