2 MATERIAL ACCOUNTING POLICIES

A) Statement of compliance

These standalone financial statements have been
prepared in accordance with the Indian Accounting
Standards (hereinafter referred to as the Ind AS) as
notified by Ministry of Corporate Affairs pursuant to
Section 133 of the Companies Act, 2013 (the Act) read
with the Companies (Indian Accounting Standards)
Rules, 2015 as amended and other relevant provisions of
the Act and accounting principles generally accepted in
India.

B) Basis of preparation of standalone financial
statements

These standalone financial statements have been
prepared and presented under the historical cost
convention, on the accrual basis of accounting except
for certain financial assets and liabilities that are
measured at fair values at the end of each reporting
period, as stated in the accounting policies stated out
below. These financial statements have been prepared
by the Company as a going concern.

The accounting policies are applied consistently to
all the periods presented in the standalone financial
statements, except where a newly issued Accounting
Standard is initially adopted or a revision to an existing
standard requires a change in the accounting policy
hitherto in use.

The standalone financial statements are presented in

Indian Rupee which is also the functional currency of
the Company. All amounts disclosed in the standalone
financial statements and notes have been rounded-off
to the nearest million as per the requirement of Schedule
III, unless otherwise stated. Amount less than a million is
presented as ' 0 Million.

Assets and Liabilities are classified as Current or
Non-Current as per the provisions of Schedule III to
the Companies Act, 2013 and the Company normal
operating cycle. Based on the nature of business, the
Company has ascertained its operating cycle as 12
months for the classification of assets and liabilities.

Figures for the previous year have been regrouped
and / or reclassified, wherever considered necessary.
The impact of such reclassification/regrouping is not
material to Standalone Financial Statements.

Previous year figures, where applicable, have been
indicated in brackets.

C) Business combinations

Business combinations have been accounted for using
the acquisition method.

The consideration transferred is measured at the fair
value of the assets transferred, equity instruments
issued and liabilities incurred or assumed at the date
of acquisition, which is the date on which control is
achieved by the Company. The cost of acquisition also
includes the fair value of any contingent consideration.
Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination
are measured initially at their fair value on the date of
acquisition.

Business combinations involving entities that are
controlled by the Company are accounted for using the
pooling of interests method as follows:

I The assets and liabilities of the combining entities
are reflected at their carrying amounts.

II No adjustments are made to reflect fair values, or
recognise any new assets or liabilities. Adjustments
are only made to harmonise accounting policies.

III The balance of the retained earnings appearing
in the financial statements of the transferor is
aggregated with the corresponding balance
appearing in the financial statements of the
transferee or is adjusted against general reserve.

IV The identity of the reserves are preserved and the
reserves of the transferor become the reserves of
the transferee.

V The difference, if any, between the amounts
recorded as share capital issued plus any additional
consideration in the form of cash or other assets
and the amount of share capital of the transferor
is transferred to capital reserve and is presented
separately from other capital reserves.

VI The financial information in the financial
statements in respect of prior periods is restated
as if the business combination had occurred
from the beginning of the preceding period in the
financial statements, irrespective of the actual
date of combination. However, where the business
combination had occurred after that date, the prior
period information is restated only from that date.

Transaction costs that the Company incurs in
connection with a business combination such
as finder’s fees, legal fees, due diligence fees,
and other professional and consulting fees are
expensed as incurred.

Goodwill is measured as the excess of the sum
of the consideration transferred, the amount of
any non-controlling interest in the acquiree, and
the fair value of the acquirer’s previously held
equity interest in the acquiree (if any) over the net
acquisition date amounts of the identifiable assets
acquired and the liabilities assumed.

