applied best judgement by management regarding the
probability of exposure to potential loss.
d) Classification of Assets and Liabilities into
Current/Non-Current
All assets and liabilities have been classified as current
or non-current as per the Company's normal operating
cycle and other criteria set out in Schedule III to the
Companies Act, 2013, as given below.
The Company has ascertained its operating cycle as
12 months for the purpose of current and non-current
classification of assets and liabilities.
For the purpose of Balance Sheet, an asset is classified
as current if:
i) Expected to be realized or intended to sold or
consumed in normal operating cycle;
ii) Held primarily for the purpose of trading;
iii) Expected to be realized within twelve months after
the reporting period; or
iv) Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting period.
All the other assets are classified as non-current.
Similarly, a liability is current if:
i) It is expected to be settled in normal operating cycle;
ii) It is held primarily for the purpose of trading;
iii) I t is due to be settled within twelve months after
the reporting period; or
iv) There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period.
The Company classifies all other liabilities as non¬
current.
Deferred Tax Assets and Liabilities are classified as
current assets and liabilities respectively.
4. SIGNIFICANT ACCOUNTING POLICIES:
A summary of the significant accounting policies
applied in the preparation of the financial statements
are as given below. These accounting policies have been
applied consistently to all the periods presented in the
financial statements, unless otherwise stated.
1) Inventories
a) Raw materials:
Valued at lower of cost and net realizable value (NRV).
However, these items are considered to be realizable
at cost, if the finished products, in which they will be
used, are expected to be sold at or above cost. Cost is
determined on weighted average basis.
b) Work-in- progress (WIP) and finished goods
Valued at lower of cost and NRV. Cost of Finished
goods and WIP includes cost of raw materials, cost
of conversion and other costs incurred in bringing the
inventories to their present location and condition. Cost
of inventories is computed on weighted average basis.
c) Waste / Scrap
Waste / Scrap inventory is valued at NRV. Net realizable
value is the estimated selling price in the ordinary course
of business, less the estimated costs of completion and
the estimated costs necessary to make the sale.
However, materials and other supplies held for use in
the production of inventories (finished goods, work-
in-progress) are not written down below the cost if the
finished products in which they will be used are expected
to sell at or below the cost.
Materials in transit are valued at cost to date.
d) Stores, spares and consumables
Stores spares, packing material and all consumables'
items held for use in the production of inventories are
charged to profit & loss account as and when purchased.
Provision is recognized for damaged, defective or
obsolete stocks where necessary.
2) Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise
cash at banks and on hand, Cheques on hand and short¬
term deposits with an original maturity of three months
or less, which are subject to an insignificant risk of
change in value.
3) Cash Flows
Cash flows are reported using the indirect method,
where by net profit before tax is adjusted for the effects
of transactions of a non-cash nature, any deferrals or
accruals of past or future operating cash receipts or
payments and item of income or expenses associated
with investing or financing cash flows. The cash flows
from operating, investing and financing activities
are segregated.
4) Income Tax
Income Tax comprises current and deferred tax.
a) Current Tax
Current Tax is measured on the basis of estimated
taxable income for the current accounting period
in accordance with the applicable tax rates and the
provisions of the Income-tax Act, 1961. Current income
tax is recognized in the statement of profit and loss
except to the extent that it relates to an item recognized
directly in equity or in other comprehensive income.
b) Deferred Tax
Deferred tax is provided, on all temporary differences
at the reporting date between the tax bases of assets
and liabilities and their carrying amounts for financial
reporting purposes. Deferred tax assets and liabilities
are measured at the tax rates that are expected to
be applied to the temporary differences when they
reverse, based on the laws that have been enacted
or substantively enacted at the reporting date. Tax
relating to items recognised directly in equity or OCI is
recognised in equity or OCI and not in the statement of
profit and loss.
Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the
same tax authority, but they intend to settle current tax
liabilities and assets on a net basis or their tax assets
and liabilities will be realized simultaneously.
A deferred tax asset is recognized to the extent that it
is probable that future taxable profits will be available
against which the temporary difference can be utilized.
Deferred tax assets are reviewed at each reporting date
and are reduced to the extent that it is no longer probable.
MAT Credit is recognized as an asset only when and to the
extent there is convincing evidence that the Company
will pay normal Income Tax during the specified period.
