(2) Material Accounting Policies:
A summary of the material accounting policies applied in
the preparation of the financial statements are as given
below. These accounting policies have been applied
consistently to all the periods presented in the financial
statements.
2.1 Property, plant and equipment
Recognition and Measurement:
Property, plant and equipment (PPE) held for use in the
supply of goods or services, or for administrative purposes,
are stated in the balance sheet at acquisition cost, net of
accumulated depreciation and cumulative impairment
losses, if any.
The initial cost of property, plant and equipment acquired
comprises its purchase price after deducting trade
discounts and rebates, including import duties and non¬
refundable purchase taxes, any directly attributable costs
of bringing the assets to its working condition and location
and present value of any obligatory decommissioning
costs for its intended use. Administrative, Borrowing and
other general overhead expenses that are specifically
attributable to construction or acquisition of PPE or
bringing the PPE to working condition are allocated and
capitalized as a part of cost of PPE, if PPE meets the
criteria of qualifying asset. When significant parts of plant
and equipment are required to be replaced at intervals,
the Company depreciates them separately based on their
specific useful lives.
Capital work in progress and Capital Advances:
Capital work in progress represents Property Plant and
Equipment that are not yet ready for their intended use
as at the Balance sheet date. Capital work in progress is
stated at cost, net of accumulated impairment loss, if any.
Capital advances given towards purchase/ acquisition of
PPE outstanding at each balance sheet date are classified
as capital advances under Other Non-current Assets.
Non-current assets held for sale and Discontinuing
Operation
The Company classifies non-current assets and disposal
Company’s as held for sale if their carrying amounts will
be recovered principally through a sale rather than through
continuing use.
Non-current assets and disposal Companys classified as
held for sale are measured at the lower of their carrying
amount and fair value less costs to sell.
The criteria for held for sale classification is regarded met
only when the assets or disposal Company is available
for immediate sale in its present condition, subject only
to terms that are usual and customary for sales of such
assets (or disposal Companys), its sale is highly probable;
and it will genuinely be sold, not abandoned. The Company
treats sale of the asset or disposal Company to be highly
probable when:
1. The appropriate level of management is committed
to a plan to sell the asset (or disposal Company),
2. An active programme to locate a buyer and complete
the plan has been initiated (if applicable),
3. The asset (or disposal Company) is being actively
marketed for sale at a price that is reasonable in
relation to its current fair value,
4. The sale is expected to qualify for recognition as
a completed sale within one year from the date of
classification, and
5. Actions required to complete the plan indicate that it
is unlikely that significant changes to the plan will be
made or that the plan will be withdrawn.
Assets and liabilities classified as held for sale are
presented separately from other items in the balance
sheet.
Discontinued operations are excluded from the results of
continuing operations and are presented separately as
'profit or loss before tax from discontinued operations,’
tax expense/(income) of discontinued operations,’ and
'profit or loss after tax from discontinued operations,’ in
the statement of profit and loss.
Additional disclosures are provided in Note 39. All other
notes to the financial statements mainly include amounts
for continuing operations, unless otherwise mentioned.
Subsequent Expenditure:
• Subsequent costs are included in the asset’s
carrying amount or recognized as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the cost incurred
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
derecognized when replaced.
• Items such as spare parts, stand by equipment and
servicing equipment’s that meet the definition of
property, plant and equipment are capitalized at cost
and depreciated over their useful life.
• Cost in nature of repair and maintenance expenses
are charged to the statement of profit or loss during
the reporting period in which they are incurred.
Depreciation:
• Depreciation on assets is provided on straight¬
line method at the rates determined based on the
useful lives of respective assets as prescribed under
Schedule II of the Companies Act, 2013 as follows:
• Freehold land is not depreciated.
• The cost of leasehold land is amortized over the
period of the lease or its useful life, whichever is
lower.
• Depreciation method, useful lives and residual values
are reviewed at each financial year-end and adjusted,
if required.
• Depreciation on additions (disposals) during the year
is provided on a pro-rata basis, i.e., from (up to) the
date on which the asset is ready for use (disposed
off).
Derecognition of Assets:
An item of property, plant and equipment is derecognized
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any
gain or loss is recognized in the statement of profit and
loss.
2.2 Intangible Assets:
Intangible assets are stated at acquisition cost net of
accumulated amortization and cumulative impairment, if
any. The Company capitalizes identifiable costs relating to
development of internally generated software and these
are stated net of accumulated amortization. Intangible
assets are amortized on straight line basis over its
estimated useful life.
