Note 2: MATERIAL ACCOUNTING POLICIES
(a) Foreign currency transactions
Transactions in currencies other than company's
functional currency i.e. Indian Rupee are recognised
at the exchange rate prevailing at the dates of
the transactions.
Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency
at the exchange rate prevailing at the reporting date.
Non-monetary assets and liabilities that are measured
at fair value in a foreign currency are translated into
the functional currency at the exchange rate when
the fair value was determined. Non-monetary assets
and liabilities that are measured based on historical
cost in a foreign currency are not translated.
Exchange differences are recognised in profit or loss
not retranslated, except exchange differences arising
from the translation of the equity investments which
are recognised at fair value through OCI (FVOCI) are
recognised in other comprehensive income.
(b) Financial Instruments
Financial assets and financial liabilities are recognized
when the Company becomes a party to the contractual
provisions of the instruments. Financial assets and
financial liabilities are initially measured at fair value.
Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added
to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to
the acquisition of financial assets or financial liabilities
at fair value through profit or loss are recognised
immediately in profit or loss.
(i) Financial Assets
All recognised financial assets are subsequently
measured in their entirety at either amortised cost
or fair value, depending on the classification of
the financial assets.
Classification of financial assets
Debt instruments that meet the following
conditions are subsequently measured at
amortised cost (except for debt instruments that
are designated as at fair value through profit or
loss on initial recognition):
• The asset is held within a business model
whose objective is to hold assets in order to
collect contractual cash flows; and
• the contractual terms of the instrument give
rise on specified dates to cash flows that are
solely payments of principal and interest on
the principal amount outstanding.
Investment in equity instruments of subsidiary,
associates and joint ventures are measured at
cost less impairment. All other financial assets
are subsequently measured at fair value.
Effective interest method
The effective interest method is a method
of calculating the amortised cost of a debt
instrument and of allocating interest income
over the relevant period. The effective interest
rate is the rate that exactly discounts estimated
future cash receipts (including all fees and points
paid or received that form an integral part of the
effective interest rate, transaction costs and other
premiums or discounts) through the expected
life of the debt instrument, or, where appropriate,
a shorter period, to the net carrying amount on
initial recognition.
I ncome is recognised on an effective interest basis
for debt instruments other than those financial
assets classified as at FVTPL. Interest income is
recognised in profit or loss and is included in the
“Other income” line item.
Financial assets at fair value through profit or
loss (FVTPL)
Financial assets at FVTPL are measured at fair
value at the end of each reporting period, with
any gains or losses arising on re-measurement
recognised in profit or loss. The net gain or loss
recognised in profit or loss incorporates any
dividend or interest earned on the financial asset
and is included in the ‘Other income' line item.
Investments in equity instruments at fair
value through other comprehensive income
(FVTOCI)
On initial recognition, the Company can make
an irrevocable election (on an instrument-by¬
instrument basis) to present the subsequent
changes in fair value in other comprehensive
income. This election is not permitted if the equity
investment is held for trading. These elected
investments are initially measured at fair value
plus transaction costs. Subsequently, they are
measured at fair value with gains and losses
arising from changes in fair value recognised in
other comprehensive income and accumulated in
the reserve for ‘equity instruments through other
comprehensive income.
(ii) Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by a Company
are classified as either financial liabilities or as
equity in accordance with the substance of the
contractual arrangements and the definitions of a
financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences
a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments
issued by the Company are recognised at the
proceeds received, net of direct issue costs.
Financial liabilities
All financial liabilities are subsequently measured
at amortised cost using the effective interest
method or at FVTPL.
Financial liabilities that are not held-for-trading
and are not designated as at FVTPL are measured
at amortised cost at the end of subsequent
accounting periods. The carrying amounts of
financial liabilities that are subsequently measured
at amortised cost are determined based on the
effective interest method. Interest expense that
is not capitalised as part of costs of an asset is
included in the ‘Finance costs' line item.
(c) Derecognition
Financial Assets
The Company derecognises a financial asset when the
contractual rights to the cash flows from the financial
asset expire, 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.
If the Company enters into transactions whereby it
transfers assets recognised on its balance sheet,
but retains either all or substantially all of the risks
and rewards of the transferred assets, the transferred
assets are not derecognised.