In the year in which the Minimum Alternative Tax (MAT)
credit becomes eligible to be recognized as an asset
in accordance with the recommendations contained
in guidance note issued by the ICAI, the said asset is
created by way of credit to statement of profit and loss
and shown as MAT credit entitlement. The Company
reviews the same at each Balance Sheet date and writes
down the carrying amount of MAT entitlement to the
extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during
the specified period.
5) Property, Plant and Equipment
a) Recognition and Measurement
i) Property, plant and equipment held for use in the
production or/and supply of goods or services, or for
administrative purposes, are stated in the balance
sheet at cost, less any accumulated depreciation and
accumulated impairment losses (if any).
ii) Cost of an item of property, plant and equipment
acquired comprises its purchase price, including import
duties and non-refundable purchase taxes, after
deducting any trade discounts and rebates, any directly
attributable costs of bringing the assets to its working
condition and location for its intended use and present
value of any estimated cost of dismantling and removing
the item and restoring the site on which it is located.
iii) I n case of self-constructed assets, cost includes the
costs of all materials used in construction, direct labor,
allocation of directly attributable overheads, directly
attributable borrowing costs incurred in bringing the
item to working condition for its intended use, and
estimated cost of dismantling and removing the item
and restoring the site on which it is located. The costs of
testing whether the asset is functioning properly, after
deducting the net proceeds from selling items produced
while bringing the asset to that location and condition
are also added to the cost of self-constructed assets.
iv) For transition to IND AS, the company has revalued land
at fair value as deemed cost and considered other assets
at Ind AS Cost.
v) Gains or losses arising from de-recognition of property,
plant and equipment are measured as the difference
between the net disposal proceeds and the carrying
amount of the asset is recognized in the statement of
profit and loss.
vi) Subsequent costs are included in the asset's carrying
amount, only when it is probable that future economic
benefits associated with the cost incurred 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 derecognized when
replaced. Major Inspection/ Repairs/ Overhauling
expenses are recognized in the carrying amount of the
item of property, plant and equipment a replacement if
the recognition criteria are satisfied. Any Unamortized
part of the previously recognized expenses of similar
nature is derecognized.
vii) The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.
viii) The Company identifies and determines cost of
asset significant to the total cost of the asset having
useful life that is materially different from that of the
remaining life.
ix) Research and development costs that are in nature of
tangible/ intangible assets and are expected to generate
probable future economic benefits are capitalized
and classified under tangible/intangible assets and
depreciated on the same basis as other fixed assets.
Revenue expenditure on research and development is
charged to the statement of profit and loss in the year in
which it is incurred.
b) Depreciation and Amortization
i) Depreciation commences when the assets are
ready for their intended use which is generally on
commissioning. Depreciation on property, plant and
equipment is provided under Straight Line Method over
the useful lives of assets prescribed by Schedule II of
the Companies Act, 2013. Depreciation in change in the
value of fixed assets due to exchange rate fluctuation
has been provided prospectively over the residual life of
the respective assets. Land is not depreciated.
The estimated useful lives of property plant and
equipment of the company are as follows:
ii) Depreciation in respect of property, plant and equipment
added / disposed of during the year is provided on
pro-rata basis, with reference to the date of addition/
disposal.
6) Intangible Assets
i) I ntangible assets acquired separately are measured on
initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated
amortization and accumulated impairment loss, if any.
ii) Gains or losses arising from derecognition of an
intangible 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
or loss.
iii) I ntangible assets are amortised on straight line basis
over its estimated useful life of 5 years.
7) Impairment of tangible and intangible assets
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 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. Where 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.
Recoverable amount is the higher of fair value less costs
to sell 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 it 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.
Where an impairment loss subsequently reverses, the
carrying amount of the asset (or 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.
Goodwill and intangible assets that have an indefinite
useful life are not subject to amortization and are tested
annually for impairment, or more frequently if events
or changes in circumstances indicate that they might
be impaired.
8) Capital Work in Progress
Capital work-in-progress is stated at cost which includes
expenses incurred during construction period, interest
on amount borrowed for acquisition of qualifying
assets and other expenses incurred in connection with
project implementation in so far as such expenses
relate to the period prior to the commencement of
commercial production.
9) Investment in Joint-Venture
I nvestment in Joint-venture is measured at cost less
impairment loss, if any.