Estimated economic useful lives of the intangible assets is
3 to 6 years. Intangible assets with finite lives are amortized
over the useful economic life and assessed for impairment
whenever there is an indication that the intangible asset
may be impaired.
The amortization expense on intangible assets with finite
lives is recognized in the statement of profit and loss.
2.3 Leases:
The Company assesses at contract inception whether a
contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identifiable asset
for a period in exchange for consideration.
Company as a lessee
The Company applies a single recognition and
measurement approach for all leases, except for short¬
term leases and leases of low value assets. The Company
recognises lease liabilities to make lease payments and
right-of-use assets representing the right to use the
underlying assets.
(i) Right-of-use Assets (ROU Assets)
The Company recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted
for any re-measurement of lease liabilities. The
cost of right-of-use assets includes the amount
of lease liabilities recognised, initial direct costs
incurred, and lease payments made at or before
the commencement date less any lease incentives
received. Right-of-use assets are depreciated on a
straight-line basis over the shorter of the lease term
and the estimated useful lives of the assets.
The estimated useful life of Right-of-use assets range
from one to seven years.
If ownership of the leased asset transfers to
the Company at the end of the lease term or the
cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated useful
life of the asset.
(ii) Lease Liabilities
At the commencement date of the lease, the Company
recognises lease liabilities measured at the present
value of lease payments to be made over the lease
term. The lease payments include fixed payments
(including in substance fixed payments) less any
lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees.
The lease payments also include the exercise price
of a purchase option reasonably certain to be
exercised by the Company and payments of penalties
for terminating the lease, if the lease term reflects
the Company exercising the option to terminate.
Variable lease payments that do not depend on an
index or a rate are recognised as expenses (unless
they are incurred to produce inventories) in the
period in which the event or condition that triggers
the payment occurs. In calculating the present value
of lease payments, the Company uses its incremental
borrowing rate at the lease commencement date
because the interest rate implicit in the lease is not
readily determinable. After the commencement
date, the amount of lease liabilities is increased
to reflect the accretion of interest and reduced for
the lease payments made. In addition, the carrying
amount of lease liabilities is re-measured if there is a
modification, a change in the lease term, a change in
the lease payments (e.g., changes to future payments
resulting from a change in an index or rate used to
determine such lease payments) or a change in the
assessment of an option to purchase the underlying
asset. Lease liability and ROU assets have been
separately presented in the Balance Sheet and lease
payments have been classified as financing cash
flows.
(iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition
exemption to its short-term leases of properties,
machinery and equipment (i.e. those leases that
have a lease term of 12 months or less from the
commencement date and do not contain a purchase
option). It also applies the lease of low-value assets
recognition exemption to leases of office equipment
that are considered to be low value. Lease payments
on short-term leases and leases of low-value assets
are recognised as expense on a straight-line basis
over the lease term.
Company as Lessor
Leases in which the Company does not transfer
substantially all the risks and rewards incidental
to ownership of an asset is classified as operating
leases. Rental income arising is accounted for on
a straight-line basis over the lease terms. Initial
direct costs incurred in negotiating and arranging
an operating lease are added to the carrying amount
of the leased asset, i.e., asset given on lease, and
recognised over the lease term on the same basis as
rental income. Contingent rents are recognised as
revenue in the period in which they are earned.
2.4 Impairment of non-financial assets:
a. The Company assesses at each reporting date whether
there is any indication that an asset, may be impaired. If
any indication exists, the Company estimates the assets’
recoverable amount. An asset’s recoverable amount is the
higher of an asset or cash generating units (CGU) net selling
price and its value in use. Where the carrying amount of an
asset or CGU exceeds its recoverable amount, the asset
is considered to be impaired and is written down to its
recoverable amount. Impairment losses are recognized in
the Statement of Profit and Loss.
An assessment is made at each reporting date to determine
whether there is an indication that previously recognized
impairment losses no longer exist or have decreased.
