1. MATERIAL ACCOUNTING POLICIES
1.1 Corporate Information
Ather Energy Limited (Formerly known as Ather
Energy Private Limited) (‘the Company’) (CIN:
L40100KA2013PLC093769) is a pure-play EV
company selling electric two-wheelers (E2Ws)
and associated product ecosystem comprising
software, charging infrastructure and smart
accessories, all of which are conceptualised and
designed by Ather in India. The Company is engaged
in the development, manufacturing, and distribution
of E2Ws and related products. The Company is
incorporated and domiciled in India. The Company
has converted from Private Limited Company to
Public Limited Company, pursuant to a special
resolution passed in the extraordinary general
meeting of the shareholders of the Company held
on June 21, 2024 and consequently the name of
the Company has changed to Ather Energy Limited
pursuant to a fresh certificate of incorporation by
the Registrar of Companies on August 27, 2024.
The Company has completed its Initial Public Offer
(IPO) and accordingly the Company’s equity shares
are listed on National Stock Exchange (NSE) and
Bombay Stock Exchange (BSE) on May 06, 2025. The
Company’s registered office is located at 3rd floor,
Tower D, IBC knowledge park, #4/1, Bannerghatta
main road, Bengaluru, Karnataka, India, 560029.
These financial statements for the year ended
March 31, 2026, have been approved by the Board
of Directors and authorised for issuance on May 04,
2026.
1.2 Basis of Preparation
The financial statements of the Company comprise
of the Balance Sheet as at March 31, 2026, the
Statement of Profit and Loss (including Other
comprehensive income), the Statement of Changes
in Equity, the Statement of Cash Flows for the year
ended on that date, and notes to financial statements,
including a summary of material accounting policies,
and other explanatory information (collectively, the
“financial statements”).
These financial statements have been prepared in
accordance with Indian Accounting Standards (Ind
AS) notified under section 133 of the Companies Act,
2013 (‘the Act’) read together with the Companies
(Indian Accounting Standards) Rules, 2015, as
amended from time to time and other relevant
provisions of the Act, on an accrual basis.
The financial statements have been prepared on
a historical cost basis, except for certain financial
instruments, defined benefit liabilities and share
based payment arrangements that are measured
at fair value at the end of each reporting year,
as explained in the accounting policies below.
Historical cost is generally based on the fair value of
the consideration given in exchange for goods and
services.
These financial statements are presented in Indian
Rupees (?), which is also the Company’s functional
currency and all values are rounded to the nearest
crore, except when otherwise indicated. The
comparative figures have been converted from
^ million to ^ crore to maintain the consistency in
presentation, any minor variances arising from
this change are solely attributable to rounding
off adjustments. The number ‘0.00’ in financial
statements denotes amount less than ^ 50,000.
1.3 Summary of Material Accounting Policies
1.3.1 Current versus non- current classification
The Company presents assets and liabilities in the
financial statements based on current/ non-current
classification.
An asset is classified as current when it satisfies any
of the following criteria;
a) It is expected to be realized in, or is intended for
sale or consumption in the Company’s normal
operating cycle;
b) It is held primarily for the purpose of being
traded;
c) It is expected to be realized within twelve
months after the reporting date; or
d) It is cash or cash equivalent unless it is restricted
from being exchanged or used to settle a
liability for at least twelve months after the
reporting date.
A liability is classified as current when it satisfies any
of the following criteria;
a) I t is expected to be settled in the Company’s
normal operating cycle;
b) It is held primarily for the purpose of being
traded;
c) It is due to be settled within twelve months after
the reporting date; or
d) It does not have the right at the end of the
reporting period to defer settlement of the
liability for at least twelve months after the
reporting period.
All other assets and liabilities are classified as non¬
current.
The Company has determined its operating cycle as
twelve months for the above purpose of classification
as current and non-current.