Financial Liabilities
The Company derecognises a financial liability
when its contractual obligations are discharged or
cancelled, or expire.
The Company also derecognises a financial liability
when its terms are modified and the cash flows under
the modified terms are substantially different. In this
case, a new financial liability based on the modified
terms is recognised at fair value. The difference
between the carrying amount of the financial liability
extinguished and the new financial liability with
modified terms is recognised in profit or loss.
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 realise the
asset and settle the liability simultaneously.
(d) Impairment
(i) Impairment of financial instruments
The Company recognises loss allowances
for expected credit loss on financial assets
measured at amortised cost, trade receivables,
other contractual rights to receive cash or other
financial assets and financial guarantee not
designated as FVTPL.
The Company measures loss allowances at an
amount equal to lifetime expected credit losses,
except for the following, which are measured as
12 month expected credit losses :
• bank balances for which credit risk (i.e.
the risk of default occurring over the
expected life of the financial instrument)
has not increased significantly since
initial recognition.
• Loss allowances for trade receivables
are always measured at an amount
equal to lifetime expected credit losses.
Lifetime expected credit losses are the
expected credit losses that result from
all possible default events over the
expected life of a financial instrument.
The Company follows ‘simplified approach'
for recognition of impairment loss allowance
for trade receivables. The application of
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.
12-month expected credit losses are the portion
of expected credit losses that result from default
events that are possible within 12 months after the
reporting date (or a shorter period if the expected
life of the instrument is less than 12 months).
In all cases, the maximum period considered
when estimating expected credit losses is the
maximum contractual period over which the
Company is exposed to credit risk.
When determining whether the credit risk of a
financial asset has increased significantly since
initial recognition and when estimating expected
credit losses, the Company considers reasonable
and supportable information that is relevant and
available without undue cost or effort. This includes
both quantitative and qualitative information and
analysis, based on the Company's historical
experience and informed credit assessment and
including forward- looking information.
(ii) Impairment of non-financial assets
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.
For impairment testing, assets that do not
generate independent cash inflows are grouped
together into cash-generating units (CGUs).
Each CGU represents the smallest group of
assets that generates cash inflows that are
largely independent of the cash inflows of other
assets or CGUs.
The recoverable amount of a CGU (or an individual
asset) is the higher of its value in use and its fair
value less costs to sell. Value in use is based on
the estimated future cash flows, 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
CGU (or the asset).
The Company's corporate assets do not
generate independent cash inflows. To determine
impairment of a corporate asset, recoverable
amount is determined for the CGUs to which the
corporate asset belongs.
An impairment loss is recognised if the carrying
amount of an asset or CGU exceeds its estimated
recoverable amount. Impairment losses are
recognised in the statement of profit and loss.
Impairment loss recognised in respect of a CGU
is allocated the CGU, and then to reduce the
carrying amounts of the other assets of the CGU
(or group of CGUs) on a pro rata basis.
An impairment loss in respect of assets other
than goodwill for which impairment loss has
been recognised in prior periods, the Company
reviews at each reporting date whether there is
any indication 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. 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 amortisation, if no impairment
loss had been recognised.
(e) Cash and cash equivalents
For the purpose of presentation in the statement of
cash flow , cash and cash equivalents including cash
on hand , deposits held at call with financial institutions,
other short term, highly liquid investments with original
maturities of three months or less that are readily
convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
Bank overdrafts are shown within borrowings in current
liabilities in the balance sheet and are not considered
as integral part of Company's cash management.
(f) Inventories
I nventories are measured at the lower of cost or net
realisable value. The cost of inventories is based
on the weighted average method, and includes
expenditure incurred in acquiring the inventories and
other costs incurred in bringing them 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 Net realisable value of work-in-progress is
determined with reference to the selling prices of
related finished products.
Raw Materials and other supplies held for use in the
production of finished products are not written down
below cost except in cases where material prices have
declined and it is estimated that the cost of the finished
products will exceed their net realisable value.
(g) Property plant and equipment
Freehold land is carried at historical cost. All other
items of property ,plant and equipment are stated
at historical cost less depreciation. Historical cost
includes expenditure that is directly attributable to the
acquisition of the items.