If such an indication exists, the Company estimates
the assets or CGU’s recoverable amount. A previously
recognized impairment loss is reversed only if there has
been a change in the assumptions used to determine the
asset’s recoverable amount since the last impairment loss
was recognized. The reversal is limited so that the carrying
amount of the asset does not exceed its recoverable
amount, nor exceed the carrying amount that would have
been determined, net of depreciation, had no impairment
loss been recognized for the asset in prior years. Such a
reversal is recognized in the statement of profit and loss.
b. Assets that are subject to depreciation and amortization
and assets representing investments in subsidiary
and associate companies are reviewed for impairment,
whenever events or changes in circumstances indicate
that carrying amount may not be recoverable. Such
circumstances include, though are not limited to, significant
or sustained decline in revenues or earnings and material
adverse changes in the economic environment.
c. Intangible assets with indefinite useful lives are tested for
impairment annually as at 31 March at the CGU level, as
appropriate, and when circumstances indicate that the
carrying value may be impaired
2.5 Foreign currency Transactions:
a. The financial statements are presented in Indian Rupee
(INR), which is the functional and presentation currency
of the Company.
b. Transactions denominated in foreign currencies are
recorded at the exchange rate prevailing at the date of the
transaction.
c. At each balance sheet date, foreign currency monetary
items for assets and liabilities are translated using the
closing exchange rate.
d. Any exchange difference on account of settlement of
foreign currency transactions and translation of monetary
assets and liabilities denominated in foreign currency is
recognized in the Statement of Profit and Loss.
e. Non-monetary items are not translated at year-end and are
measured at historical cost (translated using the exchange
rates at the transaction date), except for non-monetary
items measured at fair value which are translated using the
exchange rates at the date when fair value was determined.
2.6 Investments in Subsidiaries:
The Company has accounted for its investments in
subsidiaries and at cost less accumulated impairment
2.7 Investment in Associate:
An associate is an entity over which the Company has
significant influence. Significant influence is the power to
participate in the financial and operating policy decisions
of the investee but is not control or joint control over those
policies.
The Company investments in its associate are accounted
for using the equity method. Under the equity method,
the investment in an associate is initially recognized at
cost. The carrying amount of the investment is adjusted
to recognize changes in the Company share of net assets
of the associate since the acquisition date.
The value of investment in associates had been fully
provided in the books of accounts.
2.8 Inventories:
Cost of Inventories have been computed on basis to include
all cost of purchases, cost of conversion and other costs
incurred in bringing the inventories to their present location
and condition. Inventories are valued at lower of cost and
net realizable values.
Net realizable value is the estimated selling price in the
ordinary course of business, less estimated costs of
completion and estimated costs necessary to make the
sale. Cost is assigned to inventory on Fist in First out basis.
2.9 Revenue Recognition:
Revenue towards satisfaction of a performance obligation
is measured at the amount of transaction price (net off
variable consideration) allocated to the performance
obligation. The transaction price of goods sold, and
services rendered is net of variable consideration on
account of various elements like discounts etc. Offered
by the Company as part of the contract. The variable
consideration is estimated based on the expected value
of outflow. The company has generally concluded that it
is the Principal in its revenue arrangement.
a) Freight services:
Revenue has been recognized when control over
the services transfers to the customer i.e., when the
customer has the ability to control the use of the
transferred services provided and generally derive
their remaining benefits. The requirement is that
a contract with enforceable rights and obligations
exists, and, amongst other things, the receipt of
consideration is likely, taking-into-account the
customer’s credit quality. The revenue corresponds
to the transaction price to which the Company is
expected to be entitled
Revenue from these services is recognized over
the period as they are satisfied with the contract
term, which generally represents the transit period
including the incomplete trips at the reporting date.
The transit period can vary based upon the mode of
transport, generally a couple days for over the road,
and air transportation. The service period for these
services is usually for a very short duration, generally
a few days or weeks.
Variable consideration is included in the transaction price
when it is highly probable that a significant reversal in the
amount of revenue recognized will not occur and as soon as
the uncertainty associated with the variable consideration
no longer exists. The Company does not expect to have
contracts where the period between the transfer of the
promised services to the customer and payment by the
customer exceeds one year. Accordingly, the promised
consideration is not adjusted for the time value of money.
b) Sales of Fuel:
Revenue from sale of fuel products is recognized at
the point in time when the control on the goods has
been transferred to the customer.
c) Others:
I. Interest income from a financial asset is
recognised when it is probable that the
economic benefits will flow to the Company and
amount of income can be measured reliably.
II. Rent income is recognised on a straight-line
basis over the period of the lease.
III. Management fee are recognized as and when
the related services are rendered.
2.10. Trade receivables:
A receivable represents the Company’s right to an amount
of consideration that is unconditional (i.e., only the passage
of time is required before payment of the consideration
is due). Trade receivables are separately disclosed in the
financial statements.
