2. MATERIAL ACCOUNTING POLICIES2A. Statement of compliance and basis of preparation(i) Statement of Compliance
The Standalone financial statements of the
Company have been prepared in accordance with
Indian Accounting Standards (Ind AS) notified under
the Companies (Indian Accounting Standards)
Rules, 2015 (as amended from time to time) and
presentation requirements of Division III of Schedule
III to the Companies Act, 2013 (as amended from
time to time), (Ind AS compliant Schedule III), as
applicable to the SFS.
(ii) Basis of preparation and presentation
The financial statements have been prepared on
the historical cost basis except for certain financial
instruments that are measured at fair values at the
end of each reporting period, as explained in the
accounting policies below.
Historical cost is generally based on the fair value of
the consideration given in exchange for goods and
services.
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 into 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 financial statements
is determined 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, and measurements that have some
similarities to fair value but are not fair value, such as
net realisable 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
measurement 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 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
assets or liability.
The Standalone financial statements are presented
in INR and all values are rounded to the nearest lacs
(INR 00,000), except when otherwise indicated.
The Company has prepared the financial statements
on the basis that it will continue to operate as a going
concern.
2B. Summary of material accounting policies(i) Cash and 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) and highly
liquid investments that are readily convertible into
known amounts of cash and which are subject to
insignificant risk of changes in value.
(ii) Cash flow statement
Cash flows are reported using indirect method,
whereby Profit/(loss) before tax reported under
Statement of Profit and loss is adjusted for the
effects of transactions of non-cash nature and any
deferrals or accruals of past or future cash receipts
or payments. The cash flows from operating,
investing and financing activities of the Company are
segregated based on available information.
(iii) Property, plant and equipment
All the items of property, plant and equipment are
stated at historical cost net of cenvat credit less
depreciation and impairment losses. Historical cost
includes expenditure that is directly attributable to
the acquisition of the items.
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 Company and the cost of the item can
be measured reliably. The carrying amount of any
component accounted for as a separate asset is
derecognised when replaced. All other repairs and
maintenance are charged to profit or loss during the
reporting period in which they are incurred.
Depreciation is recognised so as to write off the cost
of assets less their residual values over their useful
lives, using the straight-line method. The estimated
useful life is taken in accordance with Schedule II
to the Companies Act, 2013. The estimated useful
lives, residual values and depreciation method are
reviewed at the end of each reporting period, with
the effect of any changes in estimate accounted for
on a prospective basis.
derecognised upon disposal or when no future eco¬
nomic benefits are expected to arise from the contin¬
ued 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 be¬
tween the sales proceeds and the carrying amount of
the asset and is recognised in profit or loss.
(iv) Impairment of non financial assets
At the end of each reporting period, the Company
reviews the carrying amounts of its tangible assets
to determine whether there is any indication that
those assets have suffered an impairment loss. If any
such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of
the impairment loss (if any). When it is not possible
to estimate the recoverable amount of an individual
asset, the Company estimates the recoverable
amount of the cash-generating unit to which the
asset belongs. When a reasonable and consistent
basis of allocation can be identified, corporate assets
are also allocated to individual cash-generating units,
or otherwise they are allocated to the smallest group
of cash-generating units for which a reasonable and
consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less
costs of disposal and value in use. 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 for
which the estimates of future cash flows have not
been adjusted.
If the recoverable amount of an asset (or cash¬
generating unit) is estimated to be less than its
carrying amount, the carrying amount of the
asset (or cash-generating unit) is reduced to
its recoverable amount. An impairment loss is
recognised immediately in profit or loss.
When an impairment loss subsequently reverses,
the carrying amount of the asset (or a cash¬
generating unit) is increased to the revised estimate
of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying
amount that would have been determined had no
impairment loss been recognised for the asset (or
cash-generating unit) in prior years. A reversal of an
impairment loss is recognised immediately in profit
or loss.
(v) Revenue recognition
Revenue towards satisfaction of a performance
obligation is measured at the amount of transaction
price allocated to that performance obligation. The
transaction price of goods sold and services rendered
is net of variable consideration on account of various
discounts and schemes offered by the Company as
part of the contract.
Income from services
Revenue from shared services contracts are
recognised over the period of the contract as and
when services are rendered.
