4. SUMMARY OF MATERIAL ACCOUNTING
POLICIES INFORMATION
4.1. Non-Current Assets Held for Sale
Non-current assets are classified as assets-held-for
sale when their carrying amount is to be recovered
principally through a sale transaction and a sale is
considered highly probable. The sale is considered highly
probable only when the asset is available for immediate
sale in its present condition, it is unlikely that the sale will
be withdrawn and sale is expected within one year from
the date of the classification. Assets classified as held
for sale are stated at the lower of carrying amount and
fair value less costs to sell.
Assets classified as held for sale are presented separately
in the balance sheet.
Loss is recognised for any initial or subsequent write
-down of the asset to fair value less costs to sell. A gain
is recognised for any subsequent increases in fair value
less costs to sell of an asset, but not in excess of any
cumulative loss previously recognised.
Discontinued operations are excluded from the results
of continuing operations and are presented as a single
amount as profit/ loss after tax from discontinued
operations in the Statement of Profit and Loss.
4.2. Property Plant and Equipment ('PPE')
An item is recognised as an asset, if and only if, it is
probable that the future economic benefits associated
with the item will flow to the Company and its cost can
be measured reliably. PPE are stated at actual cost less
accumulated depreciation and impairment loss, if any.
Actual cost is inclusive of freight, installation cost, duties,
taxes and other incidental expenses for bringing the
asset to its working conditions for its intended use (net
of tax credit, if any) and any cost directly attributable to
bring the asset into the location and condition necessary
for it to be capable of operating in the manner intended
by the Management. It includes professional fees and
borrowing costs for qualifying assets.
Property, Plant and Equipment and intangible assets
are not depreciated or amortized once classified
as held for sale.
Significant Parts of an item of PPE (including major
inspections) having different useful lives & material
value or other factors are accounted for as separate
components. All other repairs and maintenance costs are
recognized in the statement of profit and loss as incurred.
Depreciation of these PPE commences when the assets
are ready for their intended use. The estimated useful
lives and residual values are reviewed on an annual basis
and if necessary, changes in estimates are accounted for
prospectively. Depreciation on subsequent expenditure
on PPE arising on account of capital improvement or
other factors is provided for prospectively over the
remaining useful life.
Depreciation is provided pro-rata to the period of use on
the straight-line method based on the estimated useful
life of the assets. The residual values are not more than
5% of the original cost of the assets. The useful life of
property, plant and equipment are as follows: -
Note:
a. For these classes of assets based on internal
assessment and technical evaluation, the
management believes that the useful lives as given
above best represent the period over which the
Management expects to use these assets. Hence,
the useful life for these assets is different from the
useful lives as prescribed under Part C of Schedule
II of Companies Act 2013.
b. Depreciation on the amount capitalized on up-
gradation of the existing assets is provided over the
balanced life of the original asset.
c. An item of PPE is de-recognized upon disposal or
when no future economic benefits are expected
to arise from the continued use of the asset. Any
gain or loss arising on the disposal or retirement
of an item of PPE is determined as the difference
between the sales proceeds and the carrying
amount of the asset and is recognized in the
Statement of Profit and Loss.
4.3. Intangible Assets and amortisation
Intangible assets are recognised when it is probable that
the future economic benefits that are attributable to
the asset will flow to the enterprise and the cost of the
asset can be measured reliably. Intangible assets are
stated at original cost net of tax/duty credits availed,
if any, less accumulated amortisation and cumulative
impairment. Administrative and other general overhead
expenses that are specifically attributable to acquisition
of intangible assets are allocated and capitalised as a
part of the cost of the intangible assets.
Recognition of intangible assets
a. Computer software
Purchase of computer software used for the
purpose of operations is capitalized. However,
any expenses on software support, maintenance,
upgrade etc. payable periodically is charged to the
Statement of Profit & Loss.
b. Revenue expenditure of specialized R&D Division
Research and development expenditure
on new products:
(i) Expenditure on research is expensed under
respective heads of account in the period in
which it is incurred.
