Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised when the Company has a present obligation (legal or constructive) as a
result of a past event, it is probable that the Company will be required to settle the obligation, and
a reliable estimate can be made of the amount of the obligation.

Provisions are measured at the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the risks and uncertainties
surrounding the obligation. When a provision is measured using the cash flows estimated to
settle the present obligation, it's carrying amount is the present value of those cash flows (when
the effect of the time value of money is material).

A present obligation that arises from past events where it is either not probable that an outflow
of resources will be required to settle or a reliable estimate of the amount cannot be made, is
disclosed as a contingent liability. Contingent liabilities are also disclosed when there is a possible
obligation arising from past events, the existence of which will be confirmed only by the
occurrence or non -occurrence of one or more uncertain future events not wholly within the
control of the Company.

Claims against the Company where the possibility of any outflow of resources in settlement is
remote, are not disclosed as contingent liabilities.

Contingent assets are not recognised in financial statements since this may result in the
recognition of income that may never be realised. However, when the realisation of income is
virtually certain, then the related asset is not a contingent asset and is recognised.

Provisions, contingent assets and contingent liabilities are reviewed at each balance sheet date.

Q Employee benefits

Employee benefits include salaries, wages, contribution to provident fund, gratuity, leave
encashment towards un-availed leave, compensated absences, post-retirement medical benefits
and other terminal benefits.

Short-term employee benefits

Wages and salaries, including non-monetary benefits that are expected to be settled within 12
months after the end of the period in which the employees render the related service are
recognised in respect of employees' services up to the end of the reporting period and are
measured at the amounts expected to be paid when the liabilities are settled. The liabilities are
presented as current employee benefit obligations in the balance sheet.

Post-employment benefits
Defined contribution plan

Employee Benefit under defined contribution plans comprises of Contributory provident fund,
Post Retirement benefit scheme, Employee pension scheme, composite social security scheme
etc. is recognized based on the undiscounted amount of obligations of the Company to
contribute to the plan.

Defined benefit plan

Defined benefit plans comprising of gratuity, post-retirement medical benefits and other
terminal benefits, are recognized based on the present value of defined benefit obligations which
is computed using the projected unit credit method, with actuarial valuations being carried out at
the end of each annual reporting period. These are accounted either as current employee cost or
included in cost of assets as permitted.

The net interest cost is calculated by applying the discount rate to the net balance of the defined
benefit obligation and the fair value of plan assets. This cost is included in employee benefit
expense in the statement of profit and loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial
assumptions are recognised in the period in which they occur, directly in other comprehensive
income. They are included in retained earnings in the statement of changes in equity and in the
balance sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments
or curtailments are recognised immediately in profit or loss as past service cost.

Provision for Gratuity and its classifications between current and non-current liabilities are based
on independent actuarial valuation.

Short term employee benefits

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.

Voluntary retirement scheme - Termination benefits

Termination benefits are payable when employment is terminated by the Company before the
normal retirement date, or when an employee accepts voluntary retirement scheme in exchange
for these benefits. Expenditure on Voluntary Retirement Scheme (VRS) is charged to the
Statement of Profit and Loss when incurred.

R Financial instruments

Financial assets and financial liabilities are recognised when an entity becomes a party to the
contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that
are directly attributable to the acquisition or issue of financial assets and financial liabilities (other
than financial assets and financial liabilities at fair value through Statement of Profit and Loss
(FVTPL)) are added to or deducted from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of
financial assets or financial liabilities at fair value through profit and loss are recognised
immediately in Statement of Profit and Loss.

Financial assets

Initial recognition and measurement

The Company initially recognises loans and advances, deposits and debt securities purchased on
the date on which they originate. Purchases and sale of financial assets are recognised on the
trade date, which is the date on which the Company becomes a party to the contractual
provisions of the instrument.

All financial assets are recognised initially at fair value. In the case of financial assets not recorded
at FVTPL, transaction costs that are directly attributable to its acquisition of financial assets are
included therein.

Subsequent Measurement

For purposes of subsequent measurement, financial assets are classified as below :

- Amortised cost; or

- Fair Value through Other Comprehensive Income (FVTOCI) - debt investment; or

- Fair Value through Other Comprehensive Income (FVTOCI) - equity investment; or

- Fair Value through Profit or Loss (FVTPL)

A financial asset is measured at amortised cost if it meets both of the following conditions:

• The asset is held within a business model whose objective is to hold assets 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.