1.3.2 Fair Value Measurement
A number of Company’s accounting policies and
disclosures require the measurement of fair values,
for both financial and non-financial assets and
liabilities at each balance sheet date. Fair value is
the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction
between market participants at the measurement
date. The fair value measurement is based on the
presumption that the transaction to sell the asset or
transfer the liability takes place either:
a) In the principal market for the asset or liability, or
b) In the absence of a principal market, in the most
advantageous market for the asset or liability
c) The principal or the most advantageous market
must be accessible by the Company.
The fair value of an asset or a liability is measured
using the assumptions that market participants
would use when pricing the asset or liability,
assuming that market participants act in their best
economic 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.
The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is
measured or disclosed in the financial statements
are categorised within the fair value hierarchy,
described as follows, based on the lowest level input
that is significant to the fair value measurement as a
whole:
a) Level 1 — Quoted (unadjusted) market prices in
active markets for identical assets or liabilities
b) Level 2 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is directly or indirectly observable
c) Level 3 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is unobservable
For assets and liabilities that are recognised in
the financial statements on a recurring basis, the
Company determines whether transfers have
occurred between levels in the hierarchy by re¬
assessing categorisation (based on the lowest level
input that is significant to the fair value measurement
as a whole) at the end of each reporting year.
For recurring and non-recurring fair value
measurements categorised within Level 3 of the
fair value hierarchy, mention a description of the
valuation processes used by the entity (including, for
example, how an entity decides its valuation policies
and procedures and analyses changes in fair value
measurements from period to period).
For the purpose of fair value disclosures, the
Company has determined classes of assets and
liabilities on the basis of the nature, characteristics
and risks of the asset or liability and the level of the
fair value hierarchy as explained above.
1.3.3 Use of estimates and judgements
The preparation of financial statements in
conformity with Ind AS requires management to
make judgments, estimates and assumptions that
affect the application of accounting policies and
the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these
estimates.
Estimates and underlying assumptions are
reviewed on a periodic basis. Revisions to
accounting estimates are recognized in the year in
which the estimates are revised and in any future
years affected. Information about significant areas
of estimation, uncertainty and critical judgments
in applying accounting policies that have the most
significant effect on the amounts recognized in the
financial statements is included in the following
notes:
a. Intangible assets and intangible assets under
development
Capitalisation of cost in intangible assets and
intangible assets under development is based
on management’s judgement that technological
and economic feasibility is confirmed and asset
under development will generate economic
benefits in future. Based on the impairment
assessment carried out, the Company’s
management has determined that these assets
have not suffered any impairment loss.
b. Defined benefit plans
The cost of the defined benefit plan and other
post-employment benefits and the present
value of such obligation are determined using
actuarial valuations. An actuarial valuation
involves making various assumptions that
may differ from actual developments in the
future. These include the determination of the
discount rate, future salary increases, mortality
rates and future pension increases. Due to the
complexities involved in the valuation and its
long-term nature, a defined benefit obligation
is sensitive to changes in these assumptions.
All assumptions are reviewed at each reporting
date.
c. Provisions and contingent liability
On an ongoing basis, Company reviews
pending cases, claims by third parties
and other contingencies. For contingent
losses that are considered probable, an
estimated loss is recorded as an accrual in
the financial statements. Contingent loss that
are considered possible are not provided
for but disclosed as Contingent liabilities in
the financial statements. Contingencies the
likelihood of which is remote are not disclosed
in the financial statements. Contingent gains
are not recognized until the contingency has
been resolved and amounts are received or
receivable.
The Company is a party to certain tax and other
disputes with government authorities. Due to
the uncertainty associated with such cases, it
is possible that, on conclusion of such matters
at a future date, the final outcome may differ
significantly.
d. Useful lives of depreciable assets
Management reviews the useful lives of
depreciable assets at each reporting date. As at
reporting date, management assessed that the
useful lives represent the expected utility of the
assets to the Company.
e. Provision for warranty
Provisions for warranty-related costs are
recognized when the products are sold by
the Company. Provision is estimated based
on historical experience and/or technical
estimates. Provisions are discounted, where
necessary, to its present value based on the
best estimate required to settle the obligation
at the balance sheet date. In certain cases, the
Company also has back-to-back contractual
arrangement with its suppliers in the event
that a vehicle fault is proven to be a supplier’s
fault. These are reviewed at each reporting
date and adjusted to reflect the current best
estimates (net of recoveries from vendors).
f. Share based payment
Employees of the Company receive
remuneration in the form of Share-based
Payment transactions, whereby employees
render services as consideration for equity
instruments (equity-settled transactions).
