2.24 Contingent liabilities
A contingent liability is:-
a) a possible obligation that arises from past events and whose
existence will be confirmed only by the occurrence or non¬
occurrence of one or more uncertain future events not wholly
within the control of the entity; or
b) a present obligation that arises from past events but is not
recognised because:-
i) it is not probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation; or
ii) the amount of the obligation cannot be measured with
sufficient reliability.
Contingent liability is disclosed in the case of:
• a present obligation arising from past events, when it is not
probable that an outflow of resources will be required to settle
the obligation;
• a present obligation arising from past events, when no reliable
estimate is possible;
• a possible obligation arising from past events, unless the
probability of outflow of resources is remote.
A contingent asset is disclosed where an inflow of economic
benefits is probable.
Provisions, contingent liabilities and contingent assets are
reviewed at each balance sheet date.
2.25 Operating segment
Identification of segment - Operating segments are reported in
the manner consistent with the internal reporting provided to the
Chief Operating Decision Maker (CODM) of the Company.
Segment accounting policies - The Board of Directors of the
Company have been identified as the Chief Operating Decision
Maker (CODM) as defined under Ind AS 108. CODM reviews overall
financial information of the Company together for performance
evaluation and allocation of resources and does not review any
discrete information to evaluate performance of any individual
product or geography.
The Company prepares its segment information in conformity
with accounting policies adopted for preparing and presenting the
financial statements of the Company as a whole.
2.26 Non- Current Asset 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.
Assets classified as held for sale are measured at the lower of their
carrying amount and fair value less costs to sell. Costs to sell are
the incremental costs directly attributable to the disposal of an
asset, excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met
only when the sale is highly probable, and the asset is available
for immediate sale in its present condition. Actions required to
complete the sale/ distribution should indicate that it is unlikely
that significant changes to the sale will be made or that the
decision to sell will be withdrawn. Management must be committed
to the sale and the sale 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 met only when the assets are 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:
• The appropriate level of management is committed to a plan
to sell the asset,
• An active programme to locate a buyer and complete the plan
has been initiated (if applicable),
• The asset is being actively marketed for sale at a price that is
reasonable in relation to its current fair value
• The sale is expected to qualify for recognition as a completed
sale within one year from the date of classification, and
• 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.
Property, plant and equipment and intangible are not depreciated,
or amortised assets once classified as held for sale.
Assets and liabilities classified as held for sale are presented
separately from other items in the balance sheet.
2.27 Onerous contracts
If the Company has a contract that is onerous, the present
obligation under the contract is recognised and measured as a
provision. However, before a separate provision for an onerous
contract is established, the Company recognises any impairment
loss that has occurred on assets dedicated to that contract.
An onerous contract is a contract under which the unavoidable
costs (i.e., the costs that the Company cannot avoid because it
has the contract) of meeting the obligations under the contract
exceed the economic benefits expected to be received under it.
The unavoidable costs under a contract reflect the least net cost
of exiting from the contract, which is the lower of the cost of
fulfilling it and any compensation or penalties arising from failure
to fulfil it. The cost of fulfilling a contract comprises the costs that
relate directly to the contract (i.e., both incremental costs and an
allocation of costs directly related to contract activities).
3. Key sources of estimation uncertainty and critical accounting
judgements
Significant Estimates
Going Concern
The Company has prepared future cash flow forecasts taking
into cognizance the plan for monetization of some of the assets
including investments and Property, Plant and Equipments, to
repay the debts and manage the working capital requirements,
sales to other customers and cost optimisation (Refer Note 48
of standalone financial statements), which involves judgement
and estimates of key variables and market conditions. Based on
such an analysis, the Company continues to prepare its financial
statements on a going concern basis.
In the course of applying the accounting policies, the Company is
required to make judgements, estimates and assumptions about
the carrying amount of assets and liabilities that are not readily
apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognized
in the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future period, if
the revision affects current and future periods.
Key sources of estimation uncertainty
a) Useful lives of property, plant and equipment
Management reviews the useful lives of property, plant and
equipment at least once a year. Such lives are dependent upon an
assessment of both the technical lives of the assets and also their
likely economic lives based on various internal and external factors
including relative efficiency and operating costs. Accordingly,
depreciable lives are reviewed annually using the best information
available to the Management. Refer Note 4 for further disclosure.
b) Impairment of property plant and equipment and intangible assets
Determining whether the property, plant and equipment are
impaired requires an estimate in the value in use of cash generating
units and estimate of recoverable amount (Higher of FV and Value
in Use). It requires to estimate the future cash flows expected to
arise from the cash generating units and a suitable discount rate
in order to calculate present value. When the actual cash flows are
less than expected, a material impairment loss may arise. Refer
Note 4 for further disclosure.
c) Impairment of investments in subsidiaries, joint ventures and
associate and impairment of goodwill
Determining whether the goodwill or investments in subsidiaries,
joint ventures and associate are impaired requires an estimate in the
value in use. In considering the value in use, the Management have
anticipated the future cash flows, discount rates and other factors
of the underlying businesses/companies. In estimating the fair
value of an asset or a liability, the Company uses market-observable
data to the extent it is available. In certain cases, the Company
engages third party qualified valuers to perform the valuation. The
management works closely with the qualified external valuers to
establish the appropriate valuation techniques and inputs to the
model. A degree of judgment is required in establishing fair values.
