Provisions and Contingencies
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.
The amount recognised as a provision is 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, its carrying
amount is the present value of those cash flow (when the effect of
the time value of money is material).
When some or all of the economic benefits required to settle
a provision are expected to be recovered from a third party,
a receivable is recognised as if it is virtually certain that
reimbursement will be received, and the amount of the receivable
can be measured reliably.
Contingent liabilities are disclosed unless the possibility of outflow
of resources is remote. Contingent assets are neither recognised
nor disclosed in the financial statements.
2.16.1 Onerous contracts
Present obligations arising under onerous contracts are recognised
and measured as provisions. An onerous contract is considered to
exist where the Company has a contract under which the unavoidable
costs of meeting the obligations under the contract exceed the
economic benefits expected to be received from the contract.
2.16.2 Restructurings
A restructuring provision is recognised when the Company has
developed a detailed formal plan for the restructuring and has
raised a valid expectation in those affected, that it will carry out
the restructuring by starting to implement the plan or announcing
its main features to those affected by it. The measurement of a
restructuring, which are those amounts that are both necessarily
entailed by the restructuring and not associated with the ongoing
activities of the entity.
2.17 Financialinstruments
Financial assets and financial liabilities are recognised when a
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.
2.18 Financial assets
All regular way purchases of sales of financial assets are recognised
or de-recognised 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.
2.18.1 Classification of financial assets
Debt instruments that meet the following conditions are
subsequently measured at amortised cost (except for debt
instruments that are designated 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.
For the impairment policy on financial assets measured at amortised
cost, refer note 2.18.5
Debt instruments that meet the following conditions are measured
at fair value through other comprehensive income (except for debt
instruments that are designed 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, 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. When the investment is disposed of,
the cumulative gain or loss previously accumulated is reclassified to
profit or loss.
For the impairment policy on debt instruments at FVTOCI, (refer
note 2.18.5).
All other financial assets are subsequently measured at fair value.
2.18.2 Effective interest method
The effective interest is a method of calculating the amortised
cost of debt instruments 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
applicable, 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.
2.18.3 Investments in equity instruments at fair value through other
comprehensive income (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. 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.
Dividends on these investments in equity instruments are
recognised in profit or loss 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. Dividends
recognised in profit or loss are included in the 'Other income' line
item.
2.18.4 Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as 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
(refer note 2.18.3).
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 measurement 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 basis. The Company has
not designated any debt instruments 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 re¬
measurement 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.
2.18.5 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 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 that 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 period, but
determines at the end of a reporting period that the credit risk
has not increased significantly since initial recognition due to
improvement in credit quality as compared to the previous period,
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 increase 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 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.
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.
2.18.6 De-recognition 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 the 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 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 financial asset other than its entirety (e.g.
when the Company retains an option to repurchase part of the
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
losses 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 in other
comprehensive income and the part that is no longer recognised on
the basis of the relative fair value of those parts.
2.18.7 Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency
is determined in that foreign currency and translated at the spot
rate at the end of each reporting period.
• For foreign currency denominated financial assets measured
at amortised cost and FVTPL, the exchange differences
are recognised in profit or loss except for those which are
designated as hedging instruments in a hedging relationship.
• Changes in the carrying amount of investments in equity
instruments at FVTOCI relating to changes in foreign currency
rates are recognised in other comprehensive income.
• For the purposes of recognising foreign exchange gains and
losses, FVTOCI debt instruments are treated as financial
assets measured at amortised cost. Thus, 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.
2.18.8 Investments in subsidiaries
The Company has elected to recognise its investments in
subsidiaries at cost in accordance with the option available in Ind AS
27, 'Separate Financial Statement.
2.19 Financial liabilities and equityinstruments
2.19.1 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 arrangement and the definitions of a
financial liability and equity instrument.
2.19.2 Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all its liabilities.
Equity instruments issued by a Company 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.
