2. MATERIAL ACCOUNTING POLICIES
I. Statement of Compliance
The standalone financial statements of the Company comprise
the Standalone Balance Sheet as at 31st March, 2025 and 31st
March, 2024, the Standalone Statement of Profit and Loss,
Standalone Statement of Changes in Equity and the Standalone
statement of Cash Flows for the year ended as on that date and
material accounting policies and explanatory notes (together
hereinafter referred to as "Standalone Financial Statements").
The Standalone Financial Statements have been prepared in
accordance with the accounting principles generally accepted in
India including Indian Accounting Standards (Ind AS) prescribed
under the section 133 of the Companies Act, 2013 read with
rule 3 of the Companies (Indian Accounting Standards) Rules,
2015 (as amended from time to time) and the provisions of
the Companies Act, 2013 ("the Act") to the extent notified and
presentation and disclosures requirement of Division II of revised
Schedule III of the Companies Act 2013, (Ind AS Compliant
Schedule III), as applicable to Standalone Financial Statement.
These Standalone Financial Statements are approved for issue
by the Board of Directors on 30 April, 2025
II. Basis of Preparation and Presentation.
The Standalone financial statements have been prepared on
a going concern basis, the historical cost and on an accrual
basis, except for certain financial assets and liabilities (including
derivative instruments), defined benefit plan's - plan assets and
equity settled share-based payments measured at fair value at
the end of each reporting year
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, regardless of
whether that price is directly observable or estimated using
another valuation technique. In estimating the fair value of
an asset or a liability, the Company takes in account the
characteristics of the asset or liability if market participants
would take those characteristics into account when pricing
the asset or liability at the measurement date. Fair value for
measurement and/or disclosure purposes in these Standalone
financial statements is determine on such a basis, except for
share-based payment transactions that are within the scope
of Ind AS 102, leasing transactions that are within the scope of
Ind AS 116, fair value of plan assets within scope the of Ind AS
19 and measurements that have some similarities to fair value
but are not fair value, such as net realisable value in Ind AS 2 or
value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value
measurements are categorised into Level 1, 2, or 3 based on
the degree to which the inputs to the fair value measurements
are observable and the significance of the inputs to the fair value
measurements in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets
for identical assets or liabilities that the entity can access at the
measurement date;
Level 2 inputs are inputs, other than quoted prices included
within level 1, that are observable for the asset or liability, either
directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
The Standalone Financial Statements are presented in Indian
Rupees (?) and all values are rounded to the nearest crore
(' 00,00,000), except when otherwise indicated.
Amounts less than ' 50,000 have been presented as "0.00"
III. Foreign Currencies
The functional currency of the Company is determined on the
basis of the primary economic environment in which it operates.
The functional currency of the Company is Indian Rupee (INR).
Transactions and Balances
All transactions in foreign currencies are translated to the
respective functional currencies using the prevailing exchange
rates on the date of such transactions. All monetary assets and
liabilities denominated in foreign currencies are translated to the
functional currency at the closing exchange rate at the end of
each reporting year. All non-monetary assets and liabilities that
are measured at fair value in a foreign currency are translated to
the functional currency at the exchange rate when the fair value
was determined. All foreign currency differences are generally
recognized in the Statement of Profit and Loss, except for non¬
monetary items denominated in foreign currency and measured
based on historical cost, as they are not translated.
IV. Property, Plant and Equipment
The cost of property, plant and equipment comprises its purchase
price net of any trade discounts and rebates, any import duties
and other taxes (other than those subsequently recoverable
from the tax authorities), any directly attributable expenditure on
making the asset ready for its intended use, including relevant
borrowing costs for qualifying assets and any expected costs of
decommissioning. Major shut-down and overhaul expenditure is
capitalised as the activities undertaken improves the economic
benefits expected to arise from the asset.
Major overhaul costs are depreciated over the estimated life of
the economic benefit derived from the overhaul. The carrying
amount of the remaining previous overhaul cost is charged to the
Statement of Profit and Loss if the next overhaul is undertaken
earlier than the previously estimated life of the economic benefit.
Subsequent costs are included in the asset's carrying amount
or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the
item will flow to the entity and the cost can be measured reliably.