In accordance with the Ind AS 102 Share-
based Payment, the cost of equity-settled
transactions is measured using the fair value
method. The cumulative expense recognised
for equity-settled transactions at each
reporting date until the vesting date reflects the
extent to which the vesting year has expired and
the Company’s best estimate of the number of
equity instruments that will ultimately vest. The
expense or credit recognised in the statement
of profit and loss for a year represents the
movement in cumulative expense recognised
as at the beginning and end of that period and is
recognised in employee benefits expense.
g. Inventories
The Company estimates the net realisable value
(NRV) of its inventories by taking into account
their estimated selling price, estimated cost of
completion, estimated costs necessary to make
the sale. Management periodically reviews the
inventory listing to determine if any allowance
should be accounted for in the financial
statements for obsolete or slow-moving items,
and to compare the carrying value of inventory
items with their respective net realizable value.
h. Leases
The Company evaluates if an arrangement
qualifies to be a lease as per the requirements
of Ind AS 116. Identification of a lease requires
significant judgment. The Company uses
significant judgement in assessing the lease
term (including anticipated renewals) and the
applicable discount rate.
The Company determines the lease term as the
non-cancellable period of a lease, together with
both periods covered by an option to extend the
lease if the Company is reasonably certain to
exercise that option; and periods covered by an
option to terminate the lease if the Company is
reasonably certain not to exercise that option. In
assessing whether the Company is reasonably
certain to exercise an option to extend a lease,
or not to exercise an option to terminate a lease,
it considers all relevant facts and circumstances
that create an economic incentive for the
Company to exercise the option to extend the
lease, or not to exercise the option to terminate
the lease. The Company revises the lease term if
there is a change in the non-cancellable period
of a lease.
The discount rate is generally based on the
incremental borrowing rate to the lease being
evaluated or for a portfolio of leases with similar
characteristics.
.3.4 Property, Plant and Equipment (PPE)
Property, plant and equipment are stated at cost
less accumulated depreciation and impairment
losses, if any. Cost includes purchase price, related
taxes, duties, freight, insurance, etc. attributable to
the acquisition, installation of the PPE and borrowing
cost if capitalisation criteria are met but excludes
duties and taxes that are recoverable from tax
authorities.
Machinery spares which can be used only in
connection with an item of PPE and whose use
is expected to be irregular are capitalised and
depreciated over the useful life of the principal item
of the relevant assets. Subsequent expenditure
relating to PPE is capitalised only if it is probable that
future economic benefits associated with the item
will flow to the entity and the cost of the item can be
measured reliably.
Material replacement cost is capitalized provided it
is probable that future economic benefits associated
with the item will flow to the entity and the cost of the
item can be measured reliably. When replacement
cost is eligible for capitalization, the carrying amount
of those parts that are replaced are derecognized.
When significant parts of plant and equipment are
required to be replaced at intervals, the Company
depreciates them separately based on their specific
useful life.
Property, plant and equipment retired from active
use and held for sale are stated at the lower of their
net book value and net realisable value and are
disclosed separately in the Balance Sheet.
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.
Amount paid towards the acquisition of property,
plant and equipment outstanding as of each
reporting date and the cost of property, plant and
equipment not ready for their intended use before
such date are disclosed under capital work-in¬
progress. The capital work- in-progress is carried
at cost, comprising direct cost, related incidental
expenses and attributable interest. No depreciation
is charged on the capital work in progress until the
asset is ready for their intended use.