(ii) Development expenditure on new products
is capitalised as intangible asset, if all of the
following can be demonstrated:
• the technical feasibility of completing the
intangible asset so that it will be available
for use or sale;
• the company has intention to complete
the intangible asset and use or sell it;
• the company has ability to use or sell the
intangible asset;
• the manner in which the probable future
economic benefits will be generated
including the existence of a market for
output of the intangible asset or intangible
asset itself or if it is to be used internally,
the usefulness of intangible assets;
• the availability of adequate technical,
financial and other resources to complete
the development and to use or sell the
intangible asset; and
• the company has ability to reliably
measure the expenditure attributable
to the intangible asset during
its development.
Development expenditure that does not meet
the above criteria is expensed in the period in
which it is incurred.
Following initial recognition of the development
expenditure as an asset, the asset is carried at
cost less any accumulated amortization and
accumulated impairment losses. Amortization
of the asset begins when development is
complete, and the asset is available for use.
It is amortized over the period of expected
future benefit. Amortization expense is
recognized in the statement of profit and loss
unless such expenditure forms part of carrying
value of another asset.
During the period of development, the asset is
tested for impairment annually.
Amortisation periods and methods: Intangible
assets are amortised on straight line basis over
a period ranging between 2-5 years which
equates its economic useful life.
The amortization period and the amortization
method are reviewed at least at each financial
year end. If the expected useful life of the
asset is different from previous estimates, the
change is accounted for prospectively as a
change in accounting estimate.
• De-recognition of intangible assets
An intangible asset is derecognized on
disposal, or when no future economic benefits
are expected from use or disposal. Gains
or losses arising from de-recognition of an
intangible asset, measured as the difference
between the net disposal proceeds and
the carrying amount of the asset, and are
recognized in the Statement of Profit and Loss
when the asset is derecognized.
c. Intangible assets under development
All costs incurred in development are initially
capitalized as Intangible assets under
development - till the time these are either
transferred to Intangible Assets on completion
or expense as Software Development cost
(including allocated depreciation) as and when
determined of no further use.
4.4. Financial Instruments
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability
or equity instrument of another entity. The financial
instruments are recognised in the balance sheet when
the Company becomes a party to the contractual
provisions of the financial instrument. The Company
determines the classification of its financial instruments
at initial recognition.
Financial Assets
Initial recognition and measurement
All financial assets are recognised initially at fair value
plus, in the case of financial assets not recorded at fair
value through profit or loss, transaction costs that are
attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require
delivery of assets within a time frame are recognized on
the trade date, i.e., the date that the Company commits
to purchasing or selling the asset.
Subsequent measurement
For purposes of subsequent measurement, financial
assets are classified in following categories based on
business model of the entity:
• Debt instruments at amortized cost.
• Debt instruments at fair value through other
comprehensive income (FVTOCI).
• Debt instruments, derivatives and equity instruments
at fair value through profit or loss (FVTPL).
• Equity instruments measured at fair value through
other comprehensive income (FVTOCI).
Debt instruments at amortized cost
A 'debt instrument' is measured at the amortized cost if
both the following conditions are met:
a) The asset is held within a business model whose
objective is to hold assets for collecting contractual
cash flows, and
b) Contractual terms of the asset give rise on specified
dates to cash flows that are solely payments
of principal and interest (SPPI) on the principal
amount outstanding.
After initial measurement, such financial assets are
subsequently measured at amortized cost using the
effective interest rate (EIR) method.
Debt instrument at FVTOCI
A 'debt instrument' is classified as at the FVTOCI if both
of the following criteria are met:
a) The objective of the business model is achieved
both by collecting contractual cash flows and
selling the financial assets, and
b) The asset's contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category
are measured initially as well as at each reporting date
at fair value. Fair value movements are recognized in
the other comprehensive income (OCI). However, the
Company recognizes interest income, impairment
losses & reversals and foreign exchange gain or loss in
the P&L. On derecognition of the asset, cumulative gain
or loss previously recognized in OCI is reclassified from
the equity to P&L. Interest earned whilst holding FVTOCI
debt instrument is reported as interest income using
the EIR method.
