3 Material Accounting Policy Information
a) Inventories
i) Inventory of Gas (including inventory in pipeline and CNG cascades) and Stores, spares and consumables is
valued at lower of cost and net realizable value. Cost is determined on weighted average cost method.
ii) Cost is determined on Weighted Average basis and comprises of costs of purchases, cost of conversion, all
non-refundable duties & taxes and other costs incurred in bringing the inventories to their present location
and condition.
iii) Net Realisable Value is the estimated selling price in the ordinary course of business, less estimated cost
of completion and estimated cost necessary to make the sale. Necessary adjustment for shortage / excess
stock is given based on the available evidence and past experience of the Company.
b) Cash & Cash Equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks 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 equivalents includes short-term deposits with an original maturity of three
months or less from the date of acquisition.
c) Revenue Recognition
Revenue from Operations
Revenue is recognised upon transfer of control of promised products or services to customers in an amount that
reflects the consideration which the Company expects to receive in exchange for those products or services.
Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts and
other incentives, if any, as per contracts with the customers.
The Company considers recovery of excise duty flows to the Company on its liability and hence, forms part of
the cost of production, irrespective of whether the goods are sold or not. Since the recovery of excise duty
flows to the Company on its own account, revenue includes excise duty. However, VAT & GST are not received
by the Company on its own account, rather, they are collected on behalf of the government. Hence, it is not
included in revenue.
The accounting policy for the specific revenue streams of the Company are summarised below:
Revenue on sale of natural gas is recognized on transfer of control to customers at delivery point. Sales are billed
bi-monthly to domestic customers and on fortnightly basis to commercial and industrial customers. Revenue on
sale of Compressed Natural Gas (CNG) is recognized on sale of gas to customers. There are no goods return rights
with the customers attached to the sale and hence no right of return liability exists.
Gas Transportation Income is recognized in the same period in which the related volumes of gas are delivered
to the customers.
Revenue from customers with respect to shortfall in minimum guaranteed obligation is recognised on contractual
basis. Delayed payment charges are recognized on reasonable certainty to expect ultimate collection or otherwise
based on actual collection whichever is earlier.
Connection and fitting income is recognized based on satisfaction of performance obligation.
Other Income
Interest income is recognised on effective interest rate taking into account the amount outstanding and the
rate applicable. Interest income is accrued on time basis, by reference to the principal outstanding and at the
effective interest rate applicable.
Contract Balances
Contract Assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer.
If the Company performs by transferring goods or services to a customer before the customer pays consideration
or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
Trade Receivables
A receivable represents the Company's right to an amount of consideration that is unconditional i.e. only the
passage of time is required before payment of consideration is due.
The Company measures the expected credit loss of trade receivables from individual customers based on the
historial trend, industry practices and the business environment in which the entity operates.
In case of domestic customers, the gas sales between last meter reading date and reporting date has been
recognised as trade receivables as there is unconditional right to receive consideration.
Contract Liability
A contract liability is the obligation to transfer goods or services to a customer for which the Company has
received consideration (or an amount of consideration is due) from the customer. Contract liabilities are
recognised as revenue when the Company performs obligations under the contract. The same is disclosed as
"Advance from Customers" under Other Current Liabilities. The contract liabilities are recognised as revenue
when the performance obligation is satisfied.
d) Property, Plant and Equipments
Recognition and measurement
Property, Plant and Equipment's are stated at cost of acquisition or construction less accumulated depreciation
and impairment losses and net of taxes. Cost comprises the purchase price (net of tax credits, wherever
applicable), import duty and other non-refundable taxes or levies and any directly attributable cost of bringing
the asset to its working condition for its intended use. The cost of a self-constructed item of property, plant and
equipment comprises the cost of materials and direct labour, any other costs directly attributable to bringing the
item to working condition for its intended use. Borrowing cost relating to acquisition / construction of Property,
Plant and Equipment which take substantial period of time to get ready for its intended use are also included to
the extent they relate to the period till such assets are ready for its intended use. The Company has elected to
regard previous GAAP carrying values of property, plant and equipment as deemed cost at the date of transition
to Ind AS i.e April 01, 2015.
The residual values, useful lives and method of depreciation of property, plant and equipment are reviewed at
each financial year end and adjusted prospectively, if appropriate.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted
for as separate items (major components) of property, plant and equipment.