2.11. Financial instruments:
A financial instrument is any contract that gives rise to
a financial asset for one entity and a financial liability or
equity instrument for another entity.
(i) Financial assets:
a) Initial recognition and measurement:
On initial recognition, a financial asset is classified
and measured at:
• Amortized Cost; or
• Fair value through Profit or loss (FVTPL)
Financial assets are not reclassified after their initial
recognition, except if and in the period the Company
changes its business model for managing financial
assets. In the case of financial assets, not recorded
at fair value through profit or loss (FVTPL), financial
assets are recognized initially at fair value plus
transaction costs that are directly attributable to the
acquisition of the financial asset.
The Company’s business model for managing
financial assets refers to how it manages its
financial assets to generate cash flow. The business
model determines whether cash flows will result
from collecting contractual cash flows, selling the
financial assets, or both. Financial assets classified
and measured at amortized cost are held within a
business model with the objective of holding financial
assets to collect contractual cash flows.
Purchases or sales of financial assets that require
delivery of assets within a time frame established by
regulation or convention in the marketplace (regular
way trades) are recognized on the trade date, i.e., the
date that the Company commits to purchase or sell
the asset.
• Financial assets at amortized cost:
A financial asset is measured at amortized cost
if it meets both of the following conditions and
is not designated as at FVTPL:
(a) The asset is held within a business model
whose objective is to hold assets to collect
contractual cash flow; and
(b) The contractual terms of the financial
asset give rise on specified dates to cash
flows that are solely payments of principal
and interest (SPPI) on the principal amount
outstanding.
The effective interest rate (EIR) amortization is
included in finance income in the Statement of
Profit and Loss. This category generally applies
to long-term deposits and long-term trade
receivables.
• Financial assets at fair value through profit or
loss (FVTPL):
Financial assets in this category are those that are
held for trading and have been either designated
by management upon initial recognition or are
mandatorily required to be measured at fair value
under Ind AS 109 i.e. they do not meet the criteria
for classification as measured at amortised cost or
FVOCI. Management only designates an instrument
at FVTPL upon initial recognition, if the designation
eliminates, or significantly reduces, the inconsistent
treatment that would otherwise arise from measuring
the assets or liabilities or recognising gains or losses
on them on a different basis. Such designation is
determined on an instrument-by-instrument basis.
For the Company, this category includes mutual fund
investments which the Company had not irrevocably
elected to classify at fair value through OCI.
Financial assets at fair value through profit or loss
are carried in the balance sheet at fair value with net
changes in fair value recognised in the statement of
profit and loss.
Subsequent measurement
For purposes of subsequent measurement:
(ii) Financial Liability:
Financial liabilities are classified and measured at
amortized cost or FVTPL
Initial Recognition & Subsequent measurement:
• Financial liabilities recognized at fair value
through profit or loss (FVTPL):
A financial liability is recognized at FVTPL if it is
classified as held-for-trading, or it is a derivative
or it is designated as such on initial recognition.
Financial liabilities at FVTPL are measured at
fair value and net gains and losses, including
any interest expense, are recognized in the
Statement of Profit and Loss. The Company’s
financial liabilities include trade payables and
other financial liabilities
• Financial liabilities at amortized cost:
Other financial liabilities are subsequently
measured at amortized cost using the effective
interest method. Interest expense and foreign
exchange gains and losses are recognized in the
Statement of Profit and Loss.
Interest bearing loans and borrowings are
subsequently measured at amortized cost
using the EIR method. Gains and losses are
recognized in the Statement of Profit and Loss
when the liabilities are derecognized as well as
through the EIR amortization process. For trade
and other payables maturing within one year
from the balance sheet date,
the carrying amounts approximately have
fair value due to the short maturity of these
instruments.
(iii) Impairment of Financial Assets:
In accordance with Ind AS 109, the Company
applies an expected credit loss (ECL) model for
measurement and recognition of impairment loss on
the financial assets which are not fair valued through
Statement of Profit and Loss. ECLs are based on the
difference between the contractual cash flows due in
accordance with the contract and all the cash flows
that the Company expects to receive, discounted at
an approximation of the original effective interest
rate. Loss allowance for trade receivables with no
significant financing component is measured at an
amount equal to lifetime ECL at each reporting date,
right from its initial recognition. For all other financial
assets, expected credit losses are measured at an
amount equal to the 12-month ECL, unless there has
been a significant increase in credit risk from initial
recognition in which case those are measured at
lifetime ECL.
