2. Material accounting policies
2.1 Basis of preparation of the Standalone Financial Statements
The Standalone Financial Statements of the Company have been prepared in accordance with Indian Accounting
Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from
time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind-AS
compliant Schedule III), as applicable to the Company.
These Standalone Financial Statements are prepared on a going concern basis. The Standalone Financial
Statements have been prepared on an accrual basis under the historical cost convention except for certain assets
and liabilities that are measured at fair value as mentioned below.
- share-based payments - measured at fair value
- certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial
instruments)
The Standalone Financial Statements are presented in Indian Rupees (Rs.) and all values are rounded off to the
nearest millions up to two decimals places, unless otherwise stated.
2.2 Current versus non-current classification
The Company presents assets and liabilities in the Balance Sheet based on current/non-current classification.
An asset is treated as current when it is:
(i) Expected to be realised or intended to be sold or consumed in normal operating cycle.
(ii) Held primarily for the purpose of trading.
(iii) Expected to be realised within twelve months after the reporting period; or
(iv) Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve
months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
(i) It is expected to be settled in normal operating cycle.
(ii) It is held primarily for the purpose of trading.
(iii) It is due to be settled within twelve months after the reporting period, or
(iv) There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period. Terms of a liability that could, at the option of the counter party, result its settlement by the
issue of equity instruments do not affect its classification.
The Company classifies all other liabilities as non-current.
Deferred tax liabilities are classified as non-current liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and
cash equivalents. The Company has identified twelve months as its operating cycle.
2.3 Foreign currency translation
(i) Functional and presentation currency:
Items included in the Standalone Financial Statements of the Company are measured using the currency of the
primary economic environment in which the entity operates (the functional currency). The Standalone Financial
Statements are presented in Indian rupee (Rs), which is functional and presentation currency of the Company.
ii) Transactions and balances:
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of
the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are
recognised in Statement of Profit and Loss.
iii) Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss
arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the
gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or
loss is recognised in OCI or profit or loss respectively).
2.4 Fair value measurement
‘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 in the principal market or, in its absence, the most
advantageous market to which the Company has access at that date. The fair value of a liability reflects its non¬
performance risk.
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.
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.
All assets and liabilities for which fair value is measured or disclosed in the Standalone 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:
• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement
is directly or indirectly observable
• 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 Standalone 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.
2.5 Property, plant and equipment
Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment
losses, if any. Capital work-in-progress is stated at cost. Such cost comprises of the purchase price and any directly
attributable cost of bringing the asset to its working condition for its intended use. Any trade discounts and rebates
are deducted in arriving at the purchase price. Such cost includes the cost of replacing part of the property, plant
and equipment.
When significant parts of property, plant and equipment are required to be replaced at intervals, the Company
depreciates them separately based on their specific useful lives. All other repair and maintenance costs are
recognised in the Statement of Profit and Loss as incurred.
The Company identifies and determines cost of each component/ part of the asset separately, if the component/
part has a cost which is significant to the total cost of the asset and has useful life that is materially different from
that of the remaining asset. Items of stores and spares that meet the definition of property, plant and equipment
are capitalized at cost and depreciated over their useful life. Otherwise, such items are classified as inventories.
Depreciation on property, plant and equipment is calculated on a straight-line basis using the rates arrived at,
based on the useful lives estimated by the management. The identified components are depreciated separately
over their useful lives; the remaining components are depreciated over the life of the principal asset. The Company
has used the following lives to provide depreciation:
Considering the usage pattern, the management has estimated above useful lives of property, plant and equipment
which is supported by internal technical assessment.
Leasehold improvements are amortized over the primary period of the lease or the useful life of assets, whichever
is shorter.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon
disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on
de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount
of the asset) is included in the Statement of Profit and Loss when the asset is derecognized.