Judgements include consideration of inputs such as liquidity risk,
credit risk and volatility. Any subsequent changes to the cash flows
could impact the carrying value of investments/goodwill. Refer
Note 4 and 5 for further disclosure.
d) Provisions, liabilities and contingencies
Provisions and liabilities are recognized in the period when it
becomes probable that there will be a future outflow of funds
resulting from past events that can reasonably be estimated. The
timing of recognition requires application of judgement to existing
facts and circumstances which may be subject to change.
In the normal course of business, contingent liabilities may arise
from litigation and other claims against the Company. Potential
liabilities that are possible but not probable of an outflow of
resources embodying economic benefits are treated as contingent
liabilities. Such liabilities are disclosed in the notes but are not
recognized. Refer Note 37 for further disclosure.
e) Taxes
Deferred tax assets are recognized for unused tax losses to
the extent that it is probable that taxable profit will be available
against which the losses can be utilized. Significant management
judgement is required to determine the amount of deferred tax
assets that can be recognised, based upon the likely timing and
the level of future taxable profits together with future tax planning
strategies. Refer Note 8 for further disclosure.
f) Employee benefit plans
The cost of defined benefit gratuity plan and other post¬
employment benefits are determined using actuarial valuations.
An actuarial valuation involves making various assumptions that
may differ from actual developments in the future. These include
the determination of the discount rate, future salary increases and
mortality rates. Due to the complexities involved in the valuation
and its long-term nature, a defined benefit obligation is highly
sensitive to changes in these assumptions. All assumptions are
reviewed at each reporting date.
The mortality rate is based on publicly available mortality tables
for India. Those mortality tables tend to change only at interval in
response to demographic changes. Future salary increases and
gratuity increases are based on expected future inflation rates.
Refer Note 26 and 33 for further disclosure.
g) Share based payments
The Company initially measures the cost of equity-settled
transactions with employees using an appropriate valuation model
to determine the fair value of the liability incurred. Estimating
fair value for share-based payment transactions requires
determination of the most appropriate valuation model, which is
dependent on the terms and conditions of the grant. This estimate
also requires determination of the most appropriate inputs to the
valuation model including the expected life of the share option,
volatility and dividend yield and making assumptions about them.
The assumptions and models used for estimating fair value for
share-based payment transactions are disclosed in Note no 35.
h) Lease
The application of Ind AS 116 requires company to make
judgements and estimates that affect the measurement of right-
of-use assets and liabilities. In determining the lease term, we
must consider all facts and circumstances that create an economic
incentive to exercise renewal options (or not exercise termination
options). Assessing whether a contract includes a lease also
requires judgement. Estimates are required to determine the
appropriate discount rate used to measure lease liabilities.
The Company cannot readily determine the interest rate implicit
in the lease, therefore, it uses its incremental borrowing rate (IBR)
to measure lease liabilities. The IBR is the rate of interest that the
Company would have to pay to borrow over a similar term, and
with a similar security, the funds necessary to obtain an asset
of a similar value to the right-of-use asset in a similar economic
environment. The IBR therefore reflects what the Company 'would
have to pay', which requires estimation when no observable rates
are available or when they need to be adjusted to reflect the terms
and conditions of the lease. The Company estimates the IBR using
observable inputs (such as market interest rates) when available
and is required to make certain entity-specific estimates.
i) Impairment of Financial Assets:
The impairment provision for financial assets is based on
assumptions about risk of default and expected loss rates. The
Company uses judgement in making these assumptions and
selecting the inputs to the impairment calculation, based on the
Company's history, existing market conditions as well as forward
looking estimates at the end of each reporting period. Estimated
impairment allowance on financial assets is based on the aging
of the receivable balances and historical experience. Individual
receivable balances are written off when management deems
them not to be collectible. The information about the impairment
provision on the Company's trade and other receivables is disclosed
in Note 34.8.
3.1 Change in Accounting policies and disclosures
New and amended standards
The Ministry of Corporate Affairs has notified Companies (Indian
Accounting Standard) Amendment Rules 2022 dated March 23,
2022, to amend the following Ind AS which are effective from April
01, 2022.
(i) Onerous Contracts - Costs of Fulfilling a Contract -
Amendments to Ind AS 37
(ii) Reference to the Conceptual Framework - Amendments to
Ind AS 103
(iii) Property, Plant and Equipment: Proceeds before Intended
Use - Amendments to Ind AS 16
(iv) Ind AS 101 First-time Adoption of Indian Accounting Standards
- Subsidiary as a first-time adopter
(v) Ind AS 109 Financial Instruments - Fees in the '10 per cent' test
for derecognition of financial liabilities
(vi) Ind AS 41 Agriculture - Taxation in fair value measurements
These amendments had no impact on the accounting policies and
disclosures made in the standalone financial statements of the
Company.
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