2.19.3 Compound financial instruments
The component parts of compound financial instruments
(convertible notes) issued by the Company are classified separately
as financial liabilities and equity in accordance with the substance
of the contractual arrangements and the definitions of a financial
liability and an equity instrument. A conversion option that will
be settled by the exchange of a fixed amount of cash or another
financial asset for a fixed number of the Company's own equity
instruments is an equity instrument.
At the date of issue, the fair value of the liability component is
estimated using the prevailing market interest rate for similar non¬
convertible instruments. This amount is recognised as a liability on
an amortised cost basis using the effective interest method until
extinguished upon conversion or at the instrument's maturity date.
The conversion option classified as equity is determined by
deducting the amount of the liability component from the fair
value of the compound financial instrument as a whole. This is
recognised and included in equity, net of income tax effects, and is
not subsequently remeasured. In addition, the conversion option
classified as equity will remain in equity until the conversion option
is exercised, in which case, the balance recognised in equity will be
transferred to other component of equity. When the conversion
option remains unexercised at the maturity date of the convertible
note, the balance recognised in equity will be transferred to
retained earnings. No gain or loss is recognised in profit or loss upon
conversion or expiration of the conversion option.
Transaction costs that relate to the issue of the convertible notes
are allocated to the liability and equity components in proportion to
the allocation of the gross proceeds. Transaction costs relating to
the equity component are recognised directly in equity. Transaction
costs relating to the liability component are included in the carrying
amount of the liability component and are amortised over the lives
of the convertible notes using the effective interest method.
2.19.4 Financial liabilities
All financial liabilities are subsequently measured at amortised cost
using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial
asset does not qualify for de-recognition or when the continuing
involvement approach applies, financial guarantee contracts
issued by the Company, and commitments issued by the Company
to provide a loan at below-market interest rate are measured in
accordance with the specific accounting policies set out below.
2.19.4.1 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 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 documented 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 the Ind AS 109 permits the entire combined
contract to be designated as at FVTPL in accordance with Ind
AS 109.
Financial liabilities at FVTPL are stated at fair value, with any gains
or losses arising on re-measurement 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 not-held-for-trading financial liabilities that are
designated as at FVTPL, the amount of change in fair value of the
financial liability that is attributable to changes in the credit risk of
the liability is recognised in other comprehensive income, unless
the recognition of the effects of changes create mismatch in
profit or loss, in which case these effects of changes in credit risk
are 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 in profit or loss.
Gains or losses on financial guarantee contracts and loan
commitments issued by the Company that are designated by the
Company as at fair value through profit or loss are recognised in
profit or loss.
2.19.4.2 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.
2.19.4.3 Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer
to make specified payments to reimburse the holder for a loss it
incurs because a specified debtor fails to make payments when due
in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by the Company are initially
measured at their fair values and, if not designated as at FVTPL, are
subsequently measured at the higher of:
• The amount of loss allowance determined in accordance with
impairment requirements of Ind AS 109; and
• The amount initially recognised less, when appropriate, the
cumulative amount of income recognised in accordance with
the principles of Ind AS 115.
2.19.4.4 Commitments to provide a loan at below-market interest rate
Commitments to provide a loan at below-market interest rate are
initially measured at their fair values and, if not designated as at
FVTPL, are subsequently measured at the higher of:
• the amount of loss allowance determined in accordance with
impairment requirements of Ind AS 109; and
• the amount initially recognised less, when appropriate, the
cumulative amount of income recognised in accordance with
the principles of Ind AS 115.
2.19.4.5 Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency
and are measured at amortised cost at the end of each reporting
period, the foreign exchange gains and losses are determined based
on the amortised cost of the instruments and are recognised in
'Other income'.
The fair value of financial liabilities denominated in a foreign
currency is determined in that foreign currency and translated at the
spot rate at the end of each reporting period. For financial liabilities
that are measured as at FVTPL, the foreign exchange component
forms part of the fair value gains or losses and is recognised in profit
or loss.
2.19.4.6 De-recognition of financial liabilities
The Company de-recognises 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 a 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.