Interest
Interest income on all financial assets, mandatorily
required to be measured at FVTPL, is recognised
using the contractual interest rate.
Dividend
Dividend income is recognised when the Company's
right to receive dividend is established by the
reporting date.
(vi) Financial instruments
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 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.
Investment in subsidiary
A subsidiary is an entity controlled by the Company.
Control exists when the Company has power over
the entity, is exposed, or has rights to variable returns
from its involvement with the entity and has the
ability to affect those returns by using its power over
the entity. Power is demonstrated through existing
rights that give the ability to direct relevant activities,
those which significantly affect the entity's returns.
Investments in subsidiary are carried at cost less
impairment. Cost comprises price paid to acquire the
investment and directly attributable cost.
Impairment of investments
The Company reviews its carrying value of
investments carried at cost annually, or more
frequently when there is indication for impairment.
If the recoverable amount is less than its carrying
amount, the impairment loss is recorded in the
Statement of Profit and Loss.
When an impairment loss subsequently reverses,
the carrying amount of the Investment is increased
to the revised estimate of its recoverable amount,
so that the increased carrying amount does not
exceed the cost of the Investment. A reversal of
an impairment loss is recognised immediately in
Statement of Profit or Loss.
Financial assets
All regular way purchases or sales of financial assets
are recognised and derecognised on a trade date
basis. Regular way purchases or sales are purchases
or sales of financial assets that require delivery
of assets within the time frame established by
regulation or convention in the marketplace.
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.
Debt instruments that meet the following conditions
are subsequently measured at fair value through
other comprehensive income (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 achieved both by collecting
contractual cash flows and selling financial
assets; 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.
Interest income is recognised in profit or loss for
FVTOCI debt instruments. For the purposes of
recognising foreign exchange gains and losses,
FVTOCI debt instruments are treated as financial
assets measured at amortised cost. Thus, the
exchange differences on the amortised cost are
recognised in profit or loss and other changes in the
fair value of FVTOCI financial assets are recognised
in other comprehensive income and accumulated
under the heading of 'Reserve for debt instruments
through other comprehensive income'. When the
investment is disposed of, the cumulative gain or loss
previously accumulated in this reserve is reclassified
to profit or loss.
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.
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.
Investments in equity instruments at 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
pertaining to investments in equity instruments. 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'. The
cumulative gain or loss is not reclassified to profit or
loss on disposal of the investments.
A financial asset is held for trading if:
• it has been acquired principally for the purpose
of selling 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 or a financial
guarantee.
Financial assets at fair value through profit or loss
(FVTPL)
Investments in equity instruments are classified as
at FVTPL, unless the Company irrevocably elects on
initial recognition to present subsequent changes
in fair value in other comprehensive income for
investments in equity instruments which are not
held for trading.
Debt instruments that do not meet the amortised
cost criteria or FVTOCI criteria (see above) are
measured at FVTPL. In addition, debt instruments
that meet the amortised cost criteria or the FVTOCI
criteria but are designated as at FVTPL are measured
at FVTPL.
A financial asset that meets the amortised cost
criteria or debt instruments that meet the FVTOCI
criteria may be designated as at FVTPL upon
initial recognition if such designation eliminates or
significantly reduces a measurement or recognition
inconsistency that would arise from measuring
assets or liabilities or recognising the gains and
losses on them on different bases. The Company has
not designated any debt instrument as at FVTPL.
Financial assets at FVTPL are measured at fair value
at the end of each reporting period, with any gains or
losses arising on remeasurement 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. Dividend on financial assets at FVTPL is
recognised when the Company's right to receive
the dividends is established, it is probable that the
economic benefits associated with the dividend 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.
Impairment of financial assets
The Company applies the expected credit loss model
for recognising impairment loss on financial assets
measured at amortised cost, lease receivables,
trade receivables and other contractual rights to
receive cash or other financial assets and financial
guarantees not designated as at FVTPL.
For trade receivables or any contractual right to
receive cash or another financial assets 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.
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. If the
Company neither transfers nor retains substantially
all the risks and rewards of ownership and continues
to control the transferred asset, the Company
recognises its retained interest in the asset and an
associated liability for amounts it may have to pay.
If the Company retains substantially all the risks and
rewards of ownership of a transferred financial asset,
the Company continues to recognise the financial
asset and also recognises a collateralised borrowing
for the proceeds received.