The useful lives have been determined based on managements'judgement, based on technical assessment, in order
to reflect the actual usage of the assets. The assets residual values, method of depreciation and useful life are
reviewed, and adjusted if appropriate, prospectively at the end of each reporting period. An asset’s carrying
amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
2.6 Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets
acquired in a business combination is their fair value at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific
assets to which it relates. Internally generated intangibles are not capitalised and the related expenditure is
reflected in profit or loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment
whenever there is an indication that the intangible asset may be impaired. The amortisation period and the
amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting
period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits
embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated
2.6 Intangible assets (continued)
as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised
in the Statement of Profit and Loss unless such expenditure forms part of carrying value of another asset.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either
individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to
determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite
to finite is made on a prospective basis.
An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future
economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included
in the Statement of Profit and Loss, when the asset is derecognised.
Intangible assets of the Company include computer software. Cost incurred towards purchase of computer
software are amortized using the straight- line method over a period based on management’s estimate of useful
lives of such software being 1 to 3 years, or over the license period of the software, whichever is shorter.
2.7 Impairment of non-financial assets
The company assesses at each reporting date, whether there is an indication that an asset may be impaired. If any
indication exists, or when annual impairment testing for an asset is required, the company estimates the asset’s
recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU)
fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset,
unless the asset does not generate cash inflows that are largely independent of those from other assets or group of
assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount.
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.
In determining fair value less costs of disposal, recent market transactions are taken into account. If no such
transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by
valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
The company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared
separately for each of the company’s CGUs to which the individual assets are allocated. These budgets and
forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is
calculated and applied to project future cash flows after the fifth year. To estimate cash flow projections beyond
periods covered by the most recent budgets/forecasts, the Company extrapolates cash flow projections in the
budget using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. In
any case, this growth rate does not exceed the long-term average growth rate for the products, industries, or
country or countries in which the Company operates, or for the market in which the asset is used.
Impairment losses of continuing operations, including impairment on inventories, are recognised in the Statement
of Profit and Loss, except for properties previously revalued with the revaluation surplus taken to OCI. For such
properties, the impairment is recognised in OCI up to the amount of any previous revaluation surplus.
For assets, an assessment is made at each reporting date to determine whether there is an indication that previously
recognised impairment losses no longer exist or have decreased. If such indication exists, the company estimates
the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has
been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss
was recognised. The reversal is limited so that the canying amount of the asset does not exceed its recoverable
amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment
loss been recognised for the asset in prior years. Such reversal is recognised in the Statement of Profit and Loss
unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.
2.8 Revenue Recognition
Revenues are recognised when, or as, control of a promised goods or services transfers to customers, in an amount
that reflects the consideration to which the company expects to be entitled in exchange for transferring those goods
or services. To recognise revenues the following five step approach is applied: (i) identify the contract with a
customer, (ii) identify the performance obligation in the contract, (iii) determine the transaction price, (iv) allocate
the transaction price to the performance obligations in the contract, and (v) recognise revenues when a
performance obligation is satisfied.
The following specific recognition criteria must also be met before revenue is recognized:
Revenue from sale of services
Revenue from distribution and playout services are recognised over the specific period in accordance with the
terms of the contracts with customers. Certain contracts contain initial /one time set-up fees which is recognised
over the term of the contract.
Revenue from service contracts, where the performance obligations are satisfied at a point in time, is recognized
as and when the related services are performed.
Revenue from Intercompany services recognised as per the terms of arrangements made with Intercompany.
Revenues from fixed-price contracts are recognized using the “percentage-of-completion” method. Percentage of
completion is determined based on project costs incurred to date as a percentage of total estimated project costs
required to complete the project. The cost expended (or input) method has been used to measure progress towards
completion as there is a direct relationship between input and productivity.
If the company does not have a sufficient basis to measure the progress of completion or to estimate the total
contract revenues and costs, revenue is recognized only to the extent of contract cost incurred for which
recoverability is probable.
Unearned revenue included in the current liabilities represents billings in excess of revenues recognized.
The Company collected GST and other taxes on behalf of the government and, therefore, it is not an economic
benefit flowing to the Company. Hence, it is excluded from revenue.