Property, Plant and Equipment which are significant to the total
cost of that item of Property, Plant and Equipment and having
different useful life are accounted separately
Assets in the course of construction are capitalised in the
assets under Capital work in progress. At the point when an
asset is operating at management's intended use, the cost
of construction is transferred to the appropriate category of
property, plant and equipment and depreciation commences.
Costs associated with the commissioning of an asset and any
obligatory decommissioning costs are capitalised where the
asset is available for use but incapable of operating at normal
levels revenue (net of cost) generated from production during
the trial period is capitalised.
An item of property, plant and equipment is derecognised 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 property,
plant and equipment is determined as the difference between
the sales proceeds and the carrying amount of the asset and is
recognised in Statement of Profit and Loss
Property, plant and equipment except freehold land held for use
in the production, supply or administrative purposes, are stated
in the balance sheet at cost less accumulated depreciation and
accumulated impairment losses, if any
Depreciation commences when the assets are ready for their
intended use. Depreciable amount for assets is the cost of an
asset, or other amount substituted for cost, less its estimated
residual value. Depreciation is recognized so as to write off the
cost of assets (other than freehold land and properties under
construction) less their residual values over their useful lives,
using straight-line method as per the useful lives and residual
value prescribed in Schedule II to the Companies Act, 2013
except in case of the following class of assets wherein useful
lives are determined based on technical assessment made by
a technical expert engaged by the management taking into
account the nature of assets, the estimated usage of assets,
the operating conditions of the assets, anticipated technological
changes, in order to reflect the actual usage
The Company has estimated the following useful lives to provide
depreciation on its certain fixed assets based on assessment
made by experts and management estimates.
The residual values and useful lives of property, plant and
equipment are reviewed at each financial year end and adjusted
prospectively, if appropriate.
The Company has policy to expense out the assets which is
acquired during the year and value of such assets is below
' 5000
V. Intangible Assets (other than goodwill)
I ntangible assets with finite useful lives that are acquired
separately are carried at cost less accumulated amortisation
and accumulated impairment losses. Amortisation is recognised
on a straight-line basis over their estimated useful lives. The
estimated useful life and amortisation method are reviewed at
the end of each reporting year, with the effect of any changes in
estimate being accounted for on a prospective basis. Intangible
assets with indefinite useful lives that are acquired separately
are carried at cost less accumulated impairment losses if any.
The cost of intangible assets having finite lives, which are under
development and before ready for its intended use, are disclosed
as 'Intangible Assets under development
Estimated useful lives of the intangible assets are as follows:
An intangible asset is derecognised on disposal, or when no
further economic benefits are expected from use or disposal.
Gain/loss on de-recognition are recognised in statement of profit
and loss.
VI. Impairment of Non-Financial Assets - Property, Plant
and Equipment and Intangible Assets
The Company assesses at each reporting date as to whether
there is any indication that any Property, Plant and Equipment,
and Other Intangible Assets or Company of assets, called Cash
Generating Units (CGU) may be impaired. If any such indication
exists, the recoverable amount of an asset or CGU is estimated
to determine the extent of impairment, if any. When it is not
possible to estimate the recoverable amount of an individual
asset, the Company estimates the recoverable amount of the
CGU to which the asset belongs.
An impairment loss is recognised in the Statement of Profit
and Loss to the extent, asset's carrying amount exceeds its
recoverable amount. The recoverable amount is higher of an
asset's fair value less cost of disposal and value in use. Value
in use is based on the estimated future cash flows, discounted
to their present value using pre-tax discount rate that reflects
current market assessments of the time value of money and risk
specific to the assets. The impairment loss recognised in prior
accounting period is reversed if there has been a change in the
estimate of recoverable amount
I ntangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment at least
annually, and whenever there is an indication that the asset may
be impaired.
