PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are recognized when the Company has
a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow
of resources embodying economic benefits will
be required to settle the obligation and a reliable
estimate can be made of the amount of the
obligation.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax
rate that reflects, when appropriate, the risks
specific to the liability. When discounting is used,
the increase in the provision due to the passage of
time is recognized as a finance cost.
A contingent liability is a possible obligation that
arises from past events whose existence will be
confirmed by the occurrence or non-occurrence
of one or more uncertain future events beyond the
control of the Company or a present obligation that
is not recognized because it is not probable that
an outflow of resources will be required to settle
the obligation. A contingent liability also arises
in extremely rare cases where there is a liability
that cannot be recognized because it cannot be
measured reliably. The Company does not recognize
a contingent liability but discloses its existence in
the Balance Sheet.
Contingent assets are not recognized but disclosed
in the financial statements when an inflow of
economic benefit is probable.
M. CASH AND CASH EQUIVALENT
Cash and cash equivalent in the Balance Sheet
comprise cash at banks and in hand.
N. EARNING PER SHARE
Basic earnings per share are computed by dividing
the profit / (loss) after tax by the weighted average
number of equity shares outstanding during the
year. The weighted average number of equity shares
outstanding during the year is adjusted for treasury
shares, bonus issue, bonus element in a rights issue
to existing shareholders, share split and reverse
share split (consolidation of shares).
3. CRITICAL ESTIMATION AND JUDGEMENTS
The preparation of financial statements requires the
use of accounting estimates which, by definition, will
seldom equal the actual results. Management also
needs to exercise judgement in applying the company's
accounting policies.
This note provides an overview of the areas that involved
a higher degree of judgement or complexity, and of items
which are more likely to be materially adjusted due to
estimates and assumptions turning out to be different
than those originally assessed. Detailed information
about each of these estimates and judgements is
included in relevant notes together with information
about the basis of calculation for each affected line item
in the financial statements.
The areas involving critical estimates or judgements are:
- Estimation of current tax expense and payable - Note
16 (i)
- Estimation of defined benefit obligation - Note 15
- Recognition of deferred tax assets for carried forward
tax losses - Note 16 (ii)
Estimates and judgements are continually evaluated.
They are based on historical experience and other
factors, including expectations of future events that
may have a financial impact on the company and that
are believed to be reasonable under the circumstances.
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