If the consideration in a contract includes a variable amount (discounts and incentives), the company estimates
the amount of consideration to which it will be entitled in exchange for transferring the goods/services to the
customer and such discounts and incentives are estimated at contract inception and constrained until it is highly
probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when
the associated uncertainty with the variable consideration is subsequently resolved. The rights of return and
volume rebates give rise to variable consideration.
Interest Income (including Unwinding interest on Lease Deposit): Interest income is recognised using the
effective interest rate method. EIR is the rate that exactly discounts the estimated future cash payments or receipts
over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying
amount of the financial asset or to the amortised cost of a financial liability. When calculating the effective interest
rate, the company estimates the expected cash flows by considering all the contractual terms of the financial
instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit
losses. Interest income is included in other income in the Statement of Profit and Loss.
Dividend Income: Dividend income is recognized when the Company’s right to receive dividend is established.
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. Contract
assets are subject to impairment assessment. Refer to accounting policies on impairment of financial assets in
section 2.13 Financial instruments - initial recognition and subsequent measurement.
Trade receivables
A trade receivable is recognised if an amount of consideration is unconditional (i.e., only the passage of time is
required before payment of the consideration is due).
Contract liabilities
A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from the
customer before the Company transfers the related goods or services. Contract liabilities are recognised as revenue
when the Company performs under the contract (i.e., transfers control of the related goods or services to the
customer).
2.9. Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses
whether:
(i) the contract involves the use of identified asset;
(ii) the Company has substantially all of the economic benefits from the use of the asset through the period of
lease and;
(iii) the Company has the right to direct the use of the asset
Company as a Lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases
and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use
assets representing the right to use the underlying assets.
Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying
asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes
the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis
over the shorter of the lease term and the estimated useful lives of the assets.
If ownership of the leased asset is transferred to the Company at the end of the lease term or the cost reflects the
exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-
use assets are also subject to impairment. Refer to the accounting policy on impairment of non-financial assets.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in Impairment of non-
financial assets.
2.9 Leases (continued)
Lease Liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The lease payments include fixed payments (including in substance
fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate,
and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for
terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease
payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce
inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease
commencement date because the interest rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for
the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting
from a change in an index or rate used to determine such lease payments) or a change in the assessment of an
option to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of machinery and
equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not
contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office
equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets
are recognised as expense on a straight-line basis over the lease term.
2.10 Employee benefits
Short term Obligations:
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly 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.
Compensated absences
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee
benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay
as a result of the unused entitlement that has accumulated at the reporting date. The Company treats accumulated
leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the
projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the Statement of
Profit and Loss and are not deferred. The Company presents the accumulated leave liability as a current liability
in the Balance Sheet, since it does not have an unconditional right to defer its settlement for twelve months after
the reporting date.
Post-employment obligations:
The Company operates the following post-employment schemes:
• Defined benefit plans - gratuity, and
• Defined contribution plan such as provident fund.
2.10 Employee benefits (continued)
Defined benefit plans: Gratuity
The liability or asset recognised in the Balance Sheet in respect of defined benefit gratuity plan is the present value
of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined
benefit obligation is calculated annually by an independent actuary using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows
by reference to market yields at the end of the reporting period on government bonds that have term approximating
the term of the related obligation. 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.
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. Such accumulated re¬
measurement balances are never reclassified into the Statement of Profit and Loss subsequently.
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 costs.
Defined contribution plans: Provident fund
Retirement benefit in the form of provident fund scheme is the defined contribution plans. The Company has no
obligation, other than the contribution payable. The Company recognizes contribution payable to these schemes
as an expenditure, when an employee renders the related service.
2.11 Investment in Subsidiary
The Company has elected to recognize its investments in subsidiary companies at cost in accordance with the
option available in Ind AS - 27, ‘Separate Financial Statements’, less accumulated impairment loss, if any. Cost
represents amount paid for acquisition of the said investments or invested in the subsidiary. The details of such
investment is given in note 6. Refer to the accounting policies in note 2.7 for policy on impairment of non-financial
asset.