VII. Revenue Recognition
Revenue from contracts with customers is recognised when
control of the goods or services are transferred to the customer at
an amount that reflects the consideration to which the Company
expects to be entitled in exchange for transferring promised
goods or services having regard to the terms of the contract. If
the consideration in a contract includes a variable amount, the
Company estimates the amount of consideration to which it will
be entitled in exchange for transferring the goods or services to
the customer. The variable consideration is estimated having
regard to various relevant factors including historical trend and
constrained until it is highly probable that a significant revenue
reversal in the amount of cumulative revenue recognised will
not occur when the associated uncertainty with the variable
consideration is subsequently resolved. Compensation towards
shortfall in offtake are recognised on collection or earlier when
there is reasonable certainty to expect ultimate collection.
Revenue from port operations services/ multi-model service
including cargo handling and storage are recognized on
proportionate completion method basis based on services
completed till reporting date. Revenue on take-or-pay charges
are recognised for the quantity that is difference between annual
agreed tonnage and actual quantity of cargo handled.
Interest on delayed payments leviable as per the relevant
contracts are recognised on actual realisation or accrued
based on an assessment of certainty of realization supported
by acknowledgement from customers.
The amount recognised as revenue is exclusive of goods a
services tax where applicable.
VIII. Other Income
Other income is comprised primarily of interest income, mutual
fund income, dividend, exchange gain/ loss. Interest income
from a financial asset is recognised when it is probable that the
economic benefits will flow to the Company and the amount of
income can be measured reliably. Interest income is accrued on
a 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. Unrealised gain/loss on mutual unit accounted
in Statement of Profit and Loss bases mark to market basis and
realised gain/loss accounted on the redemption basis.
Dividend income from investments is recognised when the
shareholder's right to receive payment has been established
(provided that it is probable that the economic benefits will flow
to the Company and the amount of income can be measured
reliably).
IX. Leases
The Company assesses whether a contract is or contains a lease,
at inception of the contract. That is, if the contract conveys the
right to control the use of an identified asset for a period of time
in exchange for consideration.
Company as lessee
The Company applies a single recognition and measurement
approach for all leases, except for short-term leases (defined
as leases with a lease term of 12 months or less) 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.
Right-of-use 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 remeasurement 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. Unless the Company is reasonably certain
to obtain ownership of the leased asset at the end of the lease
term, the recognised right-of-use assets are depreciated on a
straight-line basis over the shorter of its estimated useful life
and the lease term.
The lease term of Company's ROU assets which comprises only
Buildings varies from 3 to 5 years.
I f 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. Right-of-use assets are subject to
impairment test.
The Company accounts for sale and lease back transaction,
recognising right-of-use assets and lease liability, measured in
the same way as other right-of use assets and lease liability.
Gain or loss on the sale transaction is recognised in statement
of profit and loss.
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 and are not
paid at the commencement date, discounted by using the rate
implicit in the lease. 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 variable lease payments that do not depend on an index or a
rate are recognised as expense in the period on which the event
or condition that triggers the payment occurs.
In calculating the present value of lease payments, the
Company uses the incremental borrowing rate at the lease
commencement date if 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 (using the effective interest method) and reduced for
the lease payments made. In addition, the carrying amount of
lease liabilities is remeasured 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.
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 of low value (i.e., below '. 50,000). 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 unless another systematic basis is more representative of
the time pattern in which economic benefits from the leased
assets are consumed.
Most of the contracts that contains extension terms are on
mutual agreement between both the parties and hence the
potential future rentals cannot be assessed. Certain contracts
where the extension terms are unilateral are with unrelated
parties and hence there is no certainty about the extension
being exercised.
The Company uses weighted average incremental borrowing rate
for lease liabilities measurement.
X. Borrowing Costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to
get ready for their intended use, are added to the cost of those
assets, until such time as the assets are substantially ready for
their intended use or sale.
All other borrowing costs are recognised in the Statement of
Profit and Loss in the year in which they are incurred.
The Company determines the amount of borrowing costs eligible
for capitalisation as the actual borrowing costs incurred on that
borrowing during the year less any interest income earned on
temporary investment of specific borrowings pending their
expenditure on qualifying assets, to the extent that an entity
borrows funds specifically for the purpose of obtaining a
qualifying asset. If any specific borrowing remains outstanding
after the related asset is ready for its intended use or sale, that
borrowing becomes part of the funds that an entity borrows
generally when calculating the capitalisation rate on general
borrowings. In case if the Company borrows generally and
uses the funds for obtaining a qualifying asset, borrowing
costs eligible for capitalisation are determined by applying a
capitalisation rate to the expenditures on that asset. Borrowing
Cost includes exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to
the finance cost.