Spare parts or stores meeting the definition of Property, Plant and Equipment, either procured along with
equipment or subsequently, are capitalized in the asset's carrying amount or recognized as separate asset,
if appropriate.
The Natural Gas distribution systems for PNG connections are commissioned on commencement of
supply of gas to the individual consumers. The CNG outlets are commissioned on receipt of approval from
concerned authority.
Subsequent expenditure related to an item of Property, Plant and Equipment are included in its carrying amount
or recognised as a separate asset, as appropriate, only if it increases the future economic benefits from the
existing asset beyond its previously assessed standard of performance. Subsequent costs are depreciated
over the residual life of the respective assets. All other expenses on existing Property, Plant and Equipment's,
including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the profit
and loss during the reporting period in which they are incurred. Cost of day to day service primarily include costs
of labour, consumables and cost of small spare parts.
Expenditure incurred during the period of construction including, all direct and indirect overheads, incidental and
related to construction is carried forward and on completion, the costs are allocated to the respective assets.
Depreciation
Depreciation is provided using straight-line method as specified in Schedule II to the Companies Act, 2013
excepts for assets mentioned below. Depreciation on assets acquired / disposed off during the year is provided
on pro-rata basis with reference to the date of addition / disposal.
Derecognition
An item of Property, Plant and Equipment is derecognised upon disposal or when no future economic benefits
are expected to arise from continued use of the asset. Any gain or loss arising on the disposal or retirement of
Property, Plant and Equipment is determined as the difference between the sales proceeds and the carrying
amount of the assets and is recognised in the statement of profit and loss.
e) Capital Work in Progress
Expenditure related to and incurred during implementation of capital projects to get the assets ready for
intended use is included under "Capital Work in Progress”. The same is allocated to the respective items of
property, plant and equipment on completion of construction/ erection of the capital project/ property plant and
equipment. Capital work in progress includes assets pending installation and not available for its intended use
and capital inventory.
f) Intangible Assets
Recognition and measurement
Intangible assets are recorded at the consideration paid for acquisition and are amortized over their estimated
useful lives on a straight-line basis, commencing from the date the asset is available to the Company for its
intended use. The residual values, useful life of the intangible assets and the amortization period are reviewed at
the end of each financial year and adjusted prospectively,if appropriate.
Intangible Assets Under Development
Software Development costs that are directly attributable to the design and testing of identifiable and unique
software products are recognised as intangible assets where recognition criteria are met. Directly attributable
costs that are capitalised as part of the software include employee costs and an appropriate portion of relevant
overheads. Capitalised development costs are recorded as intangible assets and amortised from the point at
which the asset is available for use.
Goodwill
Goodwill acquired as a result of demerger of CGD business from Adani Energy Limited was measured at net
value as at March 31, 2015. Goodwill is not amortized but is tested for impairment annually. Impairment shall be
recognised when there are certain indications that recoverable amount of cash generating unit is less than its
carrying amount.
g) Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.
Financial assets and financial liabilities are initially measured at fair value, except trade receivables that are
measured at transaction price. However, trade receivables do not include significant financing component.
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 Statement of Profit and Loss.
The Company's financial assets comprise of trade receivables, cash and cash equivalents, other bank balances
and deposits, interest accrued on deposits, security deposits, intercorporate deposits, contract assets and other
receivables. These assets are measured subsequently at amortised cost.
The Company's financial liabilities comprise of borrowings, lease liabilities , retention and capital creditors,
deposit from customers and contractors, trade and other payables.
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is
a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net
basis, to realise the assets and settle the liabilities simultaneously.
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 a Company are recognised at the proceeds received, net of
direct issue costs.
A) Financial Assets
Initial Recognition
All financial assets are initially recognised at fair value except trade receivables that are measured at
transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial
assets, which are not at Fair Value through Profit or Loss, are adjusted to the fair value on initial recognition.
Business Model Assessment
The Company makes an assessment of the objectives of the business model in which a financial asset is
held because it best reflects the way business is managed and information is provided to management.
The assessment of business model comprises the stated policies and objectives of the financial assets,
management strategy for holding the financial assets, the risk that affects the performance etc.
Further Management also evaluates whether the contractual cash flows are solely payment of principal and
interest considering the contractual terms of the instrument.