On derecognition of a financial asset in its entirety,
the difference between the asset's carrying amount
and the sum of the consideration received and
receivable and the cumulative gain or loss that had
been recognised in other comprehensive income
and accumulated in equity is recognised in profit
or loss if such gain or loss would have otherwise
been recognised in profit or loss on disposal of that
financial asset.
On derecognition of a financial asset other than
in its entirety (e.g. when the Company retains an
option to repurchase part of a transferred asset), the
Company allocates the previous carrying amount
of the financial asset between the part it continues
to recognise under continuing involvement, and
the part it no longer recognises on the basis of the
relative fair values of those parts on the date of the
transfer. The difference between the carrying amount
allocated to the part that is no longer recognised
and the sum of the consideration received for the
part no longer recognised and any cumulative gain
or loss allocated to it that had been recognised in
other comprehensive income is recognised in profit
or loss if such gain or loss would have otherwise
been recognised in profit or loss on disposal of that
financial asset. A cumulative gain or loss that had
been recognised in other comprehensive income
is allocated between the part that continues to be
recognised and the part that is no longer recognised
on the basis of the relative fair values of those parts.
(vii) Financial liabilities and 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 a Company entity 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 profit or loss
on the purchase, sale, issue or cancellation of the
Company's own equity instruments.
Financial liabilities
All financial liabilities are subsequently measured at
amortised cost using the effective interest method or
at FVTPL.
a) Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL
when the financial liability is either contingent
consideration recognised by the Company as
an acquirer in a business combination to which
Ind AS 103 applies or is held for trading or it is
designated as at FVTPL.
A financial liability is classified as held for
trading if:
• it 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 or contingent consideration
recognised by the Company as an acquirer in
a business combination to which Ind AS 103
applies, 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 group
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
risk management or investment strategy,
and information about the grouping is
provided internally on that basis; or
• it 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.
Financial liabilities at FVTPL are stated at
fair value, with any gains or losses arising on
remeasurement recognised in profit or loss.
The net gain or loss recognised in profit or loss
incorporates any interest paid on the financial
liability and is included in the 'Other income' line
item.
However, for non-held-for-trading financial
liabilities that are designated as at FVTPL, the
amount of change in the fair value of the financial
liability that is attributable to changes in the
credit risk of that liability is recognised in other
comprehensive income, unless the recognition
of the effects of changes in the liability's credit
risk in other comprehensive income would
create or enlarge an accounting mismatch in
profit or loss, in which case these effects of
changes in credit risk are recognised in profit or
loss. The remaining amount of change in the fair
value of liability is always recognised in profit
or loss. Changes in fair value attributable to a
financial liability's credit risk that are recognised
in other comprehensive income are reflected
immediately in retained earnings and are not
subsequently reclassified to profit or loss.
b) Financial liabilities subsequently measured at
amortised cost
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.
The effective interest method is a method of
calculating the amortised cost of a financial
liability and of allocating interest expense over
the relevant period. The effective interest rate is
the rate that exactly discounts estimated future
cash payments (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 financial liability, or (where
appropriate) a shorter period, to the net carrying
amount on initial recognition.
c) Derecognition of financial liabilities
The Company derecognises financial liabilities
when, and only when, the Company's
obligations are discharged, cancelled or have
expired. An exchange between with 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 profit or loss.
(viii) Employee benefit costs
Employee benefits include provident fund, gratuity
fund and compensated absences.
Retirement benefits costs and termination
benefits
Payments to defined contribution retirement
benefit plans are recognised as an expense when
employees have rendered service entitling them to
the contributions:
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 period. 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), is reflected
immediately in the balance sheet with a charge or
credit recognised in other comprehensive income
in the period in which they occur. Remeasurement
recognised in other comprehensive income is
reflected immediately in retained earnings and is
not reclassified to profit or loss. Past service cost
is recognised in profit or loss in the period of a plan
amendment. Net interest is calculated by applying
the discount rate at the beginning of the period to the
net defined benefit liability or asset. Defined benefit
costs are categorised as follows:
a. service cost (including current service cost,
past service cost, as well as gains and losses on
curtailments and settlements);
b. net interest expense or income; and
c. remeasurement
The Company presents the first two components of
defined benefit costs in profit or loss in the line item
'Employee benefits expense'. Curtailment gains and
losses are accounted for as past service costs.