In case of a bargain purchase, before recognising a
gain in respect thereof, the Company determines
whether there exists clear evidence of the
underlying reasons for classifying the business
combination as a bargain purchase. Thereafter,
the Company reassesses whether it has correctly
identified all of the assets acquired and all of the
liabilities assumed and recognises any additional
assets or liabilities that are identified in that
reassessment. The Company then reviews the
procedures used to measure the amounts that
Ind AS requires for the purposes of calculating
the bargain purchase. If the gain remains after
this reassessment and review, the Company
recognises it in other comprehensive income and
accumulates the same in equity as capital reserve.
This gain is attributed to the acquirer. If there does
not exist clear evidence of the underlying reasons

for classifying the business combination as a
bargain purchase, the Company recognises the
gain, after assessing and reviewing (as described
above), directly in equity as capital reserve.

When the consideration transferred by the Company
in a business combination includes assets or
liabilities resulting from a contingent consideration
arrangement, the contingent consideration
arrangement is measured at its acquisition date fair
value and included as a part of the consideration
transferred in a business combination. Changes in
the fair value of the contingent consideration that
qualify as measurement period adjustments are
adjusted retrospectively, with the corresponding
adjustments against goodwill or capital reserve, as
the case may be. Measurement period adjustments
are adjustments that arise from additional
information obtained during the 'measurement
period’ (which cannot exceed one year from the
acquisition date) about facts and circumstances
that existed at the acquisition date.

The subsequent accounting for changes in the fair
value of contingent consideration is recognised in
the statement of profit and loss.

When a business combination is achieved in stages,
the Company’s previously held equity interest in
the acquiree is remeasured to its acquisition date
fair value and the resulting gain or loss, if any, is
recognised in profit or loss. Amounts arising from
interests in the acquiree prior to the acquisition
date that have previously been recognised in other
comprehensive income are reclassified to profit or
loss where such treatment would be appropriate if
that interest were disposed of.

D) Property, plant and equipment

I Property, plant and equipment are stated at cost,
less accumulated depreciation and impairment
loss, if any. The cost comprises purchase price
and related expenses and for qualifying assets,
borrowing costs are capitalised based on the
Company’s accounting policy. Integrated Receiver
Decoders (IRD) boxes are capitalised, when
available for deployment.

II Capital work-in-progress comprises cost of
property, plant and equipment and related
expenses that are not yet ready for their intended
use at the reporting date.

III Depreciation is recognised so as to write-off
the cost of assets (other than free hold land and
capital work-in-progress) less their residual
values over their useful lives, using the straight¬
line method. The estimated useful lives, residual
values and depreciation method are reviewed at
each reporting period, with the effect of changes in
estimate accounted for on a prospective basis.

IV The estimate of the useful life of the assets has
been assessed based on technical advice, taking
into account the nature of the asset, the estimated
usage of the asset, the operating conditions of
the asset, past history of replacement etc. The
estimated useful life of items of property, plant and
equipment is as mentioned below:

E) Investment property

I Investment property are properties (land or a
building or part of a building or both) held to earn
rentals and / or for capital appreciation (including
property under construction for such purposes).
Investment property is measured initially at
cost including purchase price, borrowing costs.
Subsequent to initial recognition, investment
property is measured at cost less accumulated
depreciation and impairment, if any.

II Depreciation on investment property is provided
as per the useful life prescribed in Schedule II to
the Companies Act, 2013 on straight line basis.

F) Non-current assets held for sale

The Company classifies non-current assets as held
for sale if their carrying amounts will be recovered
principally through a sale rather than through continuing
use and the sale is highly probable. Management must
be committed to the sale, which should be expected
within one year from the date of classification.

For these purposes, sale transactions include exchanges
of non-current assets for other non-current assets
when the exchange has commercial substance. The
criteria for held for sale classification is regarded as met
only when the asset is available for immediate sale in its
present condition, subject only to terms that are usual
and customary for sales of such assets, its sale is highly
probable; and it will genuinely be sold, not abandoned.
The Company treats sale of the asset to be highly
probable when:

I The appropriate level of management is committed
to a plan to sell the asset,

II An active programme to locate a buyer and
complete the plan has been initiated (if applicable),

III The asset is being actively marketed for sale at a
price that is reasonable in relation to its current fair
value,

IV The sale is expected to qualify for recognition as
a completed sale within one year from the date of
classification, and

V Actions required to complete the plan indicate that
it is unlikely that significant changes to the plan will
be made or that the plan will be withdrawn.