Property, plant and equipment acquired in a business
combination are recognised at fair value at the
acquisition date.
Subsequent expenditure is capitalised only if it is
probable that the future economic benefits associated
with the expenditure will flow to the Company.
Property, plant and equipment derecognised when it is
• no longer expected to generate future economic
benefit or
• when it is disposed of
Depreciation methods, estimated useful lives and
residual value
Depreciation has been provided on the straight-line
method as per the useful life prescribed in Schedule
II to the Companies Act, 2013 except in respect of the
following categories of property, plant and equipment
where the useful life is considered differently based
on technical evaluation. Management belive that such
estimated useful lives are realistic and reflect fair
approximation of the period over which the assets are
likely to be used.
(h) Goodwill and other Intangible assets
Intangible assets are initially measured at cost.
Such intangible assets are subsequently measured
at cost less accumulated amortisation and any
accumulated impairment losses.
An intangible asset arising from development (or
from the development phase of an internal project)
is recognised if, and only if, all of the following have
been demonstrated:
(i) the technical feasibility of completing the
intangible asset so that it will be available for use;
(ii) the intention to complete the
intangible asset and use;
(iii) the ability to use the intangible asset;
(iv) how the intangible asset will generate probable
future economic benefits;
(v) the availability of adequate technical, financial
and other resources to complete the development
and to use the intangible asset; and
(vi) the ability to measure reliably the expenditure
attributable to the intangible asset during
its development.
The amount initially recognised for intangible assets
is the sum of the expenditure incurred from the date
when the intangible asset first meets the recognition
criteria listed above. Where no intangible asset can be
recognised, development expenditure is recognised
in profit or loss in the period in which it is incurred.
Amortisation
I ntangible assets acquired in a business combination
are recognised at fair value at the acquisition date.
Subsequently, intangible assets are carried at cost
less any accumulated amortisation and accumulated
impairment losses, if any.
The useful lives of intangible assets are assessed
as finite or indefinite. Finite-life intangible asset are
amortised on a Straight line basis over the period of
their estimated useful lives. Estimated useful lives by
major class of finite life Intangible assets are as follow:
Amortisation method, useful lives and residual values
are reviewed at the end of each financial year and
adjusted if appropriate.
Indefinite - life intangible assets comprises of
brandname/trademarks for which there is no
foreseeable Limit to the period over which they are
expected to generate net cash inflows. These are
considered to have an indefinite life, given the strength
and durability of the brands and the level of
marketing support.
For Indefinite life intangible assets, the assessment
of indefinite life is reviewed annually to determine
whether it continues, if not, it is impaired or changed
prospectively basis revised estimates.
Goodwill is initially recognised based on the
accounting policy for Business combination and is
tested for impairment annually.
i) Employee Benefits
(i) Short Term employee benefits
Short-term employee 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 e.g., under short-term cash bonus, 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.
(ii) Defined Contribution Plans
Defined contribution plans are employee state
insurance scheme and Government administered
pension / provident fund scheme for all applicable
employees and superannuation scheme for
eligible employees. The Company's contribution
to defined contribution plans are recognised in
the Statement of Profit and Loss in the financial
year to which they relate.
The Company makes specified monthly
contributions towards Employee Provident Fund
scheme to a separate trust administered by the
Company. The minimum interest payable by
the trust to the beneficiaries is being notified by
the Government every year. The Company has
an obligation to make good the shortfall, if any,
between the return on investments of the trust
and the notified interest rate.
(iii) Defined Benefit Plans
Gratuity Scheme
The Company operates a defined benefit gratuity
plan for employees. The Company contributes to
a separate trust administered by the Company
towards meeting the Gratuity obligation.
The Company's liability is determined on the basis
of an actuarial valuation. Remeasurements of the
net defined benefit liability as per the actuarial
valuation report , which comprise actuarial gains
and losses are recognised in OCI.
Other long term employee benefits
Entitlements to annual leave are recognised
when they accrue to employees. The Company
determines the liability for such accumulated
leaves using the Projected Accrued Benefit
method with actuarial valuations being carried
out at each Balance Sheet date.
(iv) Employee stock option scheme policy
Employees of the Company receive remuneration
in the form of share-based payments, whereby
employees render services in exchange for
equity instruments (equity-settled transactions).