The retirement benefit obligation recognised in the
balance sheet 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.
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 period 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,
(ix) Segment information
The Company determines reportable segment based
on information reported to the Chief Operating
Decision Maker (CODM) for the purposes of
resource allocation and assessment of segmental
performance, The CODM evaluates the Company's
performance and allocates resources based on
an analysis of various performance indicators by
business segments, The accounting principles
used in the preparation of the financial statements
are consistently applied to record revenue and
expenditure in individual segments,
(x) Leases
The Company's lease asset classes primarily consist
of leases for 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 recognises Right-of-Use (ROU) asset
and a corresponding lease liability for all lease
arrangements in which it is a lessee, except for leases
with a term of 12 months or less (short-term leases)
and low value leases, For these short-term and low-
value leases, the Company recognises the lease
payments as an operating expense on a straight-line
basis over the term of the lease,
Certain lease arrangements includes 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 ROU assets are initially recognised 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,
ROU 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,
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 ROU asset if the Company
changes its assessment of whether it will exercise an
extension or a termination option,
Lease liability and ROU assets have been separately
presented in the balance sheet and lease payments
have been classified as financing cash flows,
(xi) Earnings per share
Basic earnings per share is computed by dividing the
profit / (loss) after tax (including the post tax effect
of exceptional items, if any) by the weighted average
number of equity shares outstanding during the year,
Diluted earnings per share is computed by dividing
the profit / (loss) after tax (including the post tax
effect of exceptional items, if any) as adjusted for
dividend, interest and other charges to expense or
income (net of any attributable taxes) relating to
the dilutive potential equity shares, by the weighted
average number of equity shares considered for
deriving basic earnings per share and the weighted
average number of equity shares which could have
been issued on the conversion of all dilutive potential
equity shares. Potential equity shares are deemed
to be dilutive only if their conversion to equity
shares would decrease the net profit per share from
continuing ordinary operations. Potential dilutive
equity shares are deemed to be converted as at the
beginning of the period, unless they have been issued
at a later date. The dilutive potential equity shares are
adjusted for the proceeds receivable had the shares
been actually issued at fair value (i.e. average market
value of the outstanding shares). Dilutive potential
equity shares are determined independently for each
period presented. The number of equity shares and
potentially dilutive equity shares are adjusted for
employee share options and bonus shares, if any, as
appropriate.
(xii) Taxation
Income tax expense represents the sum of the tax
currently payable and deferred tax.
Current tax (refer note 26)
The tax currently payable is based on taxable profit
for the year. Taxable profit differs from net profit as
reported in profit or loss because it excludes items
of income or expense that are taxable or deductible
in other years and it further excludes items that are
never taxable or deductible. The Company's liability
for current tax is calculated using tax rates that have
been enacted or substantively enacted by the end
of the reporting period. A provision is recognised
for those matters for which the tax determination
is uncertain but it is considered probable that there
will be a future outflow of funds to a tax authority.
The provisions are measured at the best estimate
of the amount expected to become payable. The
assessment is based on the judgement of tax
professionals within the Company supported by
previous experience in respect of such activities and
in certain cases based on specialist independent tax
advice.
Deferred tax
Deferred tax is the tax expected to be payable or
recoverable on differences between the carrying
amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted
for using the liability method. Deferred tax liabilities
are generally recognised for all taxable temporary
differences and deferred tax assets are recognised
to the extent that it is probable that taxable profits
will be available against which deductible temporary
differences can be utilised. Such assets and liabilities
are not recognised if the temporary difference arises
from the initial recognition (other than in a business
combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor
the accounting profit.
The carrying amount of deferred tax assets is
reviewed at each reporting date 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.
Deferred tax is calculated at the tax rates that are
expected to apply in the period when the liability
is settled or the asset is realised based on tax laws
and rates that have been enacted or substantively
enacted at the reporting date. The measurement
of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner
in which the Company expects, at the end of the
reporting period, to recover or settle the carrying
amount of its assets and liabilities. Deferred tax
assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against
current tax liabilities and when they relate to income
taxes levied by the same taxation authority and the
Company intends to settle its current tax assets and
liabilities on a net basis.
Current and deferred tax for the year
Current and deferred tax are recognised in profit
or loss, except when they relate 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
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