XI. Employee Benefits
Retirement benefit costs and termination benefits:
Defined contribution plans:
Payments to defined contribution retirement benefit plans are
recognised as an expense when employees have rendered
service entitling them to the contributions
Defined benefit plans:
For defined benefit retirement benefit plans, the cost of providing
benefits is determined using the projected unit credit method,
with actuarial valuations being carried out at the end of each
annual reporting year. Re-measurement, comprising actuarial
gains and losses, the effect of the changes to the asset ceiling (if
applicable) and the return on plan assets (excluding interest), is
reflected immediately in the statement of financial position with
a charge or credit recognised in other comprehensive income
in the year in which they occur. Re-measurement recognised in
other comprehensive income is reflected immediately in retained
earnings and will not be reclassified to profit or loss. Actuarial
valuations are being carried out at the end of each annual
reporting period for defined benefit plans. Past service cost is
recognised in profit or loss in the year of a plan amendment
or when the Company recognizes corresponding restructuring
cost whichever is earlier. Net interest is calculated by applying
the discount rate to the net defined benefit liability or asset.
Defined benefit costs are categorised as follows:
• Service cost (including current service cost, past service
cost, as well as gains and losses on curtailments and
settlements);
• Net interest expense or income; and
• Re-measurement
The Company presents the first two components of defined
benefit costs in profit or loss in the line item 'Employee benefits
expenses. Curtailment gains and losses are accounted for as
past service costs.
The retirement benefit obligation recognised in the statement
of financial position 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 refunds from the plans or
reductions in future contributions to the plans.
A liability for a termination benefit is recognised at the earlier
of when the entity can no longer withdraw the offer of the
termination benefit and when the entity recognises any related
restructuring costs.
The Company pays gratuity to the employees whoever has
completed five years of service with the Company at the time
of resignation/ superannuation. The gratuity is paid @ 15 days
salary for each completed year of service as per the Payment of
Gratuity Act, 1972
Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in
respect of wages and salaries, annual leave and sick leave in the
year the related service is rendered at the undiscounted amount
of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits
are measured at the undiscounted amount of the benefits
expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long-term employee
benefits are measured at the present value of the estimated
future cash outflows expected to be made by the Company
in respect of services provided by employees up to the
reporting date.
XII. Share Based Payment Arrangements
Equity-settled share-based payments to employees and others
providing similar services are measured at the fair value of
the equity instruments at the grant date. Details regarding the
determination of the fair value of equity- settled share-based
transactions are set out in Note 38.
The fair value determined at the grant date of the equity-
settled share-based payments is expensed on a straight¬
line basis 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
year, 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 profit or loss such
that the cumulative expense reflects the revised estimate, with
a corresponding adjustment to the equity-settled employee
benefits reserve.
The Company has created an Employee Benefit Trust for providing
share-based payment to its employees. The Company uses the
Trust as a vehicle for distributing shares to employees under
the employee remuneration schemes. The Company treats Trust
as its extension and shared held by the Trust are treated as
treasury shares.
XIII. Tax Expense
Income tax expense represents the sum of the current tax and
deferred tax.
Current tax
Current tax is the amount of expected tax payable based on the
taxable profit for the year as determined in accordance with the
applicable tax rates and the provisions of the Income Tax Act,
1961. The Company's liability for current tax is calculated using
tax rates that have been enacted or substantively enacted for
the reporting period
Deferred tax
Deferred tax is recognised using the balance sheet approach on
temporary differences between the carrying amounts of assets
and liabilities in the Standalone Financial Statements and the
corresponding tax bases used in the computation of taxable
profit. Deferred tax liabilities are recognised for all taxable
temporary differences. Deferred tax assets are recognised for all
deductible temporary differences to the extent that it is probable
that taxable profits will be available against which those
deductible temporary differences can be utilised. Such deferred
tax assets and liabilities are not recognised if the temporary
difference arises from the initial recognition (other than in a
business combination) of assets and liabilities in a transaction
that affects neither the taxable profit nor the accounting
profit. In addition, deferred tax liabilities are not recognised if
the temporary difference arises from the initial recognition of
goodwill. Recognize of Deferred Tax Liability (DTL)/ Deferred Tax
Asset (DTA) for taxable temporary differences in cases where the
initial recognition of an asset or liability results in equal taxable
and deductible temporary differences.
