D Summary of material accounting policy information
(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
Company operates (i.e., the “functional currency”).
The standalone financial statements are presented
in INR, which is the functional and presentation
currency of the Company.
(ii) Financial instruments
a. Initial recognition and measurement
The Company recognises financial assets
and liabilities when it becomes a party to
the contractual provisions of the instrument.
Financial assets (except trade receivables)
and financial liabilities are recognised at fair
value on initial recognition. Transaction costs
that are directly attributable to the acquisition
or issue of financial assets and liabilities that
are not at fair value through profit or loss are
added to the fair value on initial recognition.
Regular purchase and sale of financial assets
are recognised on the trade date. Further, trade
receivables are measured at transaction price
on initial recognition.
b. Subsequent measurement
Non derivative financial instruments
(a) Financial assets carried at amortised cost
A financial asset is subsequently measured
at amortised cost if it is held within a
business model whose objective is to hold
the asset in order to collect contractual
cash flows and the contractual terms of the
financial asset give rise on specified dates
to cash flows that are solely payments
of principal and interest on the principal
amount outstanding.
(b) Financial assets at fair value through other
comprehensive income ('FVOCI')
A financial asset is subsequently measured
at FVOCI if it is held within a business
model whose objective is achieved by
both collecting contractual cash flows and
selling financial assets and the contractual
terms of the financial asset give rise on
specified dates to cash flows that are
solely payments of principal and interest
on the principal amount outstanding.
(c) Financial assets at fair value through profit
or loss ('FVTPL')
A financial asset which is not classified in any
of the above categories are subsequently
fair valued through profit or loss.
(d) Financial liabilities
Financial liabilities are subsequently carried
at amortised cost using the effective interest
method. For trade and other payables maturing
within one year from the balance sheet date,
the carrying amounts approximate fair value
due to the short maturity of these instruments.
The Company’s policy is to recognise
transfers into and transfers out of fair
value hierarchy levels as at the end of the
reporting period.
c. De-recognition of financial instruments
The Company derecognises a financial asset
when the contractual right to receive the
cash flows from the financial asset expire or it
transfers the financial asset. A financial liability
is derecognised when the obligation under the
liability is discharged, cancelled or expires.
d. Offsetting financial instruments
Financial assets and liabilities are offset and the
net amount is reported in the balance sheet where
there is a legally enforceable right to offset the
recognised amounts and there is an intention to
settle on a net basis or realise the asset and settle
the liability simultaneously. The legally enforceable
right must not be contingent on future events
and must be enforceable in the normal course of
business and in the event of default, insolvency or
bankruptcy of the group or the counterparty.
(iii) Current versus non-current classification
(i) An asset is considered as current when it is:
a. Expected to be realised or intended
to be sold or consumed in the normal
operating cycle, or
b. Held primarily for the purpose of
trading, or
c. Expected to be realised within twelve
months after the reporting period, or
d. Cash or cash equivalents unless
restricted from being exchanged or
used to settle a liability for at least twelve
months after the reporting period.
(ii) All other assets are classified as
non-current.
(iii) Liability is considered as current when it is:
a. Expected to be settled in the normal
operating cycle, or
b. Held primarily for the purpose of
trading, or
c. Due to be settled within twelve
months after the reporting period, or
d. There is no unconditional right to
defer the settlement of the liability
for at least twelve months after the
reporting period.
(iv) All other liabilities are classified
as non-current.
(v) Deferred tax assets and liabilities
are classified as non-current assets
and liabilities.
(vi) All assets and liabilities have been
classified as current or non-current as
per the Company's operating cycle and
other criteria set out in Schedule III to
the Act. Based on the nature of products
and services and the time between the
acquisition of assets for processing
and their realisation in cash and cash
equivalents, the Company has ascertained
its operating cycle as twelve months for
the purpose of current and non-current
classification of assets and liabilities.
(iv) Property, plant and equipment ('PPE')
PPE are stated at historical cost, less accumulated
depreciation and impairment losses, if any. Historical
costs include expenditure directly attributable to
acquisition which are capitalised until the PPE are
ready for use, as intended by management, including
non refundable taxes. Any trade discount and rebates
are deducted in arriving at the purchase price.
An item of PPE initially recognised is de-recognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Gains or losses
arising from disposals of assets are measured as the
difference between the net disposal proceeds and
the carrying value of the asset on the date of disposal
and are recognised in the standalone statement of
profit and loss, in the period of disposal.
The cost of an item of PPE shall be recognised as an
asset if, and only if:
(a) it is probable that future economic benefits
associated with the item will flow to
the Company; and
(b) the cost of the item can be measured reliably.
Items such as spare parts are recognised as PPE
when they meet the definition of PPE.
The Company depreciates PPE over their estimated
useful lives using the straight-line method ('SLM').
The estimated useful lives of PPE for the current and
comparative periods are as follows:
In case of certain assets included in above table,
the Company uses useful life different from those
specified in Schedule II of the Act which is duly
supported by technical evaluation of management.
The management believes that these estimated useful
lives are realistic and reflect fair approximation of the
period over which the assets are likely to be used.
Subsequent costs are included in the asset’s
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that
future economic benefits associated with the item
will flow to the Company and the cost of the item
can be measured reliably. The carrying amount of
any component accounted for as a separate asset
is derecognised when replaced. All other repairs
and maintenance are charged to the standalone
statement of profit and loss during the reporting
period in which they are incurred.