Non-current assets held for sale are measured at the
lower of their carrying amount and the fair value less
costs to sell.

Property, plant and equipment and intangible assets
once classified as held for sale are not depreciated or
amortised.

Gains and losses on disposals of non-current assets
are determined by comparing proceeds with carrying
amounts and are recognised in the standalone
statement of profit and loss.

A discontinued operation is a component of the entity
that has been disposed of or is classified as held for sale
and

i represents a separate major line of business or
geographical area of operations and;

ii is part of a single co-ordinated plan to dispose of
such a line of business or area of operations

The result of discontinued operations are presented
separately as a single amount as profit or loss after
tax from discontinued operations in the standalone
statement of profit and loss.

An impairment loss is recognised for any initial or
subsequent write-down 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 impairment loss
previously recognised. A gain or loss not previously
recognised by the date of the sale of the asset is
recognised at the date of de-recognition.

G) Goodwill

Goodwill arising on an acquisition of a business is
carried at cost as established at the date of acquisition
of the business less accumulated impairment losses, if
any.

For the purpose of impairment testing, goodwill is
allocated to the respective cash generating units
that is expected to benefit from the synergies of the
combination.

A cash generating unit to which goodwill has been
allocated is tested for impairment annually, or more
frequently when there is an indication that the unit
may be impaired. If the recoverable amount of the cash
generating unit is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying
amount of any goodwill allocated to the unit and then to
the other assets of the unit on a pro-rata basis, based
on the carrying amount of each asset in the unit. Any
impairment loss for the goodwill is recognised directly
in the statement of profit and loss. An impairment loss
recognised for goodwill is not reversed in subsequent
periods.

On the disposal of the relevant cash generating unit,
the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.

H) Intangible assets

Intangible assets with finite useful lives that are acquired
are carried at cost less accumulated amortisation
and accumulated impairment losses. Amortisation is
recognised on a straight-line basis over the estimated
useful lives.

The estimated useful life for intangible assets is 3 years.
The estimated useful and amortisation method are
reviewed at each reporting period, with the effect of
any changes in the estimate being accounted for on a
prospective basis.

Intangible assets under development:

Expenditure incurred on acquisition / development of
intangible assets which are not ready for their intended
use at balance sheet date are disclosed under intangible
assets under development.

Research and development of internally generated
assets:

Research costs are expensed as incurred. Development
expenditures on an internally generated assets are
recognised as an intangible asset when the Company
can demonstrate:

I. The technical feasibility of completing the
intangible asset so that the asset will be available
for use or sale

II. Its intention to complete and its ability and
intention to use or sell the asset

III. How the asset will generate future economic
benefits

IV. The availability of resources to complete the asset

V. The ability to measure reliably the expenditure
during development.

The cost of development on internally generated
intangible asset includes the directly attributable
expenditure of preparing the asset for its intended
use. Expenditure on training activities, identified
inefficiencies and initial operating losses is expensed as
it is incurred.

The cost recognised is the sum of expenditure incurred
from the date when the intangible asset first meets
the recognition criteria and prohibits reinstatement of
expenditure previously recognised as an expense.

Directly attributable costs comprise all costs necessary
to create, produce, and prepare the asset to be capable
of operating in the manner intended by management.
The capitalisation cut off is determined by when the
testing stage of the software has been completed and
the software is ready to go live. Costs incurred after
the final acceptance testing and launch have been
successfully completed, is expensed.

Post the launch of the software, the cost is accounted
for as part of the development phase only where there
is the software platform development and activities
to improve its functionality which enhance the asset’s
economic benefits potential and the cost meets the
recognition criteria listed above for the recognition of
development costs as an asset.