Equity-settled transactions
The cost of equity-settled transactions is determined
by the fair value at the date when the grant is made
using an appropriate valuation model.
That cost is recognised in employee benefits expense,
together with a corresponding increase in equity, over
the period in which the service and, where applicable,
the performance conditions are fulfilled (the vesting
period). The cumulative expense recognised for
equity-settled transactions at each reporting date until
the vesting date reflects the extent to which the vesting
period has expired and are the Company's best
estimate of the number of equity instruments that will
ultimately vest. The expense or credit in the statement
of profit or loss for a period represents the movement
in cumulative expense recognised as at the beginning
and end of that period.
Service and non-market performance conditions are
not taken into account when determining the grant date
fair value of awards, but the likelihood of the conditions
being met is assessed as part of the Company's best
estimate of the number of equity instruments that will
ultimately vest. Market performance conditions are
reflected within the grant date fair value. Any other
conditions attached to an award, but without an
associated service requirement, are considered to be
non-vesting conditions. Non-vesting conditions are
reflected in the fair value of an award and lead to an
immediate expensing of an award unless there are also
service and/or performance conditions. No expense
is recognised for awards that do not ultimately vest
because non-market performance and/or service
conditions have not been met. Where awards include
a market or non-vesting condition, the transactions are
treated as vested irrespective of whether the market or
non vesting condition is satisfied, provided that all other
performance and/or service conditions are satisfied.
When the terms of an equity-settled award are modified,
the minimum expense recognised is the grant date fair
value of the unmodified award, provided the original
vesting terms of the award are met. An additional
expense, measured as at the date of modification, is
recognised for any modification that increases the total
fair value of the share-based payment transaction, or
is otherwise beneficial to the employee. Where an
award is cancelled by the entity or by the counterparty,
any remaining element of the fair value of the award
is expensed immediately through profit or loss.
The dilutive effect of outstanding options is reflected
as additional share dilution in the computation of
diluted earnings per share (refer Note 32).
(j) Research and Development
Expenditure on research activities is recognised as an
expense in the period in which it is incurred.
An internally-generated intangible asset arising from
development (or from the development phase of an
internal project) is recognised if, and only if, all of the
following conditions have been demonstrated:
• the technical feasibility of completing the
intangible asset so that it will be available
for use or sale;
• the intention to complete the intangible asset and
use or sell it;
• the ability to use or sell the intangible asset;
• how the intangible asset will generate probable
future economic benefits;
• the availability of adequate technical, financial
and other resources to complete the development
and to use or sell the intangible asset; and
• the ability to measure reliably the expenditure
attributable to the intangible asset during
its development.
The amount initially recognised for internally-generated
intangible assets is the sum of the expenditure
incurred from the date when the intangible asset
first meets the recognition criteria listed above.
Where no internally-generated intangible asset can be
recognised, development expenditure is recognised
in profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally-generated
intangible assets are reported at cost less accumulated
amortisation and accumulated impairment losses,
on the same basis as intangible assets that are
acquired separately.
(k) Exceptional Items
Exceptional items are disclosed separately in the
financial statements where it is necessary to do so
to provide further understanding of the financial
performance of the Company. These are material
items of income or expense that have to be shown
separately due to their nature or incidence.
(l) Lease Accounting
Ind AS 116 sets out principles for the recognition,
measurement, presentation and disclosure of leases.
Ind AS 116 introduces a single lessee accounting
model and requires a lessee to recognise assets and
liabilities for all leases with a term of more than 12
months, unless the underlying asset is of low value.
For all leases except as noted above, a lessee is
required to recognise a right-of-use asset (ROU Asset)
representing its right to use the underlying leased
asset and a lease liability representing its obligation
to make lease payments in the balance sheet.
Lessee will recognise depreciation of right-of-use
assets and interest on lease liabilities in the statement
of profit and loss.
The Company as a lessee
The Company's lease asset classes primarily consist
of leases for Premises. The Company assesses
whether a contract contains a lease, at inception of
a contract. A contract is, or contains, a lease if the
contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys
the right to control the use of an identified asset, the
Company assesses whether:
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic
benefits from use of the asset through the period
of the lease and
(iii) the Company has the right to direct the
use of the asset.
