Note 2 - Summary of Material
Accounting Policies and Other
Explanatory Information

2.1 These financial statements have been prepared in
accordance with Indian Accounting Standards as
per the Companies (Indian Accounting Standards)
Rules, 2015 as amended and notified under Section
133 of the Companies Act, 2013 (the 'Act') and other
relevant provisions of the Act and it requires the
use of certain critical accounting estimates. It also
requires management to exercise its judgment in
the process of applying the Company's accounting
policies. The areas involving a higher degree of
judgment or complexity, or area where assumptions
and estimates are significant to these financial
statements are disclosed in section 2.20.

These financial statements have been prepared on
a historical cost basis, except for certain financial
assets and liabilities (including investments), defined
benefit plans, plan assets and share-based payments.

All assets and liabilities have been classified as
current and non-current as per the Company's
normal operating cycle and other criteria set out in
the Schedule III of the Act and Ind AS 1, Presentation
of Financial Statements.

The material accounting policies that are used in
the preparation of these financial statements are
summarised below. These accounting policies are
consistently used throughout the years presented in
the financial statements.

These financial statements are presented in Indian
Rupees ('INR'), which is also the Company's functional
currency. Amounts in figures presented have been
rounded to INR million unless otherwise stated.

2.2 Fair value measurement

Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement
is based on the presumption that the transaction
to sell the asset or transfer the liability takes place
either in the principal market for the asset or liability,
or in the absence of a principal market, in the most
advantageous market for the asset or liability. The
principal or the most advantageous market must be
accessible to the Company.

The fair value of an asset or a liability is measured
using the assumptions that market participants
would use when pricing the asset or liability, assuming
that market participants act in their economic best
interest. 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,
maximising the use of relevant observable inputs and
minimising the use of unobservable inputs. All assets
and liabilities for which fair value is measured or
disclosed in the financial statements are 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) market prices in
active markets for identical assets or liabilities

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

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

For assets and liabilities that are recognised in
the financial statements on a recurring basis, the
Company determines whether transfers have
occurred between levels in the hierarchy by
re-assessing categorisation (based on the lowest level
input that is significant to the fair value measurement
as a whole) at the end of each reporting year.

2.3 Foreign currency transactions

Foreign currency transactions are recorded at
the exchange rates prevailing at the date of such
transactions. Monetary assets and liabilities as at
the balance sheet date are translated at the rates of
exchange prevailing at the date of the balance sheet.
Gain/loss arising on account of differences in foreign
exchange rates on settlement/translation of monetary
assets and liabilities are recognised in the statement
of profit and loss, unless they are considered as an
adjustment to borrowing costs, in which case they are
classified along with the borrowing cost, if any.

2.4 Revenue recognition

The Company applies principles provided under Ind
AS 115 'Revenue from contracts with customers'
which provides a single, principles-based approach
to the recognition of revenue from all contracts
with customers. It focuses on the identification of
performance obligations in a contract and requires
revenue to be recognised as and when those
performance obligations are satisfied.

Company receives revenue for supply of goods to
external customers against orders received. The
majority of contracts that Company enters into
relate to sales orders containing single performance
obligations for the delivery of Active pharmaceutical
products. The average duration of a sales order is less
than 12 months.

Revenue (other than sale)

Revenue (other than sale) is recognised to the extent
that it is probable that the economic benefits will
flow to the Company and the revenue can be reliably
measured.

Export benefits

Income in respect of entitlement towards export
incentives is recognised in accordance with the
relevant scheme on recognition of the related export
sales. Such export incentives are recorded as part of
other operating revenue.

Revenue from Sale of Products

Revenue from sale of products is recognised when
the Company satisfies a performance obligation
upon transfer of control of products to customers
at the time of shipment to or receipt of goods by
the customers as per the terms of the underlying
contracts. Invoices are issued as per the general
business terms and are payable in accordance with
the contractually agreed credit year.