Following initial recognition of the development
expenditure as an asset, the asset is carried at cost
less any accumulated amortization and accumulated
impairment losses. Amortisation of the asset begins
when development is complete and the asset is available
for use. It is amortised over the period of expected
future benefit. Amortisation expense is recognised in
the standalone 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.

I) Impairment of property, plant and equipment /
right-of-use assets / other intangible assets /
investment property

The carrying amounts of the Company’s property,
plant and equipment, right-of-use assets, other
intangible assets and investment property are reviewed
at each reporting date to determine whether there is
any indication that those assets have suffered any
impairment loss. If there are indicators of impairment,
an assessment is made to determine whether the
asset’s carrying value exceeds its recoverable amount.
Where 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.

An impairment loss is recognised in standalone
statement of profit and loss whenever the carrying
amount of an asset or a cash generating unit exceeds
its recoverable amount. The recoverable amount is the
higher of fair value less costs of disposal and value in
use. In assessing the value in use, the estimated future
cash flows are discounted to the 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 assets for which the estimates of future
cash flows have not been adjusted.

Where an impairment loss subsequently reverses, the
carrying amount of the asset (or cash generating unit)
is increased to the revised estimate of its recoverable
amount, 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. Reversal
of an impairment loss is recognised immediately in the
standalone statement of profit and loss.

J) Derecognition of property, plant and equipment
/ right-of-use assets / other intangible assets /
investment property

The carrying amount of an item of property, plant and
equipment / right-of-use assets / other intangible
assets / investment property is derecognised on
disposal or when no future economic benefits are
expected from its use or disposal. The gain or loss
arising from the derecognition of an item of property,
plant and equipment / right-of-use assets / other
intangible assets / investment property is determined
as the difference between the net disposal proceeds
and the carrying amount of the item and is recognised
in the standalone statement of profit and loss.

K) Leases

The Company evaluates each contract or arrangement,
whether it qualifies as lease as defined under Ind AS 116
on 'Leases’.

I The Company as lessee:

The Company assesses whether a contract is or
contains a lease, at inception of the contract. The
Company recognises a right-of-use asset and a
corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for
short-term leases (defined as leases with a lease
term of 12 months or less) and leases of low value
assets. For these leases, the Company recognises
the lease payments as an operating expense on a
straight-line basis over the term of the lease.

The lease liability is initially measured at the
present value of the lease payments that are not
paid at the commencement date, discounted
by using the rate implicit in the lease. If this rate
cannot be readily determined, the Company uses
its incremental borrowing rate.

Lease payments included in the measurement of
the lease liability comprise:

a Fixed lease payments (including in-substance
fixed payments), less any lease incentives
receivable;

b Variable lease payments that depend on an
index or rate, initially measured using the
index or rate at the commencement date

The amount expected to be payable by the
lessee under residual value guarantees;

c The exercise price of purchase options, if the
lessee is reasonably certain to exercise the
options; and

d Payments of penalties for terminating the
lease, if the lease term reflects the exercise
of an option to terminate the lease. The lease
liability is presented as a separate line item in
the balance sheet.

The lease liability is subsequently measured by
increasing the carrying amount to reflect interest
on the lease liability (using the effective interest
method) and by reducing the carrying amount to
reflect the lease payments made.

The Company remeasures the lease liability (and
makes a corresponding adjustment to the related
rightof-use asset) whenever:

a The lease term has changed or there is a
significant event or change in circumstances
resulting in a change in the assessment
of exercise of a purchase option, in which
case the lease liability is remeasured by
discounting the revised lease payments using
a revised discount rate.

b The lease payments change due to changes
in an index or rate or a change in expected
payment under a guaranteed residual value, in
which cases the lease liability is remeasured
by discounting the revised lease payments
using an unchanged discount rate (unless the
lease payments change is due to a change in
a floating interest rate, in which case a revised
discount rate is used).

c A lease contract is modified and the lease
modification is not accounted for as a
separate lease, in which case the lease liability
is remeasured based on the lease term of the
modified lease by discounting the revised
lease payments using a revised discount rate
at the effective date of the modification.