These include trade receivables, cash and cash equivalent and other bank balances, shortterm
deposits with banks, other financial assets. Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are not quoted in an active market and which are
not classified as financial assets at fair value through profit and loss.

Subsequently, these are measured at amortized cost using the effective interest method (EIR) less
any impairment losses. Amortised cost is calculated by taking into account fees or costs that are
an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss.
The losses arising from impairment are recognised in the profit or loss.

A debt instrument is classified as FVTOCI only if it meets both of the following conditions and is
not recognised at FVTPL:

• The asset is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets; 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.

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 & 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 Statement of Profit and Loss. Interest earned whilst
holding FVTOCI debt instrument is reported as interest income using the EIR method.

All equity investments in scope of IND AS 109 are measured at fair value. Equity instruments
which are held for trading and contingent consideration recognised by an acquirer in a
business combination to which IND AS 103 applies are classified as at FVTPL. For all other
equity instruments, the Company may make an irrevocable election to present in other
comprehensive income subsequent changes in the fair value. The Company makes such
election on an instrument-by-instrument basis. The classification is made on initial
recognition and is irrevocable.

If the Company decides to classify an equity instrument as at FVTOCI, then all fair value
changes on the instrument, excluding dividends, are recognised in the OCI. There is no
recycling of the amounts from OCI to Statement of Profit and Loss, even on sale of
investment. However, on sale/disposal the Company may transfer the cumulative gain or
loss within equity.

Equity instruments included within the FVTPL category are measured at fair value with all
changes recognised in the Statement of Profit and Loss.

All other financial assets are classified as measured at FVTPL.

In addition, on initial recognition, the Company may irrevocably designate a financial asset
that otherwise meets the requirements to be measured at amortised cost or at FVTOCI as at
FVTPL if doing so eliminates or significantly reduces and accounting mismatch that would
otherwise arise.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with
any gains and losses arising on remeasurement recognised in statement of profit or loss.
The net gain or loss recognised in statement of 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 dividends will flow to the
entity,

• The dividend does not represent a recovery of part of cost of the investment and the
amount of dividend can be measured reliably.

Derecognition of financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from
the asset expire, or when it transfers the financial asset and substantially all the risks and rewards
of ownership of the asset to another party.

Impairment of financial assets

The Company applies the expected credit loss model for recognising impairment loss on financial
assets measured at amortised cost, debt instruments at FVTOCI, lease receivables, trade
receivables, other contractual rights to receive cash or other financial asset, and financial
guarantees not designated as at FVTPL.

Expected credit losses are the weighted average of credit losses with the respective risks of
default occurring as the weights. Credit loss is the difference between all contractual cash flows
that are due to the Company in accordance with the contract and all the cash flows that the
Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest
rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired
financial assets). The Company estimates cash flows by considering all contractual terms of the
financial instrument (for example, prepayment, extension, call and similar options) through the
expected life of that financial instrument.

The Company measures the loss allowance for a financial instrument at an amount equal to the
lifetime expected credit losses if the credit risk on that financial instrument has increased
significantly since initial recognition. If the credit risk on a financial instrument has not increased
significantly since initial recognition, the Company measures the loss allowance for that financial
instrument at an amount equal to 12-month expected credit losses. 12-month expected credit
losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls
that will result if default occurs within the 12 months after the reporting date and thus, are not
cash shortfalls that are predicted over the next 12 months.

If the Company measured loss allowance for a financial instrument at lifetime expected credit loss
model in the previous year, but determines a the end of a reporting year that the credit risk has
not increased significantly since initial recognition due to improvement in credit quality as
compared to the previous year, the Company again measures the loss allowance based on 12-
month expected credit losses.

When making the assessment of whether there has been a significant increase in credit risk since
initial recognition, the Company uses the change in the risk of a default occurring over the
expected life of the financial instrument instead of the change in the amount of expected credit
losses. To make that assessment, the Company compares the risk of a default occurring on the
financial instrument as at the reporting date with the risk of a default occurring on the financial
instrument as at the date of initial recognition and considers reasonable and supportable
information, that is available without undue cost or effort, that is indicative of significant
increases in credit risk since initial recognition.