Debt instrument at FVTPL
Any debt instrument, which does not meet the criteria
for categorization as at amortized cost or as FVTOCI, is
classified as at FVTPL.
In addition, the Company may elect to designate a
debt instrument, which otherwise meets amortized
cost or FVTOCI criteria, as at FVTPL. However, such
election is allowed only if doing so reduces or eliminates
a measurement or recognition inconsistency (referred
to as 'accounting mismatch'). The Company has not
designated any debt instrument as at FVTPL.
Debt instruments included within the FVTPL
category are measured at fair value with all changes
recognized in the P&L.
Equity investments (Other than investment in subsidiary)
All other equity investments are measured at fair value.
For Equity instruments, the Company may make an
irrevocable election to present in other comprehensive
income subsequent changes in the fair value. The
Company makes such election on an instrument-by¬
instrument basis. The classification is made on initial
recognition and is irrevocable.
If the Company decides to classify an equity instrument
as at FVTOCI, then all fair value changes on the
instrument, excluding dividends, are recognized in the
OCI. This amount is not recycled from OCI to P&L, even
on sale of investment. However, the Company may
transfer the cumulative gain or loss within equity.
Financial assets are measured at fair value through profit
or loss unless they are measured at amortised cost or at
fair value through other comprehensive income on initial
recognition. The transaction costs directly attributable
to the acquisition of financial assets and liabilities at fair
value through profit or loss are immediately recognised
in Statement of Profit and Loss.
Equity instruments included within the FVTPL category
are measured at fair value with all changes recognized in
the Statement of Profit and Loss.
Investments in Mutual Funds
Investments in mutual funds are measured at fair value
through profit or loss (FVTPL)
Cash and cash equivalents
The Company considers all highly liquid financial
instruments, which are readily convertible into known
amounts of cash that are subject to an insignificant
risk of change in value and having original maturities of
three months or less from the date of purchase, to be
cash equivalents. Cash and cash equivalents consist
of balances with banks which are unrestricted for
withdrawal and usage.
De-recognition
A financial asset is de-recognized 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 Company has transferred an asset, it
evaluates whether it has transferred substantially all risks
and rewards of ownership of the financial asset. In such
cases, the financial asset is de-recognized.
Where the Company has neither transferred a financial
asset nor retains substantially all risks and rewards of
ownership of the financial asset, the financial asset is
de-recognised 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.
Impairment of financial assets
The Company assesses at each date of balance sheet
whether a financial asset or a group of financial assets
is impaired. Ind AS 109 requires expected credit losses
to be measured through a loss allowance. In determining
the allowances for doubtful trade receivables, the
Company has used a practical expedient by computing
the expected credit loss allowance for trade receivables
based on a provision matrix. The provision matrix
considers historical credit loss experience and is
adjusted for forward looking information. For all other
financial assets, expected credit losses are measured
at an amount equal to the 12-months expected credit
losses or at an amount equal to the lifetime expected
credit losses if the credit risk on the financial asset has
increased significantly since initial recognition.
ECL impairment loss allowance (or reversal) recognized
during the period is recognized as income/ expense in
the statement of profit and loss (P&L).
Financial liabilities
Financial liabilities and equity instruments issued by
the company are classified according to the substance
of the contractual arrangements entered into and the
definitions of a financial liability and an equity instrument.
Initial recognition and measurement
Financial liabilities are recognised when the company
becomes a party to the contractual provisions of the
instrument. Financial liabilities are initially measured at
the amortised cost unless at initial recognition, they are
classified as fair value through profit and loss.
Subsequent measurement
Financial liabilities are subsequently measured at
amortised cost using the effective interest rate method.
Financial liabilities carried at fair value through profit or
loss are measured at fair value with all changes in fair
value recognised in the statement of profit and loss.
Trade and Other Payables
These amounts represent liabilities for goods and
services provided to the Company prior to the end
of financial period which are unpaid. Trade and other
payables are presented as current liabilities unless
payment is not due within 12 months after the reporting
period. They are recognized initially at their fair value
and subsequently measured at amortised cost using the
effective interest method.