Revenues are measured based on the transaction
price allocated to the performance obligation,
which is the consideration (including variable
consideration), net of taxes or duties collected on
behalf of the government and applicable discounts
and allowances. A receivable is recognised by the
Company when control of the goods and services is
transferred and the Company's right to an amount of
consideration under the contract with the customer is
unconditional, as only the passage of time is required.
The Company has opted practical expedient and
there are no significant financing component to be
considered while determining the transactions price.

2.5 Property, plant and equipment
Recognition and measurement

Items of property, plant and equipment are
measured at cost less accumulated depreciation and
accumulated impairment losses, if any. Cost includes
expenditure that are directly attributable to the
acquisition of the asset. The cost of self-constructed
assets includes the cost of materials and other
costs directly attributable to bringing the asset to a
working condition for its intended use.

When parts of an item of property, plant and
equipment have significant cost in relation to total
cost and different useful lives, they are accounted for
as separate items (major components) of property,
plant and equipment.

Profits and losses upon disposal of an item of property,
plant and equipment are determined by comparing
the proceeds from disposal with the carrying amount
of property, plant and equipment and are recognised
within “other income/expense in the statement of
profit and loss.

The cost of replacing part of an item of property, plant
and equipment is recognised in the carrying amount
of the item if it is probable that the future economic
benefits embodied within the part will flow to the
Company, its cost can be measured reliably and it has
a useful life of atleast twelve months. The costs of
other repairs and maintenance are recognised in the
statement of profit and loss as incurred.

Depreciation

Depreciation is recognised in the statement of profit
and loss on a straight-line basis over the estimated
useful lives of property, plant and equipment. Leased
assets are depreciated over the shorter of the lease

term or their useful lives, unless it is reasonably
certain that the Company will obtain ownership by
the end of the lease term.

The below given useful lives best represent the useful
lives of these assets based on internal assessment
and supported by technical advice where necessary
which is different from the useful lives as prescribed
under Part C of Schedule II of the Companies Act,
2013.

The estimated useful lives are as follows:

Factory and other buildings 26 - 61 years

Plant and machinery 1 - 21 years

Furniture, fixtures and office 1 - 10 years

equipment

Vehicles 1- 8 years

Leasehold land is amortised over the year of
respective leases.

Depreciation methods, useful lives and residual
values are reviewed at each reporting date.

2.6 Borrowing costs

Borrowing costs primarily comprise interest on the
Company's borrowings. Borrowing costs directly
attributable to the acquisition, construction or
production of a qualifying asset are capitalised
during the year that is necessary to complete and
prepare the asset for its intended use or sale. Other
borrowing costs are expensed in the year in which
they are incurred and reported under 'finance costs'.
Borrowing costs are recognised using the effective
interest rate method.

2.7 Intangible assets
Research and development

Expenses on research activities undertaken with
the prospect of gaining new scientific or technical
knowledge and understanding are recognised in the
statement of profit and loss as incurred.

Development activities involve a plan or design for
the production of new or substantially improved
products and processes. Development expenditure is
capitalised only if development costs can be measured
reliably, the product or process is technically and
commercially feasible, future economic benefits are
probable, the assets are controlled by the Company
and the Company intends to and has sufficient
resources to complete development and to use or sell
the asset. The expenditure capitalised includes the
cost of materials and other costs directly attributable
to preparing the asset for its intended use. Other
development expenditure is recognised in the
statement of profit and loss as incurred.

The Company's internal drug development
expenditure is capitalised only if they meet the
recognition criteria as mentioned above. Where
uncertainties exist that the said criteria may not be
met, the expenditure is recognised in the statement
of profit and loss as incurred. Where the recognition
criteria are met, intangible assets are recognised.
Based on the management estimate of the useful lives,
indefinite useful life assets are tested for impairment
and assets with limited life amortised on a straight¬
line basis over their useful economic lives from when
the asset is available for use. During the years prior
to their launch (including years when such products
have been out-licensed to other companies), these
assets are tested for impairment on an annual basis,
as their economic useful life is indeterminable till
then.