The Company did not make any such adjustments
during the periods presented.

The right-of-use assets comprise the initial
measurement of the corresponding lease
liability, lease payments made at or before the
commencement day, less any lease incentives
received and any initial direct costs. They are
subsequently measured at cost less accumulated
depreciation and impairment losses.

Right-of-use assets are depreciated over the
shorter period of lease term and useful life of the
right-of-use asset. If a lease transfers ownership
of the underlying asset or the cost of the right-
of-use asset reflects that the Company expects
to exercise a purchase option, the related right-
of-use asset is depreciated over the useful life of
the underlying asset. The depreciation starts at the
commencement date of the lease.

The right-of-use assets is presented as a separate
line item in the balance sheet.

The Company applies Ind AS 36 to determine
whether a right-of-use asset is impaired and
accounts for any identified impairment loss as
described in the 'Property, Plant and Equipment’
policy.

II The Company as a lessor:

The Company enters into lease agreements as
a lessor with respect to some of its investment
properties.

Leases for which the Company is a lessor are
classified as finance or operating leases. 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.

Rental income from operating leases is recognised
on a straight-line basis over the term of the

relevant lease. Initial direct costs incurred in
negotiating and arranging an operating lease are
added to the carrying amount of the leased asset
and recognised on a straight-line basis over the
lease term.

L) Cash and cash equivalents

Cash and cash equivalents in the balance sheet
comprise cash at banks and in hand and short-term
deposits with an original maturity of three months or
less, which are subject to an insignificant risk of changes
in value.

For the purpose of the statement of cash flows, cash
and cash equivalents consist of cash and short-term
deposits, as defined above.

M) Inventories

I Media Content :

Media content i.e. Programs, Film rights, Music
rights (completed (commissioned / acquired) and
under production) including content in digital form
are stated at lower of cost / written down value
or realisable value. Cost comprises acquisition /
direct production cost. Where the realisable value
of media content is less than its carrying amount,
the difference is expensed. Programs, film rights,
music rights are expensed as under :

a Programs - reality shows, chat shows, events,
game shows, etc. are fully expensed on
telecast / upload.

b Programs (other than (a) above) are expensed
over three financial years starting from the
year of first telecast/upload, as per expected
pattern of realisation of economic benefit.

c Film rights are expensed based on expected
pattern of realisation of economic benefit
over the licensed period of sixty months from
the commencement of rights, whichever is
shorter.

d Music rights are expensed over ten financial
years starting from the year of commencement
of rights, as per management estimate of
future revenue potential.

e The cost of educational content acquired is
expensed based on consumption pattern
over the license period or 60 months from

the date of acquisition / right start date
whichever is shorter.

f Films produced and / or acquired for
distribution / sale of rights:

Cost is allocated to each right based on
management estimate of revenue. Film rights are
amortised as under:

i Satellite rights - Allocated cost of right is
expensed immediately on sale.

ii Theatrical rights - Expensed in the month of
theatrical release.

iii Intellectual Property Rights (IPRs) - Allocated
cost of IPRs are expensed over 5 years from
release of film.

iv Music and Other Rights - Allocated cost of
each right is expensed immediately on sale.

II Raw Stock :

Tapes are valued at lower of cost or estimated net
realisable value. Cost is taken on weighted average
basis.

N) Financial Instruments

Financial instruments is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.

I Initial Recognition

Financial assets (excluding trade receivables
which are initially measured at transaction price)
and financial liabilities are initially measured at
transaction price. 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 and 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 and loss are recognised
immediately in the standalone statement of profit
and loss.

However, trade receivables that do not contain a
significant financing component are measured at

transaction price under Ind AS 115 "Revenue from
Contracts with Customers".