Loans and Borrowings
After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortized cost
using the EIR method. Gains and losses are recognized in
profit or loss when the liabilities are derecognized as well
as through the EIR amortization process.
Financial Guarantee Contracts
Financial guarantee contracts are recognised initially as
a liability at fair value, adjusted for transaction costs that
are directly attributable to the issuance of the guarantee.
Subsequently, the liability is measured at the higher of the
amount of loss allowance determined as per impairment
requirements of Ind AS 109 and the amount recognised
less cumulative amortisation.
Derecognition
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
4.5. Impairment of Non-Financial Assets
The Company assesses, at each reporting date, whether
there is an indication that an asset may be impaired. If any
indication exists, or when annual impairment testing for
an asset is required, the Company estimates the asset's
recoverable amount. An asset's recoverable amount is
the higher of an asset's or cash-generating unit's (CGU)
fair value less costs of disposal and its value in use.
Recoverable amount is determined for an individual
asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets
or group of assets.
When the carrying amount of an asset or CGU exceeds
its recoverable amount, the asset is considered impaired
and is written down to its recoverable amount.
In assessing value in use, the estimated future cash
flows are discounted to their present value using a
pre-tax discount rate that reflects current market
assessments of the time value of money and the risks
specific to the asset. In determining fair value less costs
of disposal, recent market transactions are considered.
If no such transactions can be identified, an appropriate
valuation model is used. Impairment losses of continuing
operations, including impairment on inventories, are
recognized in the statement of profit and loss.
A previously recognized impairment loss (except for
goodwill) 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 to the carrying
amount of the asset.
4.6. Inventories
a) Basis of valuation:
1. Inventories including work-in-progress , other
than scrap materials are valued at lower of cost
and net realizable value after providing cost of
Obsolescence, if any. The cost is determined
using weighted average cost method.
2. Inventory of scrap materials have been valued
at net realizable value.
b) Method of valuation:
1. Cost of raw materials comprises all costs
of purchase, duties, taxes (other than
those subsequently recoverable from tax
authorities) and all other costs incurred in
bringing the inventories to their present
location and condition.
2. Cost of finished goods and work-in¬
progress includes direct fixed and variable
production overheads and indirect taxes as
applicable. Fixed production overheads are
allocated on the basis of normal capacity of
production facilities.
3. Cost of traded goods comprises all costs
of purchase, duties, taxes (other than
those subsequently recoverable from tax
authorities) and all other costs incurred in
bringing the inventories to their present
location and condition.
4. 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.
4.7. Borrowing Costs
Borrowing costs that are directly attributable to the
acquisition, construction or production of qualifying
asset are capitalized as part of cost of such asset. Other
borrowing costs are recognized as an expense in the
period in which they are incurred.
Borrowing costs consists of interest and other costs that
an entity incurs in connection with the borrowing of funds.
4.8. Investments in subsidiaries, associates and joint
ventures
The Company records the investments in subsidiaries,
associates and joint ventures at cost less accumulated
impairment losses, if any. Where an indication of
impairment exists, the carrying amount of the
investment is assessed and written down immediately to
its recoverable amount.
When the Company issues financial guarantees on
behalf of subsidiaries, initially it measures the financial
guarantees at their fair values and subsequently measures
at the higher of the amount of loss allowance determined
as per impairment requirements of Ind AS 109 and the
amount recognized less cumulative amortization.
The Company records the initial fair value of financial
guarantee as deemed investment with a corresponding
liability recorded as deferred revenue. Such deemed
investment is added to the carrying amount of
investment in subsidiaries.
Deferred revenue is recognized in the Statement of
Profit and Loss over the remaining period of financial
guarantee issued.
The Company reviews its carrying value of investments
carried at cost (net of impairment, if any) annually, or
more frequently when there is indication for impairment.
If the recoverable amount is less than its carrying amount,
the impairment loss is accounted for in the statement of
profit and loss.
4.9. Foreign Currency Transactions
The functional currency of the Company is Indian
Rupees which represents the currency of the economic
environment in which it operates.