Depreciation and Amortisation
Depreciation is provided on a pro rata basis on straight
line method to allocate the cost, net of residual value
over the estimated useful lives of the assets.
Depreciation has been provided on the straight¬
line method based on the useful life as prescribed
in Schedule II to the Companies Act, 2013 except in
respect of the following categories of assets:
The Company, based on technical assessment made
by technical expert and Management estimate,
depreciates above items of property, plant and
equipment over estimated useful lives which are
different from the useful life prescribed in Schedule
II to the Companies Act, 2013. 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.
The estimated useful lives, residual values and
depreciation method are reviewed at the end of
each reporting year, with the effect of any changes in
estimate accounted for on a prospective basis.
Right of use assets are depreciated over the primary
lease period as the right to use of these assets
ceases on expiry of the lease period.
Depreciation on additions is being provided on pro
rata basis from the month of such additions.
Depreciation on assets sold, discarded or
demolished during the year is being provided up to
the month in which such assets are sold, discarded or
demolished. Any gain or loss arising on the disposal
or retirement of an item of property, plant and
equipment is determined as the difference between
the sales proceeds and the carrying amount of the
asset and is recognised in statement of profit and
loss.
1.3.5 Intangible Assets
Intangible assets acquired separately: Intangible
assets with finite useful lives that are acquired
separately are carried at cost less accumulated
amortisation and accumulated impairment losses,
if any. Amortisation is recognised on a straight-line
basis over their estimated useful lives. The estimated
useful life and amortisation method are reviewed
at the end of each reporting year, with the effect of
any changes in estimate being accounted for on a
prospective basis. Intangible assets with indefinite
useful lives that are acquired separately are carried
at cost less accumulated impairment losses, if any.
Internally-generated intangible assets - research
and development expenditure: Expenditure on
research activities is recognised as an expense in
the statement of profit and loss in the period in which
it is incurred.
An internally generated intangible asset arising from
development (or from the development phase of an
internal project) is recognised if, and only if, all the
following have been demonstrated:
• The technical feasibility of completing the
intangible asset so that it will be available for use
/ sale;
• The intention to complete the intangible asset
and use or sell it;
• The ability to use or sell the intangible asset;
• How the intangible asset will generate probable
future economic benefits;
• The availability of adequate technical,
financial and other resources to complete the
development and to use or sell the intangible
asset; and
• The ability to measure reliably the expenditure
attributable to the intangible asset during its
development.
The amount initially recognised for internally
generated intangible assets is the sum of the
expenditure incurred from the date when the
intangible asset first meets the recognition criteria
listed above. Where no internally generated
intangible asset can be recognised, development
expenditure is recognised in Statement of Profit and
Loss in the period in which it is incurred.
Subsequent to initial recognition, internally
generated intangible assets are reported at cost
less accumulated amortisation and accumulated
impairment losses, on the same basis as intangible
assets that are acquired separately.
An intangible asset is derecognised on disposal,
or when no future economic benefits are expected
from use or disposal. Gains or losses arising from
derecognition of an intangible asset, measured as
the difference between the net disposal proceeds
and the carrying amount of the asset, are recognised
in statement of profit and loss when the asset is
derecognised.
Interest cost incurred is capitalized up to the date
the asset is ready for its intended use for qualifying
assets, based on borrowings incurred specifically
for financing the asset.
Useful lives of other intangible assets:
Other intangible assets are amortised over their
respective individual estimated useful lives on
a straight-line basis, from the date that they are
available for use. The estimated useful life of an
identifiable intangible asset is based on a number
of factors including the effects of obsolescence,
demand, competition, and other economic
factors (such as the stability of the industry, and
known technological advances), and the level of
maintenance expenditures required to obtain the
expected future cash flows from the asset.
The management estimates the useful lives for its
intangible assets as follows:
1.3.6 Impairment of tangible and intangible assets
The Company assesses on annual basis whether
there is an indication that an asset may be impaired.