For trade receivables or any contractual right to receive cash or another financial asset that result
from transactions that are within the scope of Ind AS, 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, he Company has used a practical expedient as permitted under Ind AS 109. This
expected credit loss allowance is computed based on a provision matrix which takes into account
historical credit loss experience and adjusted for forward-looking information.

The impairment requirements for the recognition and measurement of a loss allowance are
equally applied to debt instruments at FVTOCI except that the loss allowance is recognised in
other comprehensive income and is not reduced from the carrying amount in the balance sheet.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument
and 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 and Interest income is recognised in profit or loss.

Reclassification of financial assets

The Company determines classification of financial assets and liabilities on initial recognition.
After initial recognition, no reclassification is made for financial assets which are equity
instruments and financial liabilities. For financial assets which are debt instruments, a
reclassification is made only if there is a change in the business model for managing those assets.
Changes to the business model are expected to be infrequent. The Company's senior
management determines change in the business model as a result of external or internal changes
which are significant to the Company's operations. Such changes are evident to external parties.
A change in the business model occurs when the Company either begins or ceases to perform an
activity that is significant to its operations. If the Company reclassifies financial assets, it applies
the reclassification prospectively from the reclassification date which is the first day of the
immediately next reporting period following the change in business model. The Company does
not restate any previously recognised gains, losses (including impairment gains or losses) or
interest.

Financial liabilities and equity instruments
Classification as debt or equity

Debt and equity instruments issued by a company are classified as either financial liabilities or as
equity in accordance with the substance of the contractual arrangements and the definitions of a
financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity
after deducting all of its liabilities. Equity instruments issued by the Company are recognised at
the proceeds received, net of directly attributable transaction costs.

Financial liabilities

Initial recognition and measurement

The Company's financial liabilities include trade and other payables, loans and borrowings
including bank overdrafts.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings
and payables, net of directly attributable transaction costs.

Subsequent measurement

For purposes of subsequent measurement, financial liabilities are classified in two categories:

• Financial liabilities at fair value through profit or loss ('FVTPL')

• Financial liabilities at amortised cost

Financial liabilities at fair value through profit or loss include financial liabilities held for trading
and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of
repurchasing in the near term. This category also includes derivative financial instruments
entered into by the Company that are not designated as hedging instruments in hedge
relationships as defined by Ind AS 109. Gains or losses on liabilities held for trading are recognised
in the profit or loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are
designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are
satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own
credit risk are recognised in OCI. These gains/ losses are not subsequently transferred to Profit &
Loss.

Financial liabilities at amortized cost, This is the category most relevant to the Company. After
initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the
liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and
fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs
in the statement of profit and loss.

Other financial liabilities

Other financial liabilities (including borrowings and trade and other payables) are subsequently
measured at amortised cost using the effective interest method.

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 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.

Cash and cash equivalents

Cash and cash equivalent in the Balance Sheet comprise cash at banks and on hand and short¬
term deposits with an original maturity of three months or less, which are subject to insignificant
risk of changes in value.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of
new ordinary shares and share options and buyback of ordinary shares are recognized as a
deduction from equity, net of any tax effects.

Offsetting financial instrument

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 financial asset and liability 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.

S Statement of Cash Flows

Cash Flows are reported using the indirect method, whereby profit before tax is adjusted for the
effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating
cash receipts or payments and item of income or expenses associated with investing or financing
cash flows. The cash flows from operating, investing and financing activities of the company are
segregated.

T Segments reporting

Operating segments are reported in a manner consistent with the internal reporting provided to
the chief operating decision maker (CODM). The board of directors assesses the financial
performance and position of the Company and makes strategic decisions. Only those business
activities are identified as operating segment for which the operating results are regularly
reviewed by the CODM to make decisions about resource allocation and performance
measurement.

U Earnings per share

Basic earnings per share

Basic earnings per share is computed by dividing the net profit after tax by weighted average
number of equity shares outstanding during the period. 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).

Diluted earnings per share

Diluted earnings per share is computed by dividing the profit after tax after considering the effect
of interest and other financing costs or income (net of attributable taxes) associated with dilutive
potential equity shares by the weighted average number of equity shares considered for deriving
basic earnings per share and also the weighted average number of equity shares that could have
been issued upon conversion of all dilutive potential equity shares including the treasury shares
held by the Company to satisfy the exercise of the share options by the employees.