On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged
or credited to the Statement of Profit and Loss.
2.12 Employee Share-based Payments
The Stock option plan of the Company is classified as equity settled transaction based on the constructive
obligation for settlement of option in equity.
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an
appropriate valuation model.
That cost is recognised, together with a corresponding increase in employees stock option reserves in equity, over
the period in which the performance and/or service conditions are fulfilled in employee benefits expense. The
cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects
the extent to which the vesting period has expired and the Company’s best estimate of the number of equity
instruments that will ultimately vest. The expense or credit in the Statement of Profit and Loss for a period
represents the movement in cumulative expense recognised as at the beginning and end of that period and is
recognised in employee benefits expense.
2.12 Employee Share-based payments (continued)
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted
earnings per share.
Cash-Settled Employee Stock Options: A share-based payment transaction in which the terms of the
arrangement provide the company with the choice of whether to settle in cash or by issuing equity instruments,
the company determine whether it has a present obligation to settle in cash and account for the share-based
payment transaction accordingly. The company has a present obligation to settle in cash if the choice of settlement
in equity instruments has no commercial substance or the entity has a past practice or a stated policy of settling in
cash, or generally settles in cash whenever the counterparty asks for cash settlement.
Employee Stock Appreciation Rights Scheme: The Company's employees are granted share appreciation rights
(SAR), settled in cash. The liability for the share appreciation rights is measured, initially and at the end of each
reporting period until settled, at the fair value of the SAR by applying an option pricing model, taking into account
the terms and conditions on which the SAR were granted, and the extent to which the employees have rendered
services to date.
When the terms of an equity-settled award are modified, the minimum expense recognised is the grant date fair
value of the unmodified award, provided the original vesting terms of the award are met. An additional expense,
measured as at the date of modification, is recognised for any modification that increases the total fair value of
the share-based payment transaction, or is otherwise beneficial to the employee. Where an award is cancelled by
the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately
through profit or loss.
2.13 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
Initial recognition and measurement
All financial assets are recognised initially at fair value and, in the case of financial assets not recorded at fair
value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases
or sales of financial assets that require delivery of assets within a time frame established by regulation or
convention in the market place (regular way trades) are recognised on the trade date, i.e. the date that the Company
commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
• Debt instruments at amortised cost
• Debt instruments at Fair Value Through Other Comprehensive income (FVTOCI)
• Debt instruments and equity instruments at Fair Value Through Profit and Loss (FVTPL)
• Equity instruments measured at Fair Value Through Other Comprehensive Income (FVTOCI)
• Equity instruments and equity instruments at Fair Value Through Profit and Loss (FVTPL)
A ‘debt instrument’ is measured at the amortised cost, if both of the following conditions are met:
(i) The asset is held within a business model whose objective is to hold assets for collecting contractual cash
flows; and
(ii) 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. This category generally applies to trade and other receivables.
A ‘debt instrument’ is classified as FVTOCI, if both of the following criteria are met:
(i) The objective of the business model is achieved both by collecting contractual cash flows and selling the
financial assets; and
(ii) The asset’s contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at
fair value. Fair value movements are recognized in OCI. However, the Company recognizes interest income,
impairment losses and foreign exchange gain or loss in the Statement of Profit and Loss. On de-recognition of the
asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to the Statement of
Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the
EIR method.
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for
categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. Debt instruments included within
the FVTPL category are measured at fair value with all changes recognized in the Standalone Statement of Profit
and Loss.
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for
trading are classified as at FVTPL. If the Company decides to classify an equity instrument as at FVTOCI, then
all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of
the amounts from OCI to the Statement of Profit and Loss, even on sale of the investments. Equity instruments
included within the FVTPL category are measured at fair value with all changes recognized in the Statement of
Profit and Loss.
