1.4 Summary of Material accounting policies
a) Property, Plant and Equipment (PPE)
Property, Plant and Equipment are stated at cost (or revalued amounts, as the case may be), less accumulated depreciation
and impairment loss, if any. Cost comprises the purchase price and any attributable cost of bringing the property, plant
and equipment to its working condition for its intended use. Borrowing costs relating to acquisition of property, plant
and equipment which takes substantial period of time to get ready for its intended use are also included to the extent
they relate to the period till such property, plant and equipment are ready to be put to use.
The cost of an item of property, plant and equipment is the cash price equivalent at the recognition date. If payment
is deferred beyond normal credit terms, the difference between the cash price equivalent and the total payment is
recognised as interest over the period of credit, unless such interest is capitalised as per borrowing cost.
The Company identifies and determines separate useful life of each major component of the property, plant and
equipment, if they have useful life that is materially different from that of the remaining asset, as per Schedule II of
Companies Act, 2013.
b) Capital Work-in-Progress
The cost of property, plant and equipment not ready for intended use before such date are disclosed under capital work-
in-progress. Expenditure directly relating to construction activity is capitalized. Indirect expenditure incurred during
construction period is capitalized as part of the indirect construction cost to the extent to which the expenditure is
indirectly related to construction or is incidental thereto. Other indirect expenditure (including borrowing costs) incurred
during the construction period which is not related to the construction activity nor is incidental thereto is charged to the
Statement of profit and loss.
c) Depreciation on Property, Plant and Equipment (PPE)
Depreciation on all of the property, plant and equipment is provided using the straight line method at the rates prescribed
by Schedule II of the Companies Act, 2013 and / or useful life estimated by management supported by technical valuer's
independent assessment. The management believes that depreciation rates currently used fairly reflect its estimates of
the useful lives and residual values of property, plant and equipment.
d) Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost less accumulated amortisation and
accumulated impairment losses, if any.
Cost is the amount of cash or cash equivalents paid or the fair value of other consideration given to acquire an asset
at the time of its acquisition or construction, or, when applicable, the amount attributed to that asset when initially
recognised in accordance with the specific requirements of other Indian Accounting Standards.
Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business
less accumulated impairment losses, if any.
Goodwill is tested for impairment on annual basis and impairment is carried out whenever there is an indication that
the recoverable amount is less than its carrying amount based on a number of factors including business plan, operating
results, future cash flows and economic conditions. The recoverable amount is determined based on higher of value in
use and fair value. The company carried out goodwill impairment test and the management does not believe, that it was
more likely than not the fair value of any of the reporting units was less than the carrying amount.
Software
Cost of software is amortized over a period of 6 years, being the estimated useful life as per the management estimates.
e) Derecognition
Property, plant and equipment and intangible assets are derecognised on disposal or when no future economic benefits
are expected from their use and disposal. Losses arising from retirement and gains or losses arising from disposal of a
tangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset
and are recognised in the Statement of Profit and Loss.
f) Intangible assets under development
Research costs are expensed as incurred.
Development expenditure incurred on an individual project is recognized as an intangible asset when the Company can
demonstrate all the following:
1. The technical feasibility of completing the intangible asset so that it will be available for use or sale
2. Its intention to complete the asset
3. Its ability to use or sell the asset
4. How the asset will generate future economic benefits
5. The availability of adequate resources to complete the development and to use or sell the asset
6. The ability to measure reliably the expenditure attributable to the intangible asset during development.
Following the initial recognition of the development expenditure as an asset, the cost model is applied requiring the
asset to be carried at a cost less any accumulated amortization and accumulated impairment losses. Amortization of the
asset begins when development is complete, and the asset is available for use. It is amortized on a straight-line basis over
the period of expected future benefit from the related project. Amortization is recognized in the statement of profit and
loss unless such expenditure forms part of the carrying value of another asset. During the period of development, the
asset is tested for impairment annually.
g) Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction or production of an property, plant and equipment
that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the
cost of the respective property, plant and equipment. All other borrowing costs are expensed in the period they occur.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
h) Impairment
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets
to determine whether there is any indication based on internal/ external factors 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 to which the asset belongs. 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 assets those are cash-generating units for
which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at
least annually, and whenever there is an indication that the asset may be impaired.
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.
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, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash¬
generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the statement of profit and
loss.
i) Leases
Where the Company is the lessee
The Company's lease asset classes primarily consist of leases for land and buildings. The Company assesses whether a
contract contains a lease, at inception of a contract. 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. 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 an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through
the period of the lease and (iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset("ROU")and a corresponding
lease liability for all lease arrangements in which it is a lessee, 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 Company recognizes the
lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU
assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted
for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any
lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease
term and useful life of the underlying asset. Right of use assets 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.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease
payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental
borrowing rates. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the
Company changes its assessment if whether it will exercise an extension or a termination option. Lease liability and ROU
asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cost.