If, in a subsequent period, the credit quality of the
instrument improves such that there is no longer
a significant increase in credit risk since initial
recognition, then the entity reverts to recognizing
impairment loss allowance based on 12-month ECL.
The Company follows 'simplified approach’ for
recognition of impairment loss allowance on trade
receivables.
The application of a simplified approach does not
require the Company to track changes in credit risk.
Rather, it recognizes impairment loss allowance
based on lifetime Expected credit loss at each
reporting date, right from its initial recognition.
As a practical expedient, the Company uses
historically observed default rates over the expected
life of the trade receivables and is adjusted for
forward-looking estimates to determine impairment
loss allowance on portfolio of its trade receivables.
(iv) Derecognition:
a) Financial Assets:
The Company recognizes financial assets only
• when the contractual rights to the cash
flow from the asset expires, or
• It transfers the rights to receive the
contractual cash flows in a transaction
in which substantially all of the risks and
rewards of ownership of the financial asset
are transferred or in which the Company
neither transfers nor retains substantially
all of the risks and rewards of ownership
and does not retain control of the financial
asset.
b) Financial liabilities:
The Company recognizes a financial liability
when its contractual obligations are discharged
or cancelled or expire. The Company also
recognizes financial liability when its terms are
modified and the cash flow under the modified
terms is substantially different. In this case, a
new financial liability based on the modified
terms is recognized at fair value. The difference
between the carrying amount of financial liability
extinguished and the new financial liability with
modified terms is recognized in the Statement
of Profit and Loss.
(v) Offsetting:
Financial assets and financial liabilities are offset and
the net amount presented in the balance sheet, when
and only when, the Company currently has a legally
enforceable right to set off the amounts and it intends
either to settle them on a net basis or to realize the
assets and settle the liability simultaneously.
2.12. Fair Value measurement:
A number of the Company’s accounting policies and
disclosures require the measurement of fair values, for
financial assets and financial liabilities. The Company
has an established control framework with respect to the
measurement of fair values.
The management has overall responsibility for overseeing
all significant fair value measurements and it regularly
reviews significant unobservable inputs and valuation
adjustments. The Company measures financial assets and
financial liability at fair value at each balance sheet date.
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 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
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- Inputs other than quoted prices included in
Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived
from prices).
• Level 3- Inputs for the asset or liability that are not
based on observable market data (unobservable
inputs).
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.
2.13. Employee benefits:
a) Current employee benefits
Employee benefits payable wholly within twelve
months of availing employee services are classified
as current employee benefits. These benefits
include salaries and wages, bonuses and ex-gratia.
The undiscounted amount of current employee
benefits such as salaries and wages, bonus and ex-
gratia to be paid in exchange of employee services
are recognized in the period in which the employee
renders the related service.
b) Defined contribution plan:
A defined contribution plan is a post-employment
benefit plan under which an entity pays fixed
contributions into a separate entity and will have
no legal or constructive obligation to pay further
amounts. The Company makes specified monthly
contributions of employee provident fund to
Government administered provident fund and
Employee State insurance scheme which is defined
contribution plans. Obligations for contributions
to defined contribution plans are recognized as an
employee benefit expense in the statement of Profit
and Loss in the periods during which the related
services are rendered by employees.
c) Defined benefit plan:
A defined benefit plan is a post-employment benefit
plan other than a defined contribution plan.
The Company’s gratuity benefit scheme is a defined
benefit plan. The Company’s net obligation in respect
of defined benefit plans is calculated by estimating
the amount of future benefit that employees have
earned in the current and prior periods, discounting
that amount and deducting the fair value of any plan
assets. The calculation of defined benefit obligation
is performed annually by a qualified actuary using the
projected unit credit method. When the calculation
results in a potential asset for the Company, the
recognized asset is limited to the present value
of economic benefits available in the form of any
future refunds from the plan or reductions in future
contributions to the plan (the asset ceiling). In order
to calculate the present value of economic benefits,
consideration is given to any minimum funding
requirements. The cost of providing benefits under
the defined benefit plan is determined by using the
projected unit credit method.