2.20 Derivative financial instruments
Derivatives are initially recognised at fair value at the date the
derivative contracts are entered into and are subsequently
remeasured to their fair value at the end of each reporting period.
The resulting gain or loss is recognised in profit or loss immediately.
2.20.1 Embedded derivatives
Derivatives embedded in non- derivative host contracts that are
not financial assets within the scope of Ind AS 109 are treated as
separate derivatives when their risks and characteristics are not
closely related to those of the host contracts and the host contracts
are not measured at FVTPL.
2.21 Offsetting
Financial assets and financial liabilities are off set and the net
amount is presented when and only when, the Company has legally
enforceable right to set off the amount it intends, either to settle
them on a net basis or to realise the asset and settle the liability
simultaneously.
2.22 Cash and Cash equivalents
The Company's cash and cash equivalents consists of cash on
hand and in banks and demand deposits with banks, which can
be withdrawn at any time, without prior notice or penalty on the
principal.
For the purposes of cash flow statement, cash and cash equivalents
comprise cash and cheques in hand, bank balances, demand
deposits with banks, net of outstanding bank overdrafts that are
repayable on demand and considered part of the Company's cash
management system. In the balance sheet, bank overdrafts are
presented under borrowings within current financial liabilities.
2.23 Segment reporting
Operating segments are reported in a manner consistent with
internal reporting provided to the Chief Operating Decision Maker
(CODM) of the Company. The CODM is responsible for allocating
resources and assessing performances of the operating segments
of the Company.
2.24 Earnings per share
The Company presents basic and diluted earnings per share ("EPS")
data for it's equity shares. Basic EPS is calculated by dividing the
profit or loss attributable to equity shareholders of the Company
by weighted average number of equity shares outstanding during
the period. Diluted EPS is determined by adjusting the profit or
loss attributable to equity shareholders and the weighted average
number of equity shares outstanding for the effect of all dilutive
potential ordinary shares, which includes all stock options granted
to employees.
2.25 Exceptional items
Exceptional items refer to items of income or expenses within the
statement of profit and loss from ordinary activities which are
non-recurring and are of such size, nature or incidence that their
disclosure is considered necessary to explain the performance of
the Company.
2.26 Events after reporting date
Where events occurring after the balance sheet date provide
evidence of conditions that existed at the end of the reporting
period, the impact of such event is adjusted within the financial
statements. Otherwise, events after the balance sheet date of
material size or nature are only disclosed.
2.27 Amendments to the existing accounting standards:
On March 31, 2023, the Ministry of Corporate Affairs (MCA) has
notified Companies (Indian Accounting Standards) Amendment
Rules, 2023. This notification has resulted into amendments in the
following existing accounting standards which are applicable to
Company from April 01, 2023.
i. IND AS 101 - First-time Adoption of Indian Accounting
Standards
ii. IND AS 102 - Share-based Payments
iii. IND AS 103 - Business Combinations
iv. IND AS 107 - Financial Instruments Disclosures
v. IND AS 109 - Financial Instruments
vi. IND AS 115 - Revenue from Contracts with Customers
vii. IND AS 1 - Presentation of Financial Statements
viii. IND AS 8 - Accounting Policies, Changes in Accounting
Estimates and Errors
ix. IND AS 12 - Income Taxes
x. IND AS 34 - Interim Financial Reporting
Application of above amendments are not expected to have any
significant impact on the Company's financial statements.
3. Critical accounting judgements and key sources of estimation
uncertainty
In the application of the Company's accounting policies, which are
described in note 2, the management of the Company is required to
make judgements, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from
other sources. The estimates and associated assumptions are based
on historical experiences 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 recognised
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 periods if
the revision affects both current and future periods.
3.1 Revenue recognition
The Company derives revenues from fixed price contracts, property
rental income and management service. The revenue recognised
on these contracts is recognised on completion of delivery of the
services.