II Financial assets

a Classification of financial assets

Financial assets are classified into the
following specified categories: amortised
cost, financial assets 'at fair value through
profit and loss’ (FVTPL), 'Fair value through
other comprehensive income’ (FVTOCI). The
classification depends on the Company’s
business model for managing the financial
assets and the contractual terms of cash
flows.

b Subsequent measurement

i Debt Instrument - amortised cost

A financial asset is subsequently
measured at amortised cost if it is
held within a business model whose
objective is to hold the asset in order to
collect contractual cash flows and 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. This category generally
applies to trade and other receivables.

ii Fair value through other comprehensive
income (FVTOCI):

A 'debt instrument’ is classified as at the
FVTOCI if both of the following criteria
are met:

- The objective of the business model
is achieved both by collecting
contractual cash flows and selling
the financial assets.

- The asset’s contractual cash flows
represent solely payments of
principal and interest.

Debt instruments included within the
FVTOCI category are measured initially
as well as at each reporting date at
fair value. Fair value movements are
recognised in the other comprehensive
income (OCI). However, the Company
recognises interest income, impairment

losses and reversals and foreign
exchange gain or loss in the statement of
profit and loss. On derecognition of the
asset, cumulative gain or loss previously
recognised in OCI is reclassified from the
equity to standalone statement of profit
and loss. Interest earned whilst holding
FVTOCI debt instrument is reported
as interest income using the effective
interest rate method.

I n case of "equity share" the Company
has irrevocable election choice that
can be exercised on an instrument
by instrument basis to classify such
instruments as FVTOCI. Accordingly
the Company has classified certain
investment in equity instrument as Fair
Value through other comprehensive
income.

iii Fair value through Profit and Loss
(FVTPL):

FVTPL is a residual category for debt
instruments. 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 considered only if doing
so reduces or eliminates a measurement
or recognition inconsistency (referred
to as 'accounting mismatch’). Debt
instruments included within the FVTPL
category are measured at fair value with
all changes recognised in the statement
of profit and loss.

iv Equity investments:

The Company subsequently measures
all equity investments at fair value.
Where the Company’s management
has elected to present fair value gains
and losses on equity investments in
other comprehensive income, there is
no subsequent reclassification of fair
value gains and losses to statement of
profit and loss. Dividends from such
investments are recognised in statement

of profit and loss as other income when
the Company’s right to receive payment
is established.

v Investment in subsidiaries, joint
ventures and associates:

Investment in subsidiaries, joint ventures
and associates are carried at cost less
impairment loss in accordance with Ind
AS 27 on 'Separate Financial Statements’.

vi Derivative financial instruments:

Derivative financial instruments are
classified and measured at fair value
through profit and loss.

c Derecognition of financial assets

A financial asset is derecognised only when:

i The Company has transferred the rights
to receive cash flows from the asset or
the rights have expired or

ii The Company 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 in an
arrangement.

Where the entity has transferred an
asset, the Company evaluates whether
it has transferred substantially all risks
and rewards of ownership of the financial
asset. In such cases, the financial asset
is derecognised. Where the entity
has not transferred substantially all
risks and rewards of ownership of the
financial asset, the financial asset is not
derecognised.

d Impairment of financial assets

I n accordance with Ind AS 109, the Company
applies Expected Credit Losses ("ECL")
model for measurement and recognition of
impairment loss on the following financial
assets:

• Financial assets that are debt
instruments, and are measured at
amortised cost, e.g. loans and deposits;

an amount equal to twelve months ECL is
measured and recognised as loss allowance.
However, if credit risk has increased

significantly, an amount equal to lifetime ECL
is measured and recognised as loss allowance.

When determining whether the credit risk of
a financial asset has increased significantly
since initial recognition and when estimating
expected credit losses, the Company

considers reasonable and supportable
information that is relevant and available
without undue cost or effort. This includes
both quantitative and qualitative information
and analysis, based on the Company’s

historical experience and informed credit

assessment and including forward looking
information.