If any indication exists, 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) net selling price 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 groups of assets. Where 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. 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.
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 net selling price,
recent market transactions are taken into account, if
available. If no such transactions can be identified,
an appropriate valuation model is used.
The Company bases its impairment calculation on
detailed budgets and forecast calculations which
are prepared separately for each of the Company’s
cash-generating units to which the individual
assets are allocated. These budgets and forecast
calculations are generally covering 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.
An assessment is made on annual basis as to
whether there is any indication that previously
recognized impairment losses may no longer exist
or may have decreased. If such indication exists, the
Company estimates the asset’s or cash-generating
unit’s recoverable amount. A previously recognized
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 recognized. The reversal is
limited so that the carrying 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
recognized for the asset in prior years. Such reversal
is recognized 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.
After impairment, depreciation is provided on
the revised carrying amount of the asset over its
remaining useful life.
1.3.7 Inventories
Raw materials, components and stores & spare parts
are valued at lower of cost determined on weighted
average basis and estimated net realisable value.
Cost includes purchase price, freight, taxes and
duties and is net of Goods and Services Tax to the
extent credit of the tax is availed of.
Work-in-progress and finished goods are valued
at lower of cost and estimated net realisable value.
Cost includes all direct costs including material
procurement cost and appropriate proportion of
overheads to bring the goods to the present location
and condition.
Due allowance is made for slow/non-moving /
obsolete items. Materials and other items held for
use in the production of inventories are not written
down below cost if the finished products in which
they will be used are expected to be sold at or above
cost.
Net realizable value is the estimated selling price
in the ordinary course of business, less estimated
costs of completion and estimated costs necessary
to make the sale.
1.3.8 Revenue from contract with customers and Other
Income
Revenue from contract with customers
Revenue is recognised upon transfer of control of
promised products or services to customers for an
amount that reflects the consideration which the
Company expects to receive in exchange for those
products or services. Revenue excludes taxes or
duties collected on behalf of the Government.
• Sale of products
The Company recognises revenues from sale of
products measured at the amount of transaction
price (net of variable consideration), when it
satisfies its performance obligation at a point
in time which is when products are delivered
to customers, which is when control including
risks and rewards and title of ownership pass
to the customer, and when there is no longer
any unfulfilled obligation. The transaction price
of goods sold is net of variable consideration
on account of various discounts and schemes
offered by the Company as part of the contract.
The Company offers sales incentives in the form
of variable marketing expense to customers,
which vary depending on the timing and
customer of any subsequent sale of the vehicle.
This sales incentive is accounted for as a
revenue reduction and is constrained to a level
that is highly probable not to reverse the amount
of revenue recognised when any associated
uncertainty is subsequently resolved. The
Company estimates the expected sales incentive
by market condition and considers uncertainties
including competitor pricing, ageing of retailer
stock and local market conditions.
Revenues are recognised when collectability of
the resulting receivable is reasonably assured.
• Sale of services
Income from sale of services and extended
warranties are recognised as income at a point
in time or over the relevant period of service or
extended warranty.
When the Company sells bundled service and
extended period of warranty, such services are
treated as a separate performance obligation
only if the service or warranty is having a
different timing of performance obligation. In
such cases, the transaction price allocated
towards such service or extended period of
warranty based on relative standalone selling
price and is recognised as a contract liability until
the service obligation has been met. The price
that is regularly charged for an item when sold
separately is the best evidence of its standalone
selling price. In the absence of such evidence,
the primary method used to estimate standalone
selling price is the expected cost plus a margin,
under which the Company estimates the cost of
satisfying the performance obligation and then
adds an appropriate margin based on similar
services.
Sales of services include certain performance
obligations that are satisfied over a period of time.
Any amount received in advance in respect of
such performance obligations that are satisfied
over a period of time is recorded as a contract
liability and recorded as revenue when service
is rendered to customers. Refund liabilities
comprise of obligation towards customers to pay
for discounts and sales incentives.