3.2 Taxation
The Company makes estimates in respect of tax liabilities and tax
assets. Full provision is made for deferred and current taxation at
the rates of tax prevailing at the year-end unless future rates have
been substantively enacted. These calculations represent best
estimate of the tax charge that will be incurred and recovered but
actuals may differ from the estimates made and therefore affect
future financial results. The effects would be recognised in the
Statement of Profit and Loss.
Deferred tax assets arise in respect of unutilised losses and other
timing differences to the extent that it is probable that future
taxable profits will be available against which the asset can be
utilised or to the extent they can be offset against related deferred
tax liabilities. In assessing recoverability, estimation is made of
the future forecasts of taxable profit, including for transactions
expected to be consummated during the current year. If these
forecast profits do not materialise, they change, or there are
changes in tax rates or to the period over which the losses or timing
differences might be recognised, then the value of deferred tax
assets will need to be revised in a future period.
The Company has losses and other timing differences for which
no deferred tax asset has been recognised in these financial
statements. This situation can arise where the future economic
benefit of these timing differences is estimated to be not probable.
It can also arise where the timing differences are of such a nature
that their value is dependent on only certain types of profit being
earned, such as capital profits. If trading or other appropriate profits
are earned in future, these losses and other timing differences may
yield benefit to the Company in the form of a reduced tax charge.
3.3 Depreciation and useful lives of property, plant and equipment
and intangible assets
Property, plant and equipment are depreciated over the estimated
useful lives of the assets, after taking into account their estimated
residual value. Intangible assets are amortized over its estimated
useful lives. Management reviews the estimated useful lives and
residual values of the assets annually in order to determine the
amount of depreciation/ amortization to be recorded during any
reporting period. The useful lives and residual values are based on
the Company's historical experience with similar assets and take
into account anticipated technological changes. The depreciation/
amortization for future periods is adjusted if there are significant
changes from previous estimates.
3.4 Expected credit losses on financial assets
The impairment provision of financial assets are based on
assumption about risk of default and expected timing of collection.
The Company uses judgement in making these assumptions and
selecting the inputs to the impairment calculation, based on the
Company's history of collections, customer's creditworthiness,
existing market condition as well as forward looking estimates at
the end of each reporting period.
3.5 Provisions
Provisions and liabilities are recognized in the period when it
becomes probable that there will be a future outflow of funds
resulting from past operations or events and the amount of cash
outflow can be reliably estimated. The timing of recognition and
quantification of the liability require the application of judgement
to existing facts and circumstances, which can be subject to change.
Since the cash outflows can take place many years in the future, the
carrying amounts of provisions and liabilities are reviewed regularly
and adjusted to take account of changing facts and circumstances.
3.6 Fair value measurements and valuation process
Some of the Company's assets and liabilities are measured at fair
value for financial reporting purposes. Further, the Company has
used valuation experts for the purpose of ascertaining fair value
for certain assets and liabilities. In estimating the fair value of an
asset or a liability, the Company uses market-observable data to
the extent that it is available. Where Level 1 inputs are not available,
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.
3.7 Defined benefit obligations
The costs of providing other post-employment benefits are charged
to the Statement of Profit and Loss in accordance with Ind AS 19
"Employee benefits" over the period during which benefits is derived
from the employees' services and is determined based on valuation
carried out by independent actuary. The costs are determined based
on assumptions selected by the management. These assumptions
include salary escalation rate, discount rates, expected rate of
return on assets and mortality rates. Due to the complexities
involved in the valuation and its long-term nature, a defined benefit
obligation is highly sensitive to change in these assumptions.
3.8 Leases:
Ind AS 116 defines a lease term as the non-cancellable period for
which the lessee has the right-to-use an underlying asset including
optional periods, when an entity is reasonably certain to exercise
an option to extend (or not to terminate) a lease. The Company
considers all relevant facts and circumstances that create an
economic incentive for the lessee to exercise the option when
determining the lease term. The option to extend the lease term is
included in the lease term, if it is reasonably certain that the lessee
would exercise the option. The Company reassesses the option
when significant events or changes in circumstances occur that are
within the control of the lessee.
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