The gross carrying amount of a financial asset
is written off (either partially or in full) to the
extent that there is no realistic prospect of
recovery. This is generally the case when the
Company determines that the debtor does
not have assets or sources of income that
could generate sufficient cash flows to repay
the amounts subject to the write-off. However,
financial assets that are written off could still
be subject to enforcement activities in order
to comply with the Company’s procedures for
recovery of amounts due.

The presumption under IND AS 109 with
reference to significant increases in credit
risk since initial recognition (when financial
assets are more than 180 days past due) has
been rebutted and is not applicable to the
Company, as the Company is able to collect
significant portion of its receivables that
exceed the due date.

III Financial liabilities and equity instruments

a Classification of debt or equity:

Debt or 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.

value through profit and loss are carried
in the financial statements at fair value
with changes in fair value recognised
in other income or finance costs in the
standalone statement of profit and loss.

c Derecognition of financial liabilities

A financial liability is derecognised when the
obligation under the liability is discharged
or cancelled or expires. When an existing
financial liability is replaced by another from
the same lender on substantially different
terms, or the terms of an existing liability are
substantially modified, such an exchange or
modification is treated as the derecognition
of the original liability and the recognition of a
new liability. The difference in the respective
carrying amounts is recognised in the
standalone statement of profit and loss.

IV Foreign Currency Convertible bonds (FCCB)

The Company has classified foreign currency
convertible bond denominated in USD that can
be converted to ordinary shares at the option
of the bondholder at a conversion price fixed
in Company’s functional currency (INR) as a
compound financial instrument comprising of a
liability component and an equity component.

Initial measurement

The liability component of a compound financial
instrument is initially recognised at the fair value
of a similar liability that does not have an equity
conversion option. The equity component is
initially recognised at the difference between the
fair value of the compound financial instrument as a
whole and the fair value of the liability component.
Any directly attributable transaction costs are
allocated to the liability and equity components in
proportion to their initial carrying amounts.

Subsequent measurement

Subsequent to initial recognition, the liability
component of a compound financial instrument
is measured at amortised cost using the
effective interest method. The equity component
of a compound financial instrument is not
re-measured. Interest related to the financial
liability is recognised in profit or loss under finance
cost. On conversion at maturity, the financial
liability is reclassified to equity and no gain or loss
is recognised.

V Fair value measurement

The Company measures financial instruments
such as debts and certain investments, at fair value
at each balance sheet date.

Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement
is based on the presumption that the transaction
to sell the asset or transfer the liability takes place
either:

a In the principal market for the asset or liability
or

b I n the absence of a principal market, in the

most advantageous market for the asset or
liability.

The principal or the most advantageous market
must be accessible by the Company.

The fair value of an asset or a liability is measured
using the assumptions that market participants
would use when pricing the asset or liability,
assuming that market participants act in their
economic best interest.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is
measured or disclosed in the financial statements
are categorised within the fair value hierarchy,
described as follows, based on the lowest level input
that is significant to the fair value measurement as
a whole:

a Level 1 — Quoted (unadjusted) market

prices in active markets for identical assets
or liabilities.

b Level 2 — Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is directly or indirectly
observable.

c Level 3 — Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable.

For assets and liabilities that are recognised in the
balance sheet on a recurring basis, the Company
determines whether transfers have occurred
between levels in the hierarchy by re-assessing
categorisation (based on the lowest level input
that is significant to the fair value measurement as
a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the
Company has determined classes of assets and
liabilities on the basis of the nature, characteristics
and risks of the asset or liability and the level of the
fair value hierarchy as explained above.

VI Offsetting financial instruments

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.

O) Borrowings 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 or sale, are
added to the cost of those assets, until such time as the
assets are substantially ready for their intended use of
sale. All other borrowing costs are recognised in profit or
loss in the period in which they are incurred.