De-recognition of intangible assets

Intangible assets are de-recognised either on their
disposal or where no future economic benefits are
expected from their use or disposal. Losses arising on
such de-recognition are recorded in the statement of
profit and loss, and are measured as the difference
between the net disposal proceeds, if any, and the
carrying amount of respective intangible assets as on
the date of de-recognition.

Intangible assets relating to products under
development, other intangible assets not available
for use and intangible assets having indefinite
useful life are subject to impairment testing at
each reporting date. All other intangible assets are
tested for impairment when there are indications
that the carrying value may not be recoverable. Any
impairment losses are recognised immediately in the
statement of profit and loss.

Other intangible assets

Other intangible assets that are acquired by
the Company, which have finite useful lives, are
measured at cost less accumulated amortisation and
accumulated impairment losses, if any.

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

Software for internal use, which is primarily
acquired from third-party vendors, including
consultancy charges for implementing the software,
are capitalised. Subsequent costs are charged to
the statement of profit and loss as incurred. The
capitalised costs are amortised over the estimated
useful life of the software.

Amortisation

Amortisation of intangible assets, intangible assets
not available for use and intangible assets having
indeterminable life, is recognised in the statement

of profit and loss on a straight-line basis over the
estimated useful lives from the date that they are
available for use.

The estimated useful lives of intangible assets are
1 - 10 years.

2.8 Impairment Testing of property, plant and
equipment, and intangible assets

The carrying amounts of the Company's non-financial
assets, other than inventories and deferred tax assets
are reviewed at each reporting date to determine
whether there is any indication of impairment. If any
such indication exists, then the asset's recoverable
amount is estimated. Intangible assets that have
indefinite lives or that are not yet available for use
are tested for impairment annually; their recoverable
amount is estimated annually each year at the
reporting date.

For the purpose of impairment testing, assets are
grouped together into the smallest group of assets
that generate cash inflows from continuing use
that are largely independent of the cash inflows of
other assets or groups of assets (“cash-generating
unit”). The recoverable amount of an asset or cash¬
generating unit is the greater of its value in use or
its fair value less costs to sell. 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.
Intangibles with indefinite useful lives are tested for
impairment individually.

An impairment loss is recognised if the carrying
amount of an asset or its cash-generating unit exceeds
its estimated recoverable amount. Impairment losses
are recognised in the statement of profit and loss.

Impairment losses recognised in prior years are
assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An
impairment loss is reversed if there has been a change
in the estimates used to determine the recoverable
amount. An impairment loss is reversed 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 amortisation, if no
impairment loss had been recognised.

2.9 Investments and financial assets
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 the entity's business
model for managing the financial assets and the
contractual terms of the cash flows.

For assets measured at fair value, gains and losses
will either be recorded in the statement of profit and
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.

Measurement

At initial recognition, the Company measures a
financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss,
transaction costs that are directly attributable to
the acquisition of the financial asset. However, trade
receivables that do not contain a significant financing
component are measured at the Transaction Price.

Financial assets with embedded derivatives are
considered in their entirety when determining
whether their cash flows are solely payment of
principal and interest.

Measurement of debt instruments

Subsequent measurement of debt instruments
depends on the Company's business model for
managing the asset and the cash flow characteristics
of the asset. There are three measurement
categories into which the Company classifies its debt
instruments:

• 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. A gain or loss on a debt investment that is
subsequently measured at amortised cost and is
not part of a hedging relationship is recognised
in profit or loss when the asset is derecognised
or impaired. Interest income from these financial
assets is included in other income using the
effective interest rate method.

• 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
flows 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 income and foreign exchange
gains and losses which are recognised in the
statement of profit and loss. When the financial
asset is derecognised, the cumulative gain or loss
previously recognised in OCI is reclassified from
equity to the statement of profit and loss and
recognised in other income/expenses. Interest
income from these financial assets is included
in other income using the effective interest rate
method.