Remeasurements of the net defined benefit liability,
which comprise actuarial gains and losses, the
return on plan assets (excluding interest) and the
effect of the asset ceiling (if any, excluding interest),
are recognized in Other comprehensive income
(OCI). The Company determines the net interest
expense (income) on the net defined benefit liability
(asset) for the period by applying the discount rate
used to measure the defined benefit obligation at
the beginning of the annual period to the then-net
defined benefit liability (asset), taking into account
any changes in the net defined benefit liability
(asset) during the period as a result of contributions
and benefit payments. Net interest expenses and
other expenses related to defined benefit plans are
recognized in Statement of Profit and Loss.
When the benefits of a plan are changed or when a
plan is curtailed, the resulting change in benefit that
relates to past service (past service cost’ or 'past
service gain’) or the gain or loss on curtailment is
recognized immediately in Statement of profit and
Loss. The Company recognizes gains and losses on
the settlement of a defined benefit plan when the
settlement occurs.
The contributions are deposited with the Life
Insurance Corporation of India based on information
received by the Company. When the benefits of a plan
are improved, the portion of the increased benefit
related to past service by employees is recognized in
Statement of Profit and Loss on a straight-line basis
over the average period until the benefits become
vested.
d) Compensated absences:
As per policy of the Company, employees can carry
forward unutilized accrued compensated absences
and utilize it in next service period or receive cash
compensation. Since the compensated absences
fall due wholly within twelve months after the end
of the period in which the employees render the
related service and are also expected to be utilized
wholly within twelve months after the end of such
period, the benefit is classified as a current employee
benefit. The Company records an obligation for such
compensated absences in the year in which the
employee renders the services that increase this
entitlement.
The obligation towards the same is measured at
the expected cost of accumulating compensated
absences as the additional amount expected to
be paid as a result of the unused entitlement as at
the year end. The Company’s liability is actuarially
determined (using the Projected Unit Credit method)
at the end of each year. Remesurements as a result
of experience adjustments and changes in actuarial
assumptions are recognized in the Statement of
Profit and Loss.
e) Short-term employee benefit:
Short-term employee benefit obligations are
measured on an undiscounted basis and are
expensed as the related service is provided. A liability
is recognized for the amount expected to be paid,
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 amount of
obligation can be estimated reliably.
2.14. Exceptional items
Exceptional items refer to items of income or expense
within the income statement that are of such size, nature
or incidence that their separate disclosure is considered
necessary to explain the performance for the period.
Material item of income or expense are evaluated on a
case to case basis for disclosure under exceptional items
2.15. Taxes :
a) Income Tax:
The tax expense for the period comprises current and
deferred tax. Tax is recognised in Statement of Profit
and Loss, except to the extent that it relates to items
recognised in the other comprehensive income or in
equity. In which case, the tax is also recognised in
other comprehensive income or equity.
Current tax:
Current tax assets and liabilities are measured at the
amount expected to be recovered from or paid to the
taxation authorities, based on tax rates and laws that
are enacted or substantively enacted at the Balance
sheet date.
Current income tax relating to items recognised
outside the Statement of Profit and Loss is
recognised outside the Statement of Profit and Loss
(either in other comprehensive income or in equity).
Management periodically evaluates positions taken
in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation
and establishes provisions where appropriate.
Deferred tax:
Deferred tax is recognized for temporary differences
between the carrying amounts of assets and liabilities
in financial statements and their corresponding
tax bases. Deferred tax assets are recognized
for deductible temporary differences, unused tax
credits, and tax losses, but only to the extent that it is
probable that taxable profit will be available to offset
them. The carrying amount of deferred tax assets
is reviewed at each reporting date and reduced if it
becomes unlikely that sufficient taxable profit will
be available. Unrecognized deferred tax assets are
reassessed at each reporting date and recognized if
it becomes probable that future taxable profits will
allow their recovery.
Deferred tax related to items recognized outside the
Statement of Profit and Loss is recognized outside
the Statement of Profit and Loss, either in other
comprehensive income or directly in equity.
Deferred tax liabilities and assets are measured using
the tax rates expected to apply when the liability is
settled or the asset is realized, based on tax rates and
laws enacted or substantively enacted by the end of
the reporting period. The carrying amount of deferred
tax liabilities and assets is reviewed at the end of each
reporting period.
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 realize
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.
b) GST/ value added taxes paid on acquisition of
assets or on incurring expenses:
Expenses and assets are recognized net of the
amount of sales/ value added 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 recognized as part of
the cost of acquisition of the asset or as part of the
expense item, as applicable Where receivables and
payables are stated with the amount of tax included.
2.16. Cash and cash equivalents:
In the cash flow statement, cash and cash equivalents
include cash in hand, cheques in hand.
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