Transactions in currencies other than the Company's
functional currency are recognized at the rates of
exchange prevailing at the dates of the transactions.
Monetary items denominated in foreign currency at
the year end and not covered under forward exchange
contracts are translated at the functional currency spot
rate of exchange at the reporting date.
Any income or expense on account of exchange
difference between the date of transaction and on
settlement or on translation is recognized in the profit
and loss account as income or expense.
Non-monetary items that are measured at fair value in
a foreign currency are translated using the exchange
rates at the date when the fair value was determined.
Translation difference on such assets and liabilities
carried at fair value are reported as part of fair
value gain or loss.
In case of forward exchange contracts, the premium
or discount arising at the inception of such contracts
is amortized as income or expense over the life of
the contract. Further exchange difference on such
contracts i.e. difference between the exchange rate at
the reporting /settlement date and the exchange rate on
the date of inception of contract/the last reporting date,
is recognized as income/expense for the period.
4.10. Taxation
The income tax expense or credit for the period is the tax
payable on the current period's taxable income based
on the applicable income tax rate adjusted by changes
in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses, if any.
The current income tax charge is calculated on the basis
of the tax laws enacted or substantively enacted at the
end of the reporting period. Management periodically
evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject
to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid
to the tax authorities.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying
amounts in the Standalone Financial Statement.
However, deferred tax liabilities are not recognized if they
arise from the initial recognition of goodwill. Deferred
income tax is also not accounted for if it arises from
initial recognition of an asset or liability in a transaction
other than a business combination that at the time of the
transaction affects neither accounting profit nor taxable
profit (tax loss). Deferred income tax is determined
using tax rates (and laws) that have been enacted or
substantially enacted by the end of the reporting period
and are expected to apply when the related deferred
income tax asset is realized or the deferred income tax
liability is settled.
The carrying amount of deferred tax assets are
reviewed at the end of each reporting period and are
recognized only if it is probable that future taxable
amounts will be available to utilize those temporary
differences and losses.
Deferred tax liabilities are not recognized for temporary
differences between the carrying amount and tax bases
of investments in subsidiaries, where the Company is
able to control the timing of the reversal of the temporary
differences and it is probable that the differences will not
reverse in the foreseeable future.
Deferred tax assets are not recognized for temporary
differences between the carrying amount and tax bases
of investments in subsidiaries, associates and interest
in joint arrangements where it is not probable that the
differences will reverse in the foreseeable future and
taxable profit will not be available against which the
temporary difference can be utilized.
Deferred tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate
to the same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on
a net basis, or to realize the asset and settle the liability
simultaneously.
Deferred Tax includes MAT tax Credit. The Company
recognizes tax credit in the nature of MAT credit as an
asset only to the extent that there is convincing evidence
that the Company will pay normal income tax during the
specified period, i.e. the period for which tax credit is
allowed to be carried forward. The Company reviews the
such tax credit asset at each reporting date to assess its
recoverability.
4.11. Revenue Recognition
The company recognizes revenue in accordance with
Ind- AS 115. Revenue is recognized upon transfer of
control of promised products or services to customers
in an amount that reflects the consideration that the
Company expects to receive in exchange for those
products or services.
Revenues in excess of invoicing are classified as contract
assets (which may also refer as unbilled revenue) while
invoicing in excess of revenues are classified as contract
liabilities (which may also refer to as unearned revenues).
The Company presents revenues net of indirect taxes in
its Statement of Profit and loss.
The specific recognition criteria from various stream of
revenue is described below:
a. Revenue from the sale of goods is recognized upon
transfer of control of promised products, usually
on delivery of the goods (i.e. when performance
obligation is satisfied) at the amount of transaction
price (net of variable consideration) allocated
to that performance obligation. The transaction
price of goods sold and services rendered is net
of returns and allowances, trade discounts and
volume rebates offered by the Company as part
of the contract.
b. Revenue from Services is recognized when
respective service is rendered and accepted
by the customer.
c. Capacity swaps
The exchange of network capacity is recognised
at fair value unless the transaction lacks
commercial substance or the fair value of neither
the capacity received nor the capacity given is
reliably measurable.