• Fair value through profit or loss (FVTPL):

Assets that do not meet the criteria for
amortised 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 recognised in the
statement of profit and loss and presented net
in the statement of profit and loss within other
income/expenses in the year in which it arises.
Interest income from these financial assets is
included in other income.

Measurement of equity instruments

The Company subsequently measures all equity
investments at fair value other than those elected
to be at cost under Ind AS 27. Where the Company's
management has elected to present fair value
gains and losses on equity investments in other
comprehensive income, there is no subsequent
reclassification of fair value gains and losses to
profit or loss. Dividends from such investments are
recognised in the statement of profit and loss as
other income when the Company's right to receive
payments is established.

Changes in the fair value of financial assets at fair
value through profit or loss are recognised in other
income/ expenses in the statement of profit and
loss. Impairment losses (and reversal of impairment
losses) on equity investments measured at FVOCI
are not reported separately from other changes in
fair value.

Impairment of financial assets

Company assesses on a forward looking basis
the expected credit losses associated with its
assets carried at amortised cost and FVOCI debt
instruments. The impairment methodology applied
depends on whether there has been a significant
increase in credit risk. Note 31 details how the
Company determines whether there has been a
significant increase in credit risk.

For trade receivables only, the Company applies the
simplified approach permitted by Ind AS 109 Financial
Instruments, which requires expected lifetime losses

to be recognised from initial recognition of the
receivables.

De-recognition of financial assets

A financial asset is derecognised 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 derecognised. Where the entity has not
transferred substantially all risks and rewards
of ownership of the financial asset, the financial
asset is not derecognised.

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 derecognised, 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 recognised to the extent of
continuing involvement in the financial asset.

Interest income from financial assets

Interest income from debt instruments is recognised
using the effective interest rate 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. When calculating the effective
interest rate, the Company estimates the expected
cash flows by considering all the contractual terms
of the financial instrument (for example, prepayment,
extension, call and similar options) but does not
consider the expected credit losses.

2.10 Financial liabilities

Non derivative financial liabilities include trade and
other payables.

Borrowings and other financial liabilities are initially
recognised at fair value (net of transaction costs
incurred). Difference between the fair value and
the transaction proceeds on initial recognition
is recognised as an asset / liability based on the
underlying reason for the difference.

Subsequently all financial liabilities are measured
at amortised cost using the effective interest rate
method. Borrowings are derecognised from the
balance sheet when the obligation specified in the
contract is discharged, cancelled or expired. The
difference between the carrying amount of a financial

liability that has been extinguished or transferred to
another party and the consideration paid, including
any non-cash assets transferred or liabilities
assumed, is recognised in the statement of profit and
loss. The gain / loss is recognised in other equity in
case of transaction with shareholders.

Borrowings are classified as current liabilities unless
the Company has an unconditional right to defer
settlement of the liability for at least 12 months
after the reporting year. Where there is a breach of
a material provision of a long-term loan arrangement
on or before the end of the reporting year with the
effect that the liability becomes payable on demand
on the reporting date, the entity does not classify
the liability as current, if the lender agreed, after the
reporting year and before the approval of the financial
statements for issue, not to demand payment as a
consequence of the breach.

Trade payables are recognised initially at their
transaction values which also approximate their fair
values and subsequently measured at amortised cost
less settlement payments.

2.11 Inventories

Inventories of finished goods, stock in trade, work in
process, consumable stores and spares, raw material,
packing material are valued at cost or net realisable
value, whichever is lower. Cost of inventories is
determined on a weighted moving average basis. Cost
of work-in-process and finished goods include the
cost of materials consumed, labour, manufacturing
overheads and other related costs incurred in
bringing the inventories to their present location and
condition.

Net realisable value is the estimated selling price in
the ordinary course of business, less the estimated
costs of completion and selling expenses.