Revenue is measured based on the transaction
price, which is the consideration, adjusted for
variable consideration on account of discounts and
other incentives, if any, offered by the Company as
a part of the contract with the customer. Revenue
also excludes taxes or other amounts collected
from customers. No element of financing is deemed
present as the sale of goods / services are primarily
on a “Cash and Carry” basis.
Contract balances
Trade receivables
A receivable is recognised by the Company when
the goods are delivered to the customer as this
represents the point in time at which the right to
consideration becomes unconditional, as only the
passage of time is required before payment due.
Refer to accounting policy on Financial instruments -
initial measurement and subsequent measurement
Contract liabilities
A contract liability is the obligation to transfer goods
to a customer for which the Company has received
consideration from the customer. If a customer pays
consideration before the Company transfers goods
or services to the customer, a contract liability is
recognised when the payment is made. Contract
liabilities are recognised as revenue when the
Company performs under the contract.
Warranty obligation
The Company provides warranties for general repairs
of defects as per terms of the contract with ultimate
customers. These warranties are considered as
assurance type warranties and are accounted for
under Ind AS 37- Provisions, Contingent Liabilities
and Contingent Assets. Warranty expenses is
disclosed net of supplier reimbursements.
Other Income
• Interest income is recognised on the accrual
basis. For all debt instruments measured at
amortised cost, interest income is recognised
on time proportion basis, taking into account the
amount outstanding and effective interest rate.
1.3.9 Government Grants
Government grants and subsidies are recognised
when there is reasonable assurance that the
Company will comply with the conditions attached
to them and the grants/subsidy will be received.
When the grant or subsidy from the Government
relates to an expense item, it is recognised as
income on a systematic basis in the Statement of
Profit and Loss over the period necessary to match
them with the related costs, which they are intended
to compensate.
When the Company receives grants of non¬
monetary assets, the asset and the grant are
recorded at fair value amounts and released to profit
or loss over the expected useful life in a pattern of
consumption of the benefit of the underlying asset,
i.e. by equal annual instalments. When loans or
similar assistance are provided by Governments
or related institutions, with an interest rate below
the current applicable market rate, the effect of this
favourable interest is regarded as a government
grant. The loan or assistance is initially recognised
and measured at fair value of the proceeds received.
The loan is subsequently measured as per the
accounting policy applicable to financial liabilities.
1.3.10 Employee Benefits
I. Defined Contribution Plan
a. Provident Fund
Contributions in respect of Employees
Provident Fund are made to the Regional
Provident Fund. These Contributions are
recognised as expense in the year in which
the services are rendered. The Company
has no obligation other than the contribution
payable to the Regional Provident fund.
II. Defined Benefit Plan
a. Gratuity
The Company accounts its liability for future
gratuity benefits based on actuarial valuation
done by an independent actuary, as at the
balance sheet date, determined every year
using the Projected Unit Credit method.
Actuarial gains/losses are immediately
recognised in retained earnings through
Other Comprehensive Income in the period
in which they occur. Re-measurements
are not re-classified to profit or loss in
subsequent periods. Past service cost is
recognised immediately to the statement of
profit and loss. Net interest is calculated by
applying a discount rate to the net defined
benefit liability or asset. The defined benefit
obligation recognised in the balance sheet
represents the present value of the Defined
Benefit Obligation less the Fair Value of
Plan Assets out of which the obligations are
expected to be settled.
b. Compensated Absences
Accumulated leave (earned leave) can be
availed and encashed on termination of
employment, subject to terms and conditions
of the scheme, the liability is recognised
on the basis of an independent actuarial
valuation. They are therefore measured as the
present value of expected future payments
to be made in respect of services provided
by employees up to the end of the reporting
period using the projected unit credit method.
The benefits are discounted using the market
yields at the end of the reporting period that
have terms approximating to the terms of
the related obligation. Re-measurements
as a result of experience adjustments
and changes in actuarial assumptions are
recognised in Statement of Profit and Loss.