At the date of commencement of the lease, the
Company recognizes a right-of-use asset (“ROU”)
and a corresponding lease liability for all lease
arrangements in which it is a lessee, except for leases
with a term of twelve months or less (short-term
leases) and low value leases. For these short-term and
low value leases, the Company recognizes the lease
payments as an operating expense on a straight-line
basis over the term of the lease. The lease payments
are discounted using the interest rate implicit in
the lease or, if not readily determinable, using the
incremental borrowing rates in the country of domicile
of these leases.
The lease payments that are not paid at the
commencement date are discounted using the interest
rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in
the Company, the lessee's incremental borrowing rate
is used, being the rate that the individual lessee would
have to pay to borrow the funds necessary to obtain
an asset of similar value to the right-of-use asset in
a similar economic environment with similar terms,
security and conditions.
Lease payments included in the measurement of the
lease liability comprise:
• Fixed lease payments (including in-substance
fixed payments) payable during the lease term
and under reasonably certain extension options,
less any lease incentives;
• Variable lease payments that depend on an index
or rate, initially measured using the index or rate
at the commencement date;
• The amount expected to be payable by the lessee
under residual value guarantees;
• The exercise price of purchase options, if
the lessee is reasonably certain to exercise
the options; and
• Payments of penalties for terminating the lease, if
the lease term reflects the exercise of an option to
terminate the lease.
As a practical expedient, Ind AS 116 permits a
lessee not to separate non-lease components when
bifurcation of the payments is not available between
the two components, and instead account for any
lease and associated non-lease components as a
single arrangement. The Company has used this
practical expedient. Contingent and variable rentals
are recognized as expense in the periods in which
they are incurred.
The lease liability is subsequently measured by
increasing the carrying amount to reflect interest on
the lease liability (using the effective interest method)
and by reducing the carrying amount to reflect the
lease payments made.
The Company remeasures the lease liability (and
makes a corresponding adjustment to the related
right-of-use asset) whenever:
• The lease term has changed or there is a change in
the assessment of exercise of a purchase option,
in which case the lease liability is remeasured by
discounting the revised lease payments using a
revised discount rate.
• A lease contract is modified and the lease
modification is not accounted for as a separate
lease, in which case the lease liability is
remeasured by discounting the revised lease
payments using a revised discount rate.
The right-of-use assets are initially recognized at cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the
commencement date of the lease plus any initial direct
costs less any lease incentives. They are subsequently
measured at cost less accumulated depreciation and
impairment losses. Whenever the Company incurs an
obligation for costs to dismantle and remove a leased
asset, restore the site on which it is located or restore
the underlying asset to the condition required by
the terms and conditions of the lease, a provision is
recognised and measured under Ind AS 37. The costs
are included in the related right-of-use asset, unless
those costs are incurred to produce inventories.
Right-of-use assets are depreciated from the
commencement date on a straight-line basis over
the shorter of the lease term and useful life of the
underlying asset. Right of use assets are evaluated
for recoverability whenever events or changes in
circumstances indicate that their carrying amounts
may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the
fair value less cost to sell and the value-in-use) is
determined on an individual asset basis unless the
asset does not generate cash flows that are largely
independent of those from other assets. In such cases,
the recoverable amount is determined for the Cash
Generating Unit (CGU) to which the asset belongs.
The Company has entered into lease arrangements
as a lessee for premises for operating customer
relationship center , guest houses, head office
and regional offices , residential premises for their
employees so as to help the employees to get settled
to new location and warehouse for receiving, storing
and dispatch of goods. The average term of leases
entered into is 3 year Incase of warehouses, on the
basis of past practice the entire period of the contract
has been considered for lease term depending on
the reasonable certainty to continue with the same
service provider. Generally, these lease contracts do
not include extension or early termination options.
Extension and termination options are included in
many of the leases. In determining the lease term the
management considers all facts and circumstances
that create an economic incentive to exercise an
extension option, or not exercise a termination option.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments
have been classified as financing cash flows.
The aggregate depreciation expense on ROU assets
is included under depreciation and amortization
expense in the statement of Profit and Loss.