The factors that the Company considers in
determining the allowance for slow moving, obsolete
and other non-saleable inventory includes estimated
shelf life, planned product discontinuances, price
changes, ageing of inventory and introduction of
competitive new products, to the extent each of
these factors impact the Company's business and
markets. The Company considers all these factors
and adjusts the inventory provision to reflect its
actual experience on a yearly basis.

2.12 Accounting for income taxes

Income tax expense consists of current and deferred
tax. Income tax expense is recognised in the
statement of profit and loss except to the extent that
it relates to items recognised in other comprehensive
income, in which case it is recognised in other
comprehensive income. Current tax is the expected
tax payable on the taxable income for the year, using

tax rates enacted at the reporting date, and any
adjustment to tax payable in respect of previous
years.

Deferred tax is recognised for temporary differences
between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts
used for taxation purposes.

Deferred tax is not recognised for the temporary
differences arising due to initial recognition of assets
or liabilities in a transaction that is not a business
combination and that affects neither accounting nor
taxable profit.

Deferred tax is measured at the tax rates that are
expected to be applied to the temporary differences
when they reverse, based on the laws that have been
enacted or substantively enacted by the reporting
date.

A deferred tax asset is recognised to the extent
that it is probable that future taxable profits will be
available against which the temporary difference can
be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is
no longer probable that the related tax benefit will be
realised.

Deferred tax assets and liabilities are offset if there
is a legally enforceable right to offset current tax
liabilities and assets, and they relate to income taxes
levied by the same tax authority.

2.13 Leases

The Company recognises a right-of-use asset and a
lease liability at the lease commencement date. The
right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability
adjusted for any lease payments made at or before
the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle
and remove the underlying asset or to restore the
underlying asset or the site on which it is located, less
any lease incentives received.

The right-of-use asset is subsequently depreciated
using the straight-line method from the
commencement date to the earlier of the end of the
useful life of the right-of-use asset or the end of the
lease term. The estimated useful lives of right-of-use
assets are determined on the same basis as those of
property and equipment. In addition, the right-of-use
asset is periodically reduced by impairment losses, if
any, and adjusted for certain re-measurements of the
lease liability.

The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted using the interest
rate implicit in the lease or, if that rate cannot
be readily determined, company's incremental

borrowing rate. Generally, the Company uses its
incremental borrowing rate as the discount rate.

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

- Fixed payments, including in-substance fixed
payments;

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

- Amounts expected to be payable under a
residual value guarantee; and

- The exercise price under a purchase option that
the Company is reasonably certain to exercise,
lease payments in an optional renewal year if
the Company is reasonably certain to exercise
an extension option, and penalties for early
termination of a lease unless the Company is
reasonably certain not to terminate early.

The lease liability is measured at amortised cost using
the effective interest method. It is remeasured when
there is a change in future lease payments arising
from a change in an index or rate, if there is a change
in the company's estimate of the amount expected
to be payable under a residual value guarantee, or if
company changes its assessment of whether it will
exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in
profit or loss if the carrying amount of the right-of-
use asset has been reduced to zero.

Short-term leases and leases of low-value assets

The Company has elected not to recognise right-of-
use assets and lease liabilities for short-term leases
that have a lease term of 12 months. The Company
recognises the lease payments associated with these
leases as an expense on a straight-line basis over the
lease term.

2.14 Equity

Share capital is determined using the nominal value
of shares that are issued. Incremental costs directly
attributable to the issue of ordinary shares are
recognised as a deduction from equity, net of any tax
effects.

Securities premium includes any premium received
on the issue of share capital. Any transaction costs
associated with the issue of shares is deducted from
Securities premium, net of any related income tax
benefits.

Retained earnings include all current and prior year
results, as disclosed in the statement of profit and
loss.

2.15 Employee benefits
Short-term benefits

Short-term benefit obligations are measured on an
undiscounted basis and are expensed as the related
service is provided. A liability is recognised for the
amount expected to be paid under short-term cash
bonus or profit-sharing plans if the Company has
a present legal or constructive obligation to pay
this amount as a result of past service provided by
the employee and the obligation can be estimated
reliably.