III. Short Term Employee Benefits
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
recognized in respect of employees’ services upto
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.
Short term employee benefits include short term
compensated absences which is recognized based
on the eligible leave credits on the balance sheet
date, and the estimated cost is based on the terms of
the employment contract.
1.3.11 Leases
The Company assesses, whether the contract is, or
contains, a lease. A contract is, or contains, a lease
if the contract involves- (a) the use of an identified
asset, (b) the right to obtain substantially all the
economic benefits from use of the identified asset,
and (c) the right to direct the use of the identified
asset.
As a lessee: The Company recognises a right-
of-use asset and a lease liability at the lease
commencement date. The right-of-use asset is
initially measured at cost, which comprises the initial
amount of the lease liability adjusted for any lease
payments made at or before the commencement
date, plus any initial direct costs incurred and
an estimate of costs to dismantle and remove
the underlying asset or to restore the underlying
asset or the site on which it is located, less any
lease incentives received. 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 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 Cash Generating Unit (CGU) to which the asset
belongs.
The lease liability is initially measured at the
present value of the future lease payments at the
commencement date, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily
determined, company’s incremental borrowing
rate. Generally, the company uses its incremental
borrowing rate as the discount rate. 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.
A lease contract is modified and the lease
modification is not accounted for as a separate
lease, in which case the lease liability is remeasured
based on the lease term of the modified lease by
discounting the revised lease payments using a
revised discount rate at the effective date of the
modification.
As a practical expedient, Ind AS 116 permits a
lessee not to separate non-lease components, and
instead account for any lease and associated non¬
lease components as a single arrangement. The
Company has used this practical expedient.
Lease liabilities include the net present value of the
following lease payments:
• fixed payments, including in-substance fixed
payments;
• variable lease payments that depend on an
index or a rate, initially measured using the index
or rate as at the commencement date;
• amounts expected to be payable under a
residual value guarantee;
• the exercise price under a purchase option that
the Company is reasonably certain to exercise;
and
• lease payments in an optional renewal period if
the Company is reasonably certain to exercise
an extension option, and penalties for early
termination of a lease unless the company is
reasonably certain not to terminate early.
The lease liability is measured at amortised cost
using the effective interest method.
Short-term leases and leases of low-value assets
The Company has elected not to recognise right- of-
use assets and lease liabilities for short-term leases
that have a lease term of 12 months. The Company
recognises the lease payments associated with
these leases as an expense on a straight-line basis
over the lease term.
1.3.12 Foreign Currency Transactions
Initial recognition
Transactions in foreign currencies entered by the
Company are accounted at the exchange rates
prevailing on the date of the transaction.
Measurement as at Balance Sheet date
Foreign currency monetary items of the Company
outstanding at the Balance Sheet date are restated
at reporting date exchange rates.
Non-monetary items carried at historical cost are
translated using the exchange rates at the dates of
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.
Treatment of Exchange Differences
Exchange differences arising on settlement/
restatement of foreign currency monetary assets
and liabilities of the Company are recognised as
income or expense in the Statement of Profit and
Loss.
1.3.13 Taxes on Income
Income tax expense comprises current and
deferred taxes. Income tax expense is recognised in
the Statement of Profit and Loss except to the extent
it relates to items recognised directly in equity, in
which case it is recognised in equity.
Current Tax is the amount of tax payable on the
taxable income for the year and is determined
in accordance with the provisions of the Income
Tax Act, 1961. 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 profit or loss is recognised outside profit
or loss (either in other comprehensive income
or in equity). Current tax items are recognised in
correlation to the underlying transaction either in
OCI or directly in equity.
Deferred tax is provided using the liability method
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 assets are recognised for all deductible
temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax
assets are recognised to the extent that it is probable
that taxable profit will be available against which the
deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses
can be utilised. The carrying amount of deferred
tax assets is reviewed at each reporting date and
written off 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 that 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 items are recognised in correlation to
the underlying transaction either in OCI or directly in
equity.
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.
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