Where the Company is the 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.
Assets subject to operating leases are included in PPE. Rental income on operating lease is recognized in the statement
of profit and loss on a straight-line basis over the lease term. Where the rentals are structured solely to increase in line
with expected general inflation to compensate for the Company's expected inflationary cost increases, such increases
are recognized in the year in which such benefits accrue benefits accrue.
Costs, including depreciation, are recognized as an expense in the statement of profit and loss. Initial direct costs incurred
in negotiating and arranging an operating lease are added to the carrying amount of the leased assets and recognised on
a straight line basis over the lease term.
j) Investment in Subsidiary
Investment in Subsidiary is measured at cost.
k) Inventories
Inventories of Pharmacy Drugs & Other Items, Medical Consumables and the Stores and Spares are valued at lower of
cost and net realizable value. Cost is determined on weighted average basis.
Traded goods are valued at lower of cost and net realisable value. Costs includes cost of purchase and other costs
incurred to bring inventories to their present locations and conditions. Cost is determined on weighted average basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to
make the sale.
l) Revenue recognition
The Company derives revenue primarily from Healthcare Services through operating of multi-speciality Hospital.
Revenue is measured at the transaction price. Revenue is reduced for returns, trade allowances for deduction, rebates,
value added taxes and amounts collected on behalf of third parties.
Sale of Pharmacy Drugs and Medical Supplies including Traded Goods
Revenue is recognized as and when Pharmacy Drugs, Medical Supplies and Traded goods are sold. Revenue from the sale
of Pharmacy Drugs, Medical Supplies and Traded good are recognised when control of the goods has passed to the buyer
i.e. at the point of sale / to the customer at an amount that reflects the consideration to which the Company expects to
be entitled in exchange for those goods. Sale is net of sales returns, discounts and goods & services tax.
Income from Operations
Revenue is recorded when the performance obligations are satisfied. For outpatient customers services are simultaneously
received and consumed by the patient. For inpatient customers, revenue is recognized as services are performed over
the period. Revenue for the ongoing services at the reporting date is recognised as unbilled revenue. The income is
stated net of discount and price differences, as per terms of contract.
Interest
Interest income is recognised on a time proportion basis taking into account the amount outstanding and the applicable
interest rate.
Income from Nursing Hostel
Revenue is recognized as per contractual arrangement with nursing staff using the hostel facilities.
Income from Lease Rentals & Outsourced Facilities
Revenue is recognized in accordance with the terms of lease agreements entered into with the respective lessees.
Income from Service Export from India Scheme (SEIS)
Income from 'Service Export from India Scheme' is recognized on accrual basis as and when eligible services are
performed and convertible foreign exchange is received on a net basis.
Income from Clinical Research
Income from clinical research is recognised as and when the services are rendered in accordance with the terms of the
respective agreements.
Income from Sponsorships
Sponsorship income is recognized when the underlying obligations are completed as per contractual terms.
m) Foreign currency transactions
In preparing the financial statements, transaction in currencies other than the Company's functional currency (foreign
currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.
At the end of each reporting period
i) Monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date,
ii) Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates
prevailing at the date when the fair value was determined.
iii) Non-monetary items that are measured in terms of historical cost in foreign currency are not retranslated.
Exchange differences on monetary items are recognized in the statement of profit and loss in the period in which they
arise except exchange differences on foreign currency borrowings relating to assets under construction for future
productive use, which are included in the cost of those assets when they are regarded as adjustment to interest costs on
those foreign currency borrowings.
n) Employees Benefits
Short term employee benefits
Employee benefits payable wholly within twelve months of receiving services are classified as short-term employee
benefits. These benefits include salary and wages, bonus and exgratia. The undiscounted amount of short-term employee
benefits to be paid in exchange for employee services is recognized as an expense as the related service is rendered by
the employees.
Post employment benefits
Defined contribution plans
A defined contribution plan is post-employment benefit plan under which an entity pays specified contributions to
separate entity and has no obligation to pay any further amounts. The Company makes specified obligations towards
employee provident fund and employee state insurance (ESI) to Government administered provident fund scheme and
ESI scheme which is a defined contribution plan. The Company's contributions are recognized as an expense in the
statement of profit and loss during the period in which the employee renders the related service.