Defined contribution plans

A defined contribution plan is a post-employment
benefit plan under which the Company pays fixed
contributions into a separate entity and will have
no legal or constructive obligation to pay further
amounts. Obligations for contributions to recognised
provident funds, approved superannuation schemes
and other social securities, which are defined
contribution plans, are recognised as an employee
benefit expense in the statement of profit and loss as
incurred.

Defined benefit plans

A defined benefit plan is a post-employment benefit
plan other than a defined contribution plan. The
Company's net obligation in respect of an approved
gratuity plan, which is a defined benefit plan, and
certain other defined benefit plans is calculated
separately for each material plan by estimating
the ultimate cost to the entity of the benefit that
employees have earned in return for their service in
the current and prior years. This requires an entity
to determine how much benefit is attributable to
the current and prior years and to make estimates
(actuarial assumptions) about demographic variables
and financial variables that will affect the cost of the
benefit. The cost of providing benefits under the
defined benefit plan is determined using actuarial
valuation performed annually by a qualified actuary
using the projected unit credit method.

The benefit is discounted to determine the present
value of the defined benefit obligation and the
current service cost. The discount rate is the yield
at the reporting date on risk free government bonds
that have maturity dates approximating the terms of
the Company's obligations and that are denominated
in the same currency in which the benefits are
expected to be paid.

The fair value of any plan assets is deducted from
the present value of the defined benefit obligation
to determine the amount of deficit or surplus. The
net defined benefit liability/ (asset) is determined as
the amount of the deficit or surplus, adjusted for any
effect of limiting a net defined benefit asset to the
asset ceiling. The net defined benefit liability/(asset)
is recognised in the balance sheet.

Defined benefit costs are recognised as follows:

• Service cost in the statement of profit and loss

• Net interest on the net defined benefit liability
(asset) in the statement of profit and loss

• Remeasurement of the net defined benefit
liability/ (asset) in other comprehensive income

Service costs comprise of current service cost, past
service cost, as well as gains and losses on curtailment
and settlements. The benefit attributable to current
and past years of service is determined using the
plan's benefit formula. However, if an employee's
service in later years will lead to a materially higher
level of benefit than in earlier years, the benefit is
attributed on a straight-line basis. Past service cost
is recognised in the statement of profit and loss in
the year of plan amendment. A gain or loss on the
settlement of a defined benefit plan is recognised
when the settlement occurs.

Net interest is calculated by applying the discount
rate at the beginning of the year to the net defined
benefit liability (asset) at the beginning of the year,
taking account of any changes in the net defined
benefit liability/(asset) during the year as a result of
contribution and benefit payments.

Remeasurement comprises of actuarial gains and
losses, the return on plan assets (excluding interest),
and the effect of changes to the asset ceiling (if
applicable). Remeasurement recognised in other
comprehensive income is not reclassified to the
statement of profit and loss.

Compensated leave of absence

Eligible employees are entitled to accumulate
compensated absences up to prescribed limits in
accordance with the Company's policy and receive
cash in lieu thereof. The Company measures the
expected cost of accumulating compensated
absences as the additional amount that the Company
expects to pay as a result of the unused entitlement
that has accumulated at the date of the balance sheet.
Such measurement is based on actuarial valuation
as at the date of the balance sheet carried out by a
qualified actuary.

Termination benefits

Termination benefits are recognised as an expense
when the Company is demonstrably committed,
without realistic possibility of withdrawal, to a formal
detailed plan to either terminate employment before
the normal retirement date, or to provide termination
benefits as a result of an offer made to encourage
voluntary redundancy. Termination benefits for
voluntary redundancies are recognised as an expense
if the Company has made an offer encouraging
voluntary redundancy, it is probable that the offer

will be accepted, and the number of acceptances can
be estimated reliably.