d. Interest income
For all debt instruments measured either at
amortized cost or at fair value through other
comprehensive income, interest income is recorded
using the effective interest rate (EIR).
e. Rental income
Rental income arising from operating leases or
on investment properties is accounted for on a
straight-line basis over the lease terms and is
included in other non-operating income in the
statement of profit and loss.
f. Insurance Claims
Insurance claims are accounted for as and when
admitted by the concerned authority.
g. Dividend Income
Dividend income on investments is recognised
when the right to receive dividend is established.
h. Other Income
Other Income is accounted for on accrual basis
except, where the receipt of income is uncertain.
4.12. Employee Benefits
Short Term Employee Benefits
Liabilities for wages and salaries, including non¬
monetary benefits that are expected to be settled wholly
within 12 months after the end of the period in which the
employees render the related service are recognized
in respect of employees' services up to the end of the
reporting period and are measured at the amounts
expected to be paid when the liabilities are settled. The
liabilities are presented as current employee benefit
obligations in the balance sheet.
Long-Term employee benefits
Compensated expenses which are not expected to occur
within twelve months after the end of period in which the
employee renders the related services are recognized
as a liability at the present value of the defined benefit
obligation at the balance sheet date.
Post-employment obligations
i. Defined contribution plans
Provident Fund and employees' state
insurance schemes
All employees of the Company are entitled to
receive benefits under the Provident Fund, which is
a defined contribution plan. Both the employee and
the employer make monthly contributions to the
plan at a predetermined rate (presently 12%) of the
employees' basic salary. These contributions are
made to the fund administered and managed by the
Government of India. In addition, some employees
of the Company are covered under the employees'
state insurance schemes, which are also defined
contribution schemes recognized and administered
by the Government of India.
The Company's contributions to both these
schemes are expensed in the Statement of Profit
and Loss. The Company has no further obligations
under these plans beyond its monthly contributions.
ii. Defined benefit plans
Gratuity
The Company provides for gratuity obligations
through a defined benefit retirement plan (the
'Gratuity Plan') covering all employees. The
Gratuity Plan provides a lump sum payment to
vested employees at retirement or termination of
employment based on the respective employee
salary and years of employment with the Company.
The Company provides for the Gratuity Plan
based on actuarial valuations in accordance
with Indian Accounting Standard 19 (revised),
"Employee Benefits". The Company makes annual
contributions to the Life Insurance Corporation of
India for the Gratuity Plan in respect of employees.
The present value of obligation under gratuity is
determined based on actuarial valuation using
Project Unit Credit Method, which recognizes each
period of service as giving rise to additional unit of
employee benefit entitlement and measures each
unit separately to build up the final obligation.
Defined retirement benefit plans comprising
of gratuity, un-availed leave, post-retirement
medical benefits and other terminal benefits, are
recognized based on the present value of defined
benefit obligation which is computed using the
projected unit credit method, with actuarial
valuations being carried out at the end of each
annual reporting period. These are accounted
either as current employee cost or included in cost
of assets as permitted.
Leave Encashment
The company has provided for the liability at
period end on account of un-availed earned leave
as per the actuarial valuation as per the Projected
Unit Credit Method.
iii. Actuarial gains and losses are recognized in OCI as
and when incurred.
The net interest cost is calculated by applying the
discount rate to the net balance of the defined
benefit obligation and the fair value of plan assets.
This cost is included in employee benefit expense in
the statement of profit and loss.
Remeasurement, comprising actuarial gains and
losses, the effect of the changes to the asset
ceiling (if applicable) and the return on plan assets
(excluding net interest as defined above),are
recognized in other comprehensive income except
those included in cost of assets as permitted in the
period in which they occur and are not subsequently
reclassified to profit or loss.
The retirement benefit obligation recognized in
the Standalone Financial Statements represents
the actual deficit or surplus in the Company's
defined benefit plans. Any surplus resulting from
this calculation is limited to the present value of
any economic benefits available in the form of
reductions in future contributions to the plans.