The subsequent measurement of financial assets depends on their classification, as described below:
1) At amortised cost
A financial asset is measured at the amortised cost if both the following conditions are met :
(a) The asset is held within a business model whose objective is to hold assets for collecting contractual
cash flows, and
(b) Contractual terms of the asset give rise, on specified dates, to cash flows that are solely payments
of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the
effective interest rate (EIR) method. 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 in finance income in the Statement of Profit and Loss. The losses arising from impairment are
recognised in the Statement of Profit and Loss.
The effective interest rate is the rate that exactly discounts estimated future cash receipts
(including all fees and transaction costs and other premiums or discounts) through the expected
life of the financial assets, or where appropriate, a shorter period, to the gross carrying amount on
initial recognition.
2) At Fair Value through Other Comprehensive Income (FVTOCI)
A financial asset is classified as the FVTOCI if both of the following criteria are met:
(a) The objective of the business model is achieved both by collecting contractual cash flows and
selling the financial assets, and
(b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments
of principal and interest (SPPI) on the principal amount outstanding.
The Company may opt for an irrevocable election to present subsequent changes in the fair value of
investment in equity instruments through OCI. 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 investments.
3) At Fair Value through Profit & Loss (FVTPL)
Financial assets which are not measured at amortised cost or FVTOCI and are held for trading are
measured 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 remeasurement recognised in profit or loss.
In addition, the Company may elect to designate a debt instrument, which otherwise meets amortised
cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or
eliminates a measurement or recognition inconsistency (referred to as 'accounting mismatch').
The Company derecognises a financial asset when the contractual rights to the cash flows from the
financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in
which substantially all of the risks and rewards of ownership of the financial asset are transferred or in
which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and
does not retain control of the financial asset.
On derecognition of a financial asset, 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 Statement of Profit and Loss if such gain or
loss would have otherwise been recognised in Statement of Profit and Loss on disposal of that financial asset.
Impairment of financial assets
The Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment
loss on the financial assets and credit risk exposure.
Expected 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. The Company estimates cash flows
by considering all contractual terms of the financial instrument through the expected life of that financial
instrument. ECL impairment loss allowance (or reversal) recognised during the period is recognised as
expenses / (income) in the Statement of Profit and Loss.
The Company follows 'Simplified Approach' for recognition of impairment loss allowance on all trade
receivables or contractual receivables. Under the simplified approach, the Company does not track changes
in credit risk, but it recognises impairment loss allowance based on lifetime ECLs at each reporting date,
right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that
whether there has been a significant increase in the credit risk since initial recognition. If credit risk has
not increased significantly, 12 month ECL is used to provide for impairment loss. However, if credit risk has
increased significantly, lifetime ECL is used.
The Company assesses at each Balance sheet date whether a financial asset or a Group of financial assets
is impaired. Ind AS 109, 'Financial Instruments' requires expected credit losses to be measured through a
loss allowance.
B) Financial Liabilities and equity instruments
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 arrangements and the definitions of a financial liability
and an equity instrument.
Financial Liabilities
Financial liabilities are classified, at initial recognition as at amortised cost or fair value through profit or
loss. The measurement of financial liabilities depends on their classification, as described below:
1) At amortised cost
After initial recognition, financial liabilities are subsequently measured at amortised cost using the
EIR method. Gains and losses are recognised in Statement of Profit and 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.
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) At Fair Value through Profit or Loss (FVTPL)
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition as FVTPL. Subsequently, any changes in fair
value are recognised in the Statement of Profit and Loss.
Derecognition of financial liability
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 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 the statement
of Profit and Loss.
C) Derivative financial instruments and hedge accounting
The Company uses a variety of derivative financial instruments to hedge its foreign currency risks and
interest rate risks, respectively. Such derivative financial instruments are initially recognised at fair value
on the date on which a derivative contract is entered into and are subsequently re-measured at fair value.
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the
fair value is negative.
The resulting gain or loss is recognised in the statement of profit and loss immediately, except for the
effective portion of cash flow hedges, which is recognised in OCI and later reclassified to statement of
profit or loss.
At the inception of a hedge relationship, the Company formally designates and documents the hedge
relationship to which the Company wishes to apply hedge accounting and the risk management objective
and strategy for undertaking the hedge.
Hedges that meet the strict criteria for hedge accounting are accounted for as described below:
Cash flow hedges
The Company designates derivative contracts or non derivative financial assets / liabilities as hedging
instruments to mitigate the risk of movement in interest rates and foreign exchange rates for foreign
exchange exposure on highly probable future cash flows attributable to a recognised asset or liability or forecast
cash transactions. The forward element is recognised in OCI. The ineffective portion relating to foreign currency
contract is recognised in finance cost.