Deferred tax liabilities are recognised for taxable temporary
differences associated with investments in subsidiaries,
except where the Company is able to control the reversal of
the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred
tax assets arising from deductible temporary differences
associated with such investments and interests are only
recognised to the extent that it is probable that there will be
sufficient taxable profits against which to utilise the benefits of
the temporary differences and they are expected to reverse in
the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the
end of each reporting year and reduced to the extent that it is
no longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws,
which gives future economic benefits in the form of adjustment
to future income tax liability, is considered as a deferred tax
asset if there is convincing evidence that the Company will pay
normal income tax. Accordingly, MAT is recognised as an asset
in the Balance Sheet when it is probable that future economic
benefit associated with it will flow to the Company.
Deferred tax assets and liabilities are measured at the tax rates
that are expected to apply in the year in which the liability is
settled or the asset realised, based on tax rates (and tax laws)
that have been enacted or substantively enacted by the end of
the reporting year.
Deferred tax assets and deferred tax liabilities are offset if a
legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relate to
the same taxable entity and the same taxation authority.
Current and Deferred Tax for the year
Current and deferred tax are recognised in profit or loss,
except when they are relating to items that are recognised
in other comprehensive income or directly in equity, in which
case, the current and deferred tax are also recognized in other
comprehensive income or directly in equity respectively.
XIV. Inventories
I tems of inventories are measured at lower of cost and net
realisable value after providing for obsolescence, if any, Cost is
determined by the weighted average cost method.
Net realisable value represents the estimated selling price for
inventories less all estimated costs of completion and costs
necessary to make the sale. Cost of inventories includes cost
of purchase price, cost of conversion and other cost incurred in
bringing the inventories to their present location and condition.
XV. Investment in subsidiaries:
Investment in subsidiaries, are shown at cost in accordance with
the option available in Ind AS 27, 'Separate Financial Statements'.
Where the carrying amount of an investment in greater than its
estimated recoverable amount, it is written down immediately
to its recoverable amount and the difference is transferred to
the Statement of Profit and Loss. On disposal of investment,
the difference between the net disposal proceeds and the
carrying amount is charged or credited to the Statement of Profit
and Loss.
The Company has elected to continue with carrying value of
all its investment in affiliates recognised as on transition date,
measured as per the previous GAAP and use that carrying value
as its deemed cost as of transition date
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.
Financial assets and financial liabilities are recognised 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 Statement of Profit and Loss (FVTPL)) 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 and loss are
recognised immediately in Statement of Profit and Loss.
a) Investments and other financial assets:
Initial recognition and measurement
Financial assets are recognised when the Company
becomes a party to the contractual provisions of the
instrument. 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 or issue of the
financial asset. Purchases and sales of financial assets
are recognised on the trade date, which is the date on
which the Company becomes a party to the contractual
provisions of the instrument.
Classification of Financial Assets
Financial assets are classified, at initial recognition and
subsequently measured at amortised cost, fair value
through other comprehensive income (OCI) and fair value
through profit and loss.
A financial asset is measured at amortised cost if it meets
both of the following conditions and is not designated
at FVTPL:
i) The asset is held within a business model whose
objective is to hold assets to collect contractual
cash flows; and
ii) The contractual terms of the financial asset give
rise on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding.
The classification depends on the Company's business
model for managing the financial assets and the
contractual terms of the cash flows.
Equity instruments included within the FVTPL category are
measured at fair value with all changes recognised in the
Statement of Profit and Loss.
All other financial assets are classified as measured
at FVTPL.
In addition, on initial recognition, the Company may
irrevocably designate a financial asset that otherwise
meets the requirements to be measured at amortised
cost or at FVTOCI or at FVTPL if doing so eliminates or
significantly reduces an accounting mismatch that would
otherwise arise.