Termination benefits
Termination benefits are recognized as an expense
in the period in which they are incurred.
4.13. Employee Share Based Payment
Equity- settled share- based payments to employees are
measured at the fair value of the employee stock options
at the grant. The fair value determined at the grant date of
the equity- settled share - based payments is amortised
over the vesting period, based on the Company's
estimate of equity instruments that will eventually vest,
with a corresponding increase in equity. At the end of
each reporting period, the Company revises its estimate
of the number of equity instruments expected to vest.
The impact of the revision of the original estimates, if
any, is recognised in the Statement of Profit and Loss
such that the cumulative expense reflects the revised
estimate, with a corresponding adjustment to the Share
based payment reserve outstanding.
The Company measures the cost of equity- settled
transactions with employees using Black- Scholes
model to determine the fair value of the liability incurred
on the grant date. Estimating fair value for share- based
payment transactions require determination of the most
appropriate valuation model, which is dependent on the
terms and conditions of the grant.
This estimate also requires determination of the most
appropriate inputs to the valuation model including the
expected life of the share option, volatility and dividend
yield and making assumptions about them.
The dilutive effect, if any outstanding options is reflected
as additional share dilution in computation of diluted
earnings per share.
4.14. Leases
As a lessee
The Company's lease asset classes primarily consist of
leases for land and buildings. 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.
Certain lease arrangements include the options to extend
or terminate the lease before the end of the lease term.
ROU assets and lease liabilities includes these options
when it is reasonably certain that they will be exercised.
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.
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 lease liability is initially measured at amortized cost
at the present value of the future lease payments. 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. Lease liabilities are remeasured with
a corresponding adjustment to the related right of use
asset if the Company changes its assessment of whether
it will exercise an extension or 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 Company's lease liabilities are included in Other
financial liabilities.
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.
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.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition
exemption to its short-term leases (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 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.
4.15. Earning Per Share ('EPS')
The Company presents the Basic and Diluted EPS data.
Basic earnings per share are computed by dividing the
net profit after tax by the weighted average number
of equity shares outstanding during the period. Diluted
earnings per share is computed by dividing the profit
after tax by the weighted average number of equity
shares considered for deriving basic earnings per share
and also the weighted average number of equity shares
that could have been issued upon conversion of all
dilutive potential equity shares.
4.16. Segment Reporting
Identification of segments:
Operating segments are reported in a manner consistent
with the internal financial reporting provided to the Chief
Operating Decision Maker (CODM) i.e. Chief Executive
officer. CODM monitors the operating results of all
product segments separately for the purpose of making
decisions about resource allocation and performance
assessment. Segment performance is evaluated based
on profit and loss and is measured consistently with profit
and loss in the Standalone Financial Statements. The
primary reporting of the Company has been performed
on the basis of business segments. The analysis of
geographical segments is based on the areas in which the
Company's products are sold or services are rendered.
Allocation of common costs:
Common allocable costs are allocated to each segment
according to the relative contribution of each segment
to the total common costs.
Unallocated items:
The Corporate and other segment include general
corporate income and expense items, which are not
allocated to any business segment.
4.17. Government Grant
Government Grants are recognized where there is
reasonable assurance that the grant will be received and
all attached conditions will be complied with .
Government grants related to depreciable fixed
assets are treated as deferred income which has
been recognised in the profit and loss statement on a
systematic and rational basis over the useful life of the
asset, i.e., such grants should be allocated to income over
the periods and in the proportions in which depreciation
on those assets is charged.
4.18. Cash & Cash Equivalents
Cash comprises cash on hand and demand deposits with
banks. Cash equivalents are short-term balances (with
an original maturity of three months or less from the date
of acquisition), highly liquid investments that are readily
convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
4.19. Prior Period Items
The Company has adopted following materiality
threshold limits in the recognition of Prior period
expenses/incomes:
4.20. Exceptional Items
Exceptional items refer to items of income or expense
within the statement of profit and loss from ordinary
activities which are non-recurring and are of such
size, nature or incidence that their separate disclosure
is considered necessary to explain the performance
of the Company.
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