Depreciation methods, estimated useful lives and
residual values are reviewed at each reporting date.
Depreciation on addition to PPE or on disposal of
PPE is calculated pro-rata from the month of such
addition or up to the month of such disposal as the
case may be. The residual values are not more than
5% of the original cost of the asset.
Capital work-in-progress includes PPE under
construction and not ready for intended use as on
the balance sheet date.
(v) Leases
The Company as a lessor
Leases for which the Company is a lessor is classified
as a finance or operating lease. Whenever the terms
of the lease transfer substantially all the risks and
rewards of ownership to the lessee, the contract
is classified as a finance lease. All other leases are
classified as operating leases.
When the Company is an intermediate lessor, it
accounts for its interests in the head lease and the
sublease separately. The sublease is classified as a
finance or operating lease by reference to the ROU
asset arising from the head lease. For operating
leases, rental income is recognised on a straight-line
basis over the term of the relevant lease.
For operating leases, rental income is recognised
on a straight-line basis over the term of the relevant
lease. Contingent rents are recognised as revenue in
the period in which they are earned.
(vi) Impairment of assets
(a) Non-financial assets
Intangible assets, ROU assets and PPE are
evaluated for recoverability whenever events
or changes in circumstances indicate that their
carrying amounts may not be recoverable.
For the purpose of impairment testing, the
recoverable amount (i.e., the higher of the fair
value less cost to sell and the value in use)
is determined on an individual asset basis
unless the asset does not generate cash flows
that are largely independent of those from
other assets. In such cases, the recoverable
amount is determined for the CGU to which
the asset belongs.
If such assets are considered to be impaired, the
impairment to be recognised in the standalone
statement of profit and loss is measured by the
amount by which the carrying value of the assets
exceeds the estimated recoverable amount
of the asset. An impairment loss is reversed
in the standalone statement of profit and loss
if there has been a change in the estimates
used to determine the recoverable amount. The
carrying amount of the asset is increased to its
revised recoverable amount, provided that this
amount does not exceed the carrying amount
that would have been determined (net of any
accumulated amortisation or depreciation) had
no impairment loss been recognised for the
asset in prior years.
(b) Financial assets
The Company assesses at each date of balance
sheet 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. The
Company recognises lifetime expected losses
for all trade receivables that do not constitute
a financing component. In determining the loss
allowances for trade receivables, the Company
has used a practical expedient by computing
the expected credit loss allowance for trade
receivables based on a provision matrix. The
provision matrix takes into account historical
credit loss experience and is adjusted for forward¬
looking information. The expected loss allowance
is based on the ageing of the receivables that are
due and allowance rates used in the provision
matrix. For all other financial assets, expected
loss allowance are measured at an amount equal
to the 12-months expected credit losses or at an
amount equal to the lifetime credit losses if the
credit risk on the financial asset has increased
significantly since initial recognition.
When determining whether the credit risk of a
financial asset has increased significantly since
initial recognition, the Company considers
reasonable and supportable information that
is relevant and available without undue cost
or effort. This includes both quantitative and
qualitative information and analysis, based
on the Company’s historical experience and
informed credit assessment, that includes
forward looking information.
The Company calculates impairment allowance
under the simplified approach and do not
perform individual assessment of credit risk for
its financial assets/ specific parties.
For impairment of investment in subsidiaries
and joint venture, refer accounting policy of
“Investment in subsidiaries, associate and
joint venture”.
(vii) Employee benefits
Long-term employee benefits
(i) Defined contribution plan
The Company has defined contribution
plan for post employment benefits in the
form of provident fund and employees’
state insurance. Under the defined
contribution plan, the Company has no
further obligation beyond making the
contributions. Such contributions are
charged to the standalone statement of
profit and loss as incurred.
(ii) Defined benefit plan
The Company has defined benefit plan for
post employment benefits in the form of
gratuity for its employees in India. Liability
for defined benefit plan is provided on
the basis of actuarial valuations, as at
the balance sheet date, carried out by
an independent actuary. The actuarial
valuation method used by independent
actuary for measuring the liability is the
projected unit credit method.
Actuarial gains or losses are recognised
in OCI. Further, the profit or loss does
not include an expected return on plan
assets. Instead net interest recognised
in standalone statement of profit and
loss is calculated by applying the
discount rate used to measure the
defined benefit obligation to the net
defined benefit liability or asset. The
actual return on the plan assets above
or below the discount rate is recognised
as part of remeasurement of net defined
benefit liability or asset through OCI.
Remeasurement comprising of actuarial
gains or losses and return on plan
assets (excluding amounts included in
net interest on the net defined benefit
liability or asset) are not reclassified to
standalone statement of profit and loss in
subsequent periods.
(iii) Other long-term employee benefits
The employees of the Company are also
entitled to other long-term employee
benefits. Liability for such benefits
is provided on the basis of actuarial
valuations, as at the balance sheet date,
carried out by an independent actuary
using the projected unit credit method.
Actuarial gains and loss are recognised in
the standalone statement of profit and loss
during the period in which they arise.
Short-term employee benefits
The undiscounted amount of short-term employee
benefits expected to be paid in exchange for the
services rendered by employees is recognised
in the year during which the employee rendered
the services. These benefits include salary and
performance incentives etc.
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