Financial assets at FVTPL are measured at fair value at
the end of each reporting year, with any gains and losses
arising on remeasurement recognised in statement
of profit and loss. The net gain or loss recognised in
statement of profit and loss incorporates any dividend or
interest earned on the financial asset and is included in
the other income' line item. Dividend on financial assets
at FVTPL is recognised when:
• The Company's right to receive the dividends is
established,
• I t is probable that the economic benefits associated
with the dividends will flow to the entity,
• The dividend does not represent a recovery of part of
cost of the investment and the amount of dividend can
be measured reliably.
Derecognition of Financial Assets
The Company derecognises a financial asset when the
contractual rights to the cash flows from the asset expire,
or when it transfers the financial asset and substantially
all the risks and rewards of ownership of the asset to
another party.
Impairment
The Company applies the expected credit loss model for
recognizing impairment loss on financial assets measured
at amortised cost, debt instruments at FVTOCI, lease
receivables, trade receivables, other contractual rights
to receive cash or other financial asset, and financial
guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit
losses with the respective risks of default occurring as
the weights. Credit loss is the difference between all
contractual cash flows that are due to the Company in
accordance with the contract and all the cash flows that
the Company expects to receive (i.e. all cash shortfalls),
discounted at the original effective interest rate (or credit-
adjusted effective interest rate for purchased or originated
credit-impaired financial assets). The Company estimates
cash flows by considering all contractual terms of the
financial instrument (for example, prepayment, extension,
call and similar options) through the expected life of that
financial instrument.
The Company measures the loss allowance for a financial
instrument at an amount equal to the lifetime expected
credit losses if the credit risk on that financial instrument
has increased significantly since initial recognition. If the
credit risk on a financial instrument has not increased
significantly since initial recognition, the Company
measures the loss allowance for that financial instrument
at an amount equal to 12-month expected credit losses.
12-month expected credit losses are portion of the life¬
time expected credit losses and represent the lifetime
cash shortfalls that will result if default occurs within the
12 months after the reporting date and thus, are not cash
shortfalls that are predicted over the next 12 months.
I f the Company measured loss allowance for a financial
instrument at lifetime expected credit loss model in the
previous period, but determines at the end of a reporting
period that the credit risk has not increased significantly
since initial recognition due to improvement in credit
quality as compared to the previous period, the Company
again measures the loss allowance based on 12-month
expected credit losses.
When making the assessment of whether there has
been a significant increase in credit risk since initial
recognition, the Company uses the change in the risk of
a default occurring over the expected life of the financial
instrument instead of the change in the amount of
expected credit losses. To make that assessment, the
Company compares the risk of a default occurring on the
financial instrument as at the reporting date with the risk
of a default occurring on the financial instrument as at the
date of initial recognition and considers reasonable and
supportable information, that is available without undue
cost or effort, that is indicative of significant increases in
credit risk since initial recognition.
For trade receivables or any contractual right to
receive cash or another financial asset that result from
transactions that are within the scope of Ind AS 115,
the Company always measures the loss allowance at an
amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected
credit loss allowance for trade receivables, the Company
has used a practical expedient as permitted under Ind
AS 109. This expected credit loss allowance is computed
based on a provision matrix which takes into account
historical credit loss experience and adjusted for forward¬
looking information.
The impairment requirements for the recognition and
measurement of a loss allowance are equally applied to
debt instruments at FVTOCI except that the loss allowance
is recognised in other comprehensive income and is not
reduced from the carrying amount in the balance sheet.
The Company has performed sensitivity analysis on the
assumptions used and based on current indicators of
future economic conditions, the Company expects to
recover the carrying amount of these assets.
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 year. 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 year, to the net carrying amount on
initial recognition.
Income 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.
b) Financial Liabilities & Equity Instruments
Classification as Debt or Equity
Debt and equity instruments issued by the 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.
Repurchase of the Company's own equity instruments
is recognised and deducted directly in equity. No gain or
loss is recognised in Statement of Profit and Loss on the
purchase, sale, issue or cancellation of the Company's own
equity instruments
Financial Liabilities
Financial liabilities are classified as either financial liabilities
'at FVTPL' or 'other financial liabilities'
I nitial 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 fair value.