The Company as a lessor
Leases for which the Company is a lessor is classified
as a finance or operating lease. Whenever the terms
of the lease transfer substantially all the risks and
rewards of ownership to the lessee, the contract
is classified as a finance lease. All other leases are
classified as operating leases. Ind AS 116 does not
change substantially how a lessor accounts for leases.
Under Ind AS 116, a lessor continues to classify
leases as either finance leases or operating leases
and account for those two types of leases differently.
However, Ind AS 116 has changed and expanded the
disclosures required, in particular with regard to how
a lessor manages the risks arising from its residual
interest in leased assets.
When the Company is an intermediate lessor, it
accounts for its interests in the head lease and the
sublease separately. The sublease is classified as a
finance or operating lease by reference to the right-of-
use asset arising from the head lease.
For operating leases, rental income is recognized on a
straight line basis over the term of the relevant lease.
(m) Revenue Recognition
The Company derives Revenue from sale of products
primarily water purifiers and vacuum cleaners and
providing related maintenance services. Revenue from
sale of goods is recognised when control of the
products being sold has transferred to the customer
upon delivery. Revenue is measured net of taxes,
returns, discounts, incentives and rebates earned by
customers on the sales. Revenue from services are
recognised over the period of time.
A refund liability (included in other current liabilities) is
recognised for expected volume discounts payable to
customers in relation to sales made until the end of the
reporting period.
In relation to certain contracts where installation
services are provided by the company, same is
accounted as a separate performance obligation.
Payment of the transaction price is due immediately
when the customer purchases the goods/services
except in certain cases where a credit term is agreed
between company and customer.
Revenue is only recognised to the extent that it is
highly probable a significant reversal will not occur.
An estimate is made for goods that will be returned
and a liability has been recognised for this amount
as refund liability (included in other current liabilities).
An asset has also been recorded (included in other
current assets) for the corresponding inventory that
is estimated to return to the company using a best
estimate based on accumulated experience.
Company's obligation to repair or replace faulty
products under the standard warranty terms is
recognised as provision.
Dividend income is recognised when the right to
receive payment is established and known.
Interest income from financial asset is recognised
when it is probable that the economic benefit will flow
to the company and the amount of income can be
measured reliably. Interest income is accrued on time
basis, by reference to the principal outstanding and at
the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts
through the expected life of the financial asset to that
asset's net carrying amount on initial recognition.
(n) Taxation
I ncome tax comprises current and deferred tax. It is
recognised in profit & loss except to the extent that
it relates to a business combination or to an item
recognised directly in equity or in other comprehensive
income, in which the current and the deferred tax
is also recognised directly in equity or in other
comprehensive income.
Current Tax
Current tax is measured on the basis of estimated
income and tax credits computed in accordance with
the provisions of the Income Tax Act, 1961.
Management periodically evaluates positions taken in
tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts
expected to be paid to tax authorities.
The entity shall recognise the income tax consequences
of dividends in profit or loss, other comprehensive
income or equity according to where the entity originally
recognised those past transactions or events.
Current tax assets and current tax liabilities are offset
only if there is a legally enforceable right to set off
the recognised amounts, and it is intended to realise
the asset and settle the liability on a net basis or
simultaneously.
Deferred Tax
Deferred tax is recognised in respect of temporary
differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
corresponding amounts used for taxation purposes.
Deferred tax liability are generally recognised for all
taxable temporary differences. Deferred tax asset
(including in respect of carried forward tax losses and
tax credits) are recognised to the extent it is probable
that the taxable profit will be available against which
deductible temporary differences can be utilised.
Deferred tax is measured at the tax rates that are
expected to apply to the period when the asset is
realised or the liability is settled, based on the laws
that have been enacted or substantively enacted by
the reporting date.
Uncertain Tax position
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.
The provision is estimated based on one of two
methods, the expected value method (the sum of the
probability weighted amounts in a range of possible
outcomes) or the single most likely amount method,
depending on which is expected to better predict the
resolution of the uncertainty.
(o) Earnings Per Share
The Company presents basic and diluted earnings per
share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to
ordinary shareholders of the Company by the weighted
average number of ordinary shares outstanding during
the year. Diluted EPS is determined by adjusting the
profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares
outstanding after adjusting for the effects of all potential
dilutive ordinary shares.
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