Any ineffective portion of changes in the fair value of the derivative is recognised immediately in the
statement of profit & loss.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to the statement
of profit and loss, except for the effective portion of cash flow hedges, which is recognised in OCI and later
reclassified to the statement of profit and loss when the hedge item affects profit or loss or treated as basis
adjustment if a hedged forecast transaction subsequently results in the recognition of a non-financial asset
or non-financial liability.
h) Investments in subsidiaries and joint ventures
Investments in subsidiaries and joint ventures are accounted for at cost less impairment loss (if any).
i) Foreign Currency Transactions and Translations
Functional and Presentation Currency
The financial statements are presented in Indian Rupee (INR), which is entity's functional and presentation currency.
Transactions and Balances
Foreign currency transactions are translated into the functional currency, for initial recognition, using the
exchange rates at the dates of the transactions.
All foreign currency denominated monetary assets and liabilities are translated at the exchange rates on the
reporting date. Exchange differences arising on settlement or translation of monetary items are recognised in
Statement of Profit and Loss to the extent of exchange differences which are regarded as an adjustment to
interest costs on foreign currency borrowings that are directly attributable to the acquisition or construction
of qualifying assets which are capitalised as cost of assets. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
j) Employee Benefits
Employee benefits include gratuity, compensated absences, contribution to provident fund, employees' state
insurance and superannuation fund.
a) Short Term Employee Benefits
Employee benefits payable wholly within twelve months of rendering the services are classified as short term
employee benefits and recognised in the period in which the employee renders the related service. These are
recognised at the undiscounted amount of the benefits expected to be paid in exchange for that service.
b) Post Employment Benefits
Defined Benefit Plans
The Company operates a defined benefit gratuity plan in India, which requires contributions to be made to
a separately administered fund. The cost of providing benefits under the defined benefit plan is determined
based on actuarial valuation, carried out by an independent actuary, using the projected unit credit
method. The liability for gratuity is funded annually to a gratuity fund maintained with the Life Insurance
Corporation of India.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling (excluding net
interest) and the return on plan assets (excluding net interest), are recognised immediately in the balance
sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur.
Re-measurements are not reclassified to profit or loss in subsequent periods. Net interest is calculated by
applying the discount rate to the net balance of defined benefit liability or asset.
The Company recognises the following changes in the net defined benefit obligation as an expense in the
statement of profit and loss in the line item "Employee Benefits Expense":
Ý Service cost including current service cost, past service cost, gains and losses on curtailments and
non-routine settlements; and
Ý Net interest expense or income
For the purpose of presentation of defined benefit plans, the allocation between short term and long term
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Defined Contribution Plans
Retirement benefits in the form of provident fund and superannuation fund are defined contribution schemes.
The Company has no obligation, other than the contribution payable to the provident fund. The Company
recognises contribution payable to the provident fund scheme as an expense, when an employee renders
the related service. If the contribution payable to the scheme for service received before the balance sheet
date exceeds the contribution already paid, the deficit payable to the scheme is recognised as a liability
after deducting the contribution already paid.
c) Other Employee Benefits
Other employee benefits comprise of compensated absences/leaves. The actuarial valuation is done as per
projected unit credit method. The Company allocates accumulated leaves between short term and long term
liability based on actuarial valuation as at the end of the period.
k) Borrowing Costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of
funds. General and specific borrowing costs directly attributable to the acquisition, construction or production
of a qualifying asset that necessarily takes a substantial period of time to get ready for its intended use or sale
are capitalised as part of the cost of the asset. The Company considers a period of twelve months or more as a
substantial period of time.
Transaction costs in respect of non-current borrowings are amortised over the tenure of respective loans using
effective interest method.
All other borrowing costs are expensed in the period in which they are incurred. Borrowing cost also includes
exchange differences to the extent regarded as an adjustment to the borrowing cost.
Interest Income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalization.
l) Segment Reporting
As per para 4 of Ind AS 108 "Operating Segments”, if a single financial report contains both consolidated financial
statements and the separate financial statements of the Parent Company, segment information may be presented
on the basis of the consolidated financial statements. Thus, the information related to disclosure of operating
segments required under Ind AS 108 "Operating Segments”, is given in Consolidated Financial Statements.
m) Leases
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date except for
leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and
low value leases, the lease payments associated with these leases as an expense on a straight-line basis over
the lease term.