De-recognition
A financial asset (or, where applicable, a part of a financial asset or part of a company of similar financial assets)
is primarily derecognised (i.e. removed from the Balance Sheet) when:
•The rights to receive cash flows from the asset have expired; or
•The Company has transferred its rights to receive cash flows from the asset and either (a) the Company has
transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor
retained substantially all the risks and rewards of the asset but has transferred control of the asset.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and
recognition of impairment loss on the financial assets and credit risk exposure. The Company follows ‘simplified
approach’ for recognition of impairment loss allowance on Trade receivables. The application of simplified
approach does not require the Company to track changes in credit risk. Rather, 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, lifetime ECL is used. If, in a
subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in
credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on
twelve-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a
financial instrument. The twelve-month ECL is a portion of the lifetime ECL which results from default events
that are possible within twelve months after the reporting date. ECL 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 EIR. ECL impairment loss allowance (or reversal)
recognized during the year is recognized as income/ expense in the Statement of Profit and Loss. This amount is
reflected under the head ‘other expenses’ in the Statement of Profit and Loss.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the
basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable
significant increases in credit risk to be identified on a timely basis.
Financial liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value. The Company’s financial liabilities include trade and
other payables, and Lease liabilities.
Subsequent measurement
The measurement of financial liabilities depends on their classification. Financial liabilities at fair value through
profit or loss include financial liabilities held for trading and financial liabilities designated upon initial
recognition as 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. Separated embedded derivatives are also classified as
held for trading, unless they are designated as effective hedging instruments. Gains or losses on liabilities held for
trading are recognised in the Standalone Statement of Profit and 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 recognized in OCI. These gains/losses
are not subsequently transferred to the Statement of Profit and Loss. However, the Company may transfer the
cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the
Statement of Profit and Loss.
After initial recognition, gains and losses are recognised in the Statement of Profit and Loss when the liabilities
are derecognised as well as through the EIR amortization process. Amortized 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.
De-recognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired.
When an existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the
de-recognition of the original liability and the recognition of a new liability. The difference in the respective
carrying amounts is recognised in the Statement of Profit and Loss.
Reclassification of financial assets and liabilities
The Company determines classification of financial assets and liabilities on initial recognition. After initial
recognition, no re-classification is made for financial assets which are equity instruments and financial liabilities.
For financial assets which are debt instruments, a re-classification is made only if there is a change in the business
model for managing those assets. 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 re-classification prospectively from the re-classification date, which is the first day of the immediately
2.13 Financial instruments (continued)
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.
Offsetting of financial instruments
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 realize the assets and settle the liabilities simultaneously.
2.14 Income taxes
Income tax
Income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognised outside the Statement of Profit and Loss is recognised outside the
Statement of Profit and Loss (either in OCI or in equity in correlation to the underlying transaction). Management
periodically evaluates whether it is probable that the relevant taxation authority would accept an uncertain tax
treatment that the Company has used or plan to use in its income tax filings, including with respect to situations
in which applicable tax regulations are subject to interpretation and establishes provisions, where appropriate. The
Company shall reflect the effect of uncertainty for each uncertain tax treatment by using either most likely method
or expected value method, depending on which method predicts better resolution of the treatment.
Deferred tax
Deferred tax is provided on temporary differences between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes at the reporting date. Deferred tax liabilities and assets are recognized
for all taxable temporary differences and deductible temporary differences, except:
• when the deferred tax liability or asset arises from the initial recognition of goodwill or an asset or liability
in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; and
• in respect of taxable temporary differences and deductible temporary differences associated with investments
in subsidiary and associate, when the timing of the reversal of the temporary differences can be controlled and it
is probable that the temporary differences will not reverse in the foreseeable future.
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 utilized. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax
asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to
the extent it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
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 the Statement of Profit and Loss is
recognised outside the Statement of Profit and Loss (either in OCI or in equity in correlation to the underlying
transaction).
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation
authority.
2.15 Segment reporting
The Company reports the Standalone Financial Statements along with the consolidated financial statements. In
accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the
consolidated financial statements.
2.16 Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity
shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding
during the period. The weighted average number of equity shares outstanding during the period is adjusted for
events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of
shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity
shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects
of all dilutive potential equity shares.
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