Defined benefit plans
The Company's gratuity benefit scheme is a defined benefit plan. The Company's net obligation in respect of a defined
benefit plan is calculated by estimating the amount of future benefit that employees have earned and returned for
services in the current and prior periods; that benefit is discounted to determine its present value. The calculation of
Company's obligation under the plan is performed periodically by a qualified actuary using the projected unit credit
method.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past
service or the gain or loss on curtailment is recognised immediately in the statement of profit and loss.
Compensated absences
The employees can carry-forward a portion of the unutilized accrued compensated absences and utilize it in future
service periods or receive cash compensation on termination of employment. The Company records an obligation for
such compensated absences in the period in which the employee renders the services that increase this entitlement.
The obligation is measured on the basis of independent actuarial valuation using the projected unit credit method.
Share based payments
The Company follows the fair value method for accounting of share-based payment transactions as per Ind AS 102
- Share-based Payment. The fair value of stock options granted to employees is recognised as an employee benefits
expense over the vesting period, with a corresponding increase in equity under the "Share Options Outstanding Account".
Each tranche of the option grant with a different vesting period is accounted for as a separate award. The cost of
equity-settled share-based payment transactions is measured based on the fair value of the awards at the grant date,
determined using an appropriate valuation model (such as the Black-Scholes-Merton model).
At each reporting date, the Company revises its estimate of the number of options expected to vest. The impact of the
revision, if any, is recognised in the statement of profit and loss with a corresponding adjustment to equity.
Upon expiry or lapse of options, the balance lying in the Share Options Outstanding Account relating to such options is
transferred to the General Reserve.
o) Income taxes
Income tax expense represents the sum of the tax currently payable and deferred tax.
i) Current Tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from 'profit before tax' as
reported in the statement of profit and loss because of items of income or expense that are taxable or deductible
in other years and items that are never taxable or deductible. The current tax is calculated using tax rates and tax
laws that have been enacted or substantively enacted by the end of the reporting period.
Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the
Income-tax Act, 1961 enacted in India.
ii) Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in computation of taxable profit. Deferred tax liabilities
are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all
deductible temporary differences to the extent that it is probable that taxable profits 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 the end of each reporting period and reduced to the
extent that is no longer probable that sufficient taxable profits will be available to allow all or part of assets to be
recovered.
Deferred tax is measured based on tax rates and tax laws enacted or substantively enacted at the balance sheet
date. 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.
iii) Current and deferred tax for the year
Current and deferred tax are recognized in the statement of profit and loss, except when they relate to items that
are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are
also recognized in other comprehensive income or directly in equity respectively.
p) Earnings Per share
Basic earnings per share is being calculated by dividing net profit or loss for the year (including prior period items, if any)
attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity
shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all
dilutive potential equity shares.
q) Financial Instrument
Financial assets and financial liabilities are recognised when Company becomes a party to the contractual provisions of
the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at
fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or
financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular
way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame
established by regulation or convention in the market place.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value,
depending on the classification of the financial assets.
Classification of financial assets
Financial Assets that meet the following conditions are subsequently measured at amortised cost (except for financial
assets that are designated as at fair value through profit or loss on initial recognition):
i) the assets is held within a business model whose objective is to hold assets in order to collect contractual cash
flows; and
ii) the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Financial Assets that meet the following conditions are subsequently measured at fair value through other comprehensive
income (except for financial assets that are designated as at fair value through profit or loss on initial recognition):
i) the assets is held within a business model whose objective is achieved both by collecting contractual cash flows and
selling financial assets; and
ii) the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Interest income is recognised in profit or loss for financial assets designated at fair value through other comprehensive
income (FVTOCI). For the purposes of recognising foreign exchange gains and losses, FVTOCI financial assets are treated
as financial assets measured at amortised cost. Thus, the exchange differences on the amortised cost are recognised
in profit or loss and other changes in the fair value of FVTOCI financial assets are recognised in other comprehensive
income and accumulated under the heading of 'Reserve for financial assets through other comprehensive income'.
When the investment is disposed of, the cumulative gain or loss previously accumulated in this reserve is reclassified to
profit or loss.
All other financial assets are subsequently measured at fair value.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest
income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash
receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction
costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a
shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at
FVTPL. Interest income is recognised in profit or loss and is included in the "Other income" line item.
Financial assets at fair value through profit or loss (FVTPL)
A financial asset that meets the amortised cost criteria or debt instruments that meet the FVTOCI criteria may be
designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement
or recognition inconsistency that would arise from measuring assets or liabilities or recognising the gains and losses on
them on different bases. The Company has not designated any debt instrument as 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. The net gain or loss recognised in profit or loss incorporates any dividend
or interest earned on the financial asset and is included in the 'Other income' line item. Dividend on financial assets at
FVTPL is recognised when the Company's right to receive the dividends is established, it is probable that the economic
benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost
of the investment and the amount of dividend can be measured reliably.
Impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at
amortised cost, debt instruments at FVTOCI, lease receivables, trade receivables, and other contractual rights to receive
cash or other financial asset, and financial guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the
weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with
the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original
effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit impaired financial
assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example,
prepayment, extension, call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit
losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on
a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance
for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses
are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default
occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next
12 months.
If the Company measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous
period, but determines at the end of a reporting period that the credit risk has not increased significantly since initial
recognition due to improvement in credit quality as compared to the previous period, the Company again measures the
loss allowance based on 12-month expected credit losses.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the
Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead
of the change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a
default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial
instrument as at the date of initial recognition and considers reasonable and supportable information, that is available
without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that
are within the scope of Ind AS 115, the Company always measures the loss allowance at an amount equal to lifetime
expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used
a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision
matrix which takes into account historical credit loss experience and adjusted for forward looking information.
The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt
instruments at FVTOCI except that the loss allowance is recognised in other comprehensive income and is not reduced
from the carrying amount in the balance sheet.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the
Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the
transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may
have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset,
the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds
received.
On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the
sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other
comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise
been recognised in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase
part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the
part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the
relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to
the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any
cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit
or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A
cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that
continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated
at the spot rate at the end of each reporting period. For foreign currency denominated financial assets measured at
amortised cost and FVTPL, the exchange differences are recognised in statement of profit and loss since there are no
designated hedging instruments in a hedging relationship.
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or then
the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments
issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific
accounting policies set out below.
Compulsorily Convertible Debentures
Compound Financial Instruments:
Compulsorily Convertible Debentures (CCDs) are treated as compound financial instruments and these are separated
into liability and equity components based on the terms of the contract. At the inception of the CCDs, the following
two elements are separated: (a) a liability component arising from the interest payments, if any; and (b) an equity
component representing the delivery of fixed number of equity shares in future. On issuance of the CCDs, the fair value
of the liability portion is determined using a market interest rate for an equivalent non-convertible debt. This amount
is recorded as a liability on an amortised cost basis, till its conversion into equity or payment, whichever is earlier. The
remainder of the proceeds is attributable to the equity portion of the compound instrument and is not subsequently
remeasured. In addition, the component classified as equity shall remain in equity till its conversion. Transaction costs
are apportioned between the liability and equity components of the CCDs based on the allocation of proceeds to the
liability and equity components when the instruments are initially recognized.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognised
by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is
designated as at FVTPL.
A financial liability is classified as held for trading if:
i) it has been incurred principally for the purpose of repurchasing it in the near term; or
ii) on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together
and has a recent actual pattern of short-term profit-taking; or
iii) it is a derivative that is not designated and effective as a hedging instrument.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in
profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and
is included in the 'Other income' line item.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in
the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised
in other comprehensive income, unless the recognition of the effects of changes in the liability's credit risk in other
comprehensive income would create or enlarge an accounting mismatch in profit or loss, in which case these effects
of changes in credit risk are recognised in profit or loss. The remaining amount of change in the fair value of liability is
always recognised in profit or loss. Changes in fair value attributable to a financial liability's credit risk that are recognised
in other comprehensive income are reflected immediately in retained earnings and are not subsequently reclassified to
profit or loss.
Gains or losses on financial guarantee contracts and loan commitments issued by the Company that are designated by
the Company as at fair value through profit or loss are recognised in profit or loss.
Financial liabilities subsequently measured at amortised cost.
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at
the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured
at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part
of costs of an asset is included in the 'Finance costs' line item.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash payments (including all fees and points paid or received that form an integral part of the effective interest
rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where
appropriate) a shorter period, to the net carrying amount on initial recognition.
Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder
for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt
instrument.
Financial guarantee contracts issued by a Company entity are initially measured at their fair values and, if not designated
as at FVTPL, are subsequently measured at the higher of:
i) the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
ii) the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance
with the principles of Ind AS 115.
Commitments to provide a loan at a below-market interest rate
Commitments to provide a loan at a below-market interest rate are initially measured at their fair values and, if not
designated as at FVTPL, are subsequently measured at the higher of:
i) the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
ii) the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance
with the principles of Ind AS115.
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each
reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments
and are recognised in 'Other income'.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and
translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the
foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled
or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted
for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly,
a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial
difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of
a new financial liability. The difference between the carrying amount of the financial liability derecognised and the
consideration paid and payable is recognised in statement of profit and loss.
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