Lease term is a non-cancellable period together with periods covered by an option to extend the lease if the
Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease
if the Company is reasonably certain not to exercise that option.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred
and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the
site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated
using the straight-line method from the commencement date to the end of the lease term, unless the lease
transfers ownership of the underlying asset to the Company by the end of the lease term or the cost of the
right-of-use asset reflects that the Company will exercise a purchase option. In that case the right-of-use asset
will be depreciated over the useful life of the underlying asset. In addition, the right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments to be paid over the lease term at
the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Company's incremental borrowing rate. Generally, the Company uses its incremental borrowing
rate as the discount rate. Subsequently, the lease liability is measured at amortised cost using the effective
interest method. In addition, the carrying amount of lease liabilities is remeasured if there is a modification in the
form of a change in the lease term or lease payments.
n) Earnings Per Share
Basic Earnings per share is computed by dividing the profit/(loss) for the year attributable to equity holders of
the Company by the weighted average number of equity shares during the year. Diluted Earnings per share is
computed by dividing the profit/(loss) attributable to equity holders of the Company (after adjusting for costs
associated with dilutive potential equity shares) by the weighted average number of equity shares and dilutive
potential equity shares during the year.
o) Taxes
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability
during the year. Current and deferred taxes are recognised in Statement of Profit and Loss, except when they
relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current
and deferred tax are also recognised in other comprehensive income or directly in equity, respectively.
a) Current Tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or
paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted, at the reporting date where the Company operates and generates
taxable income.
Current tax items, relating to items recognised outside the statement of profit and loss, are recognised
in correlation to the underlying transaction either in OCI or directly in equity. Management periodically
evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations
are subject to interpretation and establishes provisions where appropriate. Provision for current tax is
recognised based on the estimated tax liability computed after taking credit for allowances and exemption
in accordance with the Income Tax Act, 1961.
Current tax assets and liabilities are offset where the Company has a legally enforceable right to offset and
intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
b) Deferred Tax
Deferred tax is recognised using the Balance Sheet approach. Deferred tax assets and liabilities are
recognised for deductible and taxable temporary differences arising between the tax base of assets and
liabilities and their carrying amount, except when the deferred tax arises from the initial recognition of
an asset or liability in a transaction that is not a business combination and affects neither accounting nor
taxable profit or loss at the time of the transaction.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carry forward of unused tax credits and
unused tax losses can be utilised. The carrying amount of unrecognised deferred tax assets are reviewed at
each reporting date to assess their realisability and corresponding adjustment is made to carrying values of
deferred tax assets in the financial statements.
Deferred tax assets and liabilities are offset where a legally enforceable right exists to offset current
tax assets and liabilities and the deferred taxes relate to the same taxable entity and the same taxation
authority. Net outstanding balance in Deferred Tax account is recognized as deferred tax liability/asset.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date. Deferred tax relating to items recognised outside statement
of profit and loss is recognised outside statement of profit and loss (either in other comprehensive income
or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or
directly in equity.
p) Impairment of non-financial assets
At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets
to determine whether there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset,
the Company estimates the recoverable amount of the cash-generating unit (CGU) to which the asset belongs.
Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of
the cash inflows of other assets or CGUs. When a reasonable and consistent basis of allocation can be identified,
corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the
smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in
use, the estimated future cash flows are discounted to their 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 asset for which the
estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount,
the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised immediately in the Statement of profit and loss.
Assets (other than goodwill) for which impairment loss has been recognised in prior periods, the Company reviews
at each reporting date whether there is any indication that the loss has decreased or no longer exists. When an
impairment loss subsequently reverses, the carrying amount of the asset (or a 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. A reversal of an
impairment loss is recognised immediately in Statement of Profit and Loss.
Impairment is determined for goodwill by assessing the recoverable amount of CGU to which such goodwill
relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is
recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
q) Fair Value Measurement
The Company measures certain financial instruments 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:
Ý In the principal market for the asset or liability, or
Ý In 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's management determines the policies and procedures for fair value measurement of financial
instruments measured at fair value.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.
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:
Ý Level 1- Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Ý Level 2-Valuation techniques for which the lowest level input that is significant to the fair value measurement
is directly or indirectly observable.
Ý 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 financial statements 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.
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