Financial liabilities at FVTPL:
Financial liabilities are classified as at FVTPL when the
financial liability is either held for trading or it is designated
as at FVTPL.
A financial liability is classified as held for trading if:
• I t has been incurred principally for the purpose of
repurchasing it in the near term; or
• on initial recognition it is part of a portfolio of identified
financial instruments that the Company manages
together and has a recent actual pattern of short-term
profit-taking; or
• it is a derivative that is not designated and effective as
a hedging instrument.
A financial liability other than a financial liability held
for trading may be designated as at FVTPL upon initial
recognition if:
• such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would
otherwise arise;
• the financial liability forms part of a Company of financial
assets or financial liabilities or both, which is managed
and its performance is evaluated on a fair value basis,
in accordance with the Company's documented risk
management or investment strategy, and information
about the Companying is provided internally on that
basis; or
• i t forms part of a contract containing one or more
embedded derivatives, and Ind AS 109 permits the
entire combined contract to be designated as at FVTPL
in accordance with Ind AS 109.
Financial liabilities at FVTPL are stated at fair value with
any gains or losses arising on remeasurement recognised
in Statement of Profit and Loss. The net gain or loss
recognised in Statement of Profit and Loss incorporates
an interest paid on the financial liability and is include in
the Statement of Profit and Loss. For liabilities designated
as FVTPL, fair value gains/ losses attributable to changes
in own credit risk are recognised in OCI.
The Company derecognises financial liabilities when, and
only when, the Company's obligations are discharged,
cancelled or they expire. The difference between the
carrying amount of the financial liability derecognised and
the consideration paid and payable is recognised in the
Statement of Profit and Loss.
Other financial liabilities:
The Company enters into deferred payment arrangements
(acceptances) whereby overseas lenders such as
banks and other financial institutions make payments to
supplier's banks for import of raw materials and property,
plant and equipment. The banks and financial institutions
are subsequently repaid by the Company at a later date
providing working capital benefits. These arrangements
are in the nature of credit extended in normal operating
cycle and these arrangements for raw materials are
recognised as Acceptances (under trade payables) and
arrangements for property, plant and equipment are
recognised as borrowings. Interest borne by the Company
on such arrangements is accounted as finance cost.
Other financial liabilities are subsequently measured at
amortised cost using the effective interest method
Derecognition of Financial Liabilities: A financial liability is
derecognized when the obligation specified in the contract
is discharged, cancelled or expires. An exchange between
a lender of debt instruments with substantially different
terms is accounted for as an extinguishment of the original
financial liability and the recognition of a new financial
liability. Similarly, a substantial modification of the terms
of an existing financial liability (whether or not attributable
to the financial difficulty of the debtor) is accounted for
as an extinguishment of the original financial liability and
the recognition of a new financial liability. The difference
between the carrying amount of the financial liability
derecognised and the consideration paid and payable is
recognised in the Statement of Profit or Loss.
Financial assets and liabilities are offset and the net
amount is reported in the Balance Sheet where there is a
legally enforceable right to offset the recognised amounts
and there is an intention to settle on a net basis or realise
the asset and settle the liability simultaneously. The legally
enforceable right must not be contingent on future events
and must be enforceable in the normal course of business
and in the event of default, insolvency or bankruptcy of the
Company or the counterparty.
Reclassification of financial assets
The Company determines classification of financial assets
and liabilities on initial recognition. After initial recognition,
no reclassification is made for financial assets which are
equity instruments and financial liabilities. For financial
assets which are debt instruments, a reclassification is
made only if there is a change in the business model for
managing those assets. Changes to the business model
are expected to be infrequent. The Company's senior
management determines change in the business model
as a result of external or internal changes which are
significant to the Company's operations. Such changes
are evident to external parties. A change in the business
model occurs when the Company either begins or ceases
to perform an activity that is significant to its operations.
If the Company reclassifies financial assets, it applies the
reclassification prospectively from the reclassification
date which is the first day of the immediately next reporting
year following the change in business model. The Company
does not restate any previously recognised gains, losses
(including impairment gains or losses) or interest.
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