The joint arrangement is structured through a separate
vehicle and the legal form of the separate vehicle,
the terms of the contractual arrangement and, when
relevant, any other facts and circumstances gives the
Company rights to the net assets of the arrangement
(i.e. the arrangement is a joint venture). The activities
of the joint venture are primarily aimed to provide the
third parties with an output and the parties to the
joint venture will not have rights to substantially all the
economic benefits of the assets of the arrangement.
10) Investment in subsidiaries and associates
Investments in subsidiaries and associates are
recognised at cost as per IND AS 27. Except where
investments accounted for at cost shall be accounted
for in accordance with IND AS 105, Non-current Assets
held for Sale and Discontinued Operations, when they
are classified as held for sale.
11) Leases
a) The Company as lessor
Leases for which the Company is a lessor are classified
as finance or operating leases. Whenever the terms of
the lease transfer substantially all the risks and rewards
of ownership to the lessee, the contract is classified
as finance lease. All other leases are classified as
operating leases.
Rental income from operating leases is recognised on
a straight-line basis over the term of the relevant lease.
Initial direct costs incurred in negotiating and arranging
an operating lease are added to the carrying amount of
the leased asset and recognised on a straight-line basis
over the lease term.
b) The Company as lessee
The Company assesses whether a contract is or contains
a lease, at inception of the contract. The Company
recognizes a right-of-use asset and a corresponding
lease liability with respect to all lease arrangements
in which it is the lessee, except for short-term leases
(defined as leases with a lease term of 12 months or less)
and leases of low value assets. For these leases, the
Company recognizes the lease payments as an operating
expense on a straight-line basis over the lease term,
unless another systematic basis is more representative
of the time pattern in which economic benefits from the
leased assets are consumed. Contingent and variable
rentals are recognized as expense in the periods in which
they are incurred.
c) Lease Liability
The lease payments that are not paid at the
commencement date are discounted using the interest
rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in
the Company, the lessee's incremental borrowing rate
is used, being the rate that the individual lessee would
have to pay to borrow the funds necessary to obtain
an asset of similar value to the right-of-use asset in
a similar economic environment with similar terms,
security and conditions.
Lease payments included in the measurement of the
lease liability comprise:
• Fixed lease payments (including in-substance
fixed payments) payable during the lease term and
under reasonably certain extension options, less
any lease incentives;
• Variable lease payments that depend on an index or
rate, initially measured using the index or rate at the
commencement date;
• The amount expected to be payable by the lessee
under residual value guarantees;
• The exercise price of purchase options, if the lessee
is reasonably certain to exercise the options; and
• Payments of penalties for terminating the lease, if
the lease term reflects the exercise of an option to
terminate the lease.
The lease liability is presented as a separate line in the
Balance Sheet.
The lease liability is subsequently measured by
increasing the carrying amount to reflect interest on
the lease liability (using the effective interest method)
and by reducing the carrying amount to reflect the lease
payments made.
The Company re-measures the lease liability (and makes
a corresponding adjustment to the related right-of-use
asset) whenever:
• The lease term has changed or there is a change in
the assessment of exercise of a purchase option,
in which case the lease liability is re-measured by
discounting the revised lease payments using a
revised discount rate.
• A lease contract is modified and the lease
modification is not accounted for as a separate
lease, in which case the lease liability is re-measured
by discounting the revised lease payments using a
revised discount rate.
d) Right of Use (ROU) Assets
The ROU assets comprise the initial measurement of
the corresponding lease liability, lease payments made
at or before the commencement day and any initial
direct costs. They are subsequently measured at cost
less accumulated depreciation and impairment losses.
Whenever the company incurs an obligation for costs
to dismantle and remove a leased asset, restore the site
on which it is located or restore the underlying asset
to the condition required by the terms and conditions
of the lease, a provision is recognized and measured
under Ind AS 37- Provisions, Contingent Liabilities and
Contingent Assets. The costs are included in the related
right-of-use asset.
ROU assets are depreciated over the shorter period of
the lease term and useful life of the underlying asset.
If the company is reasonably certain to exercise a
purchase option, the right-of-use asset is depreciated
over the underlying asset's useful life. The depreciation
starts at the commencement date of the lease.
The ROU assets are not presented as a separate line in
the Balance Sheet but presented below similar owned
assets as a separate line in the PPE note under "Notes
forming part of the Financial Statement".
The Company applies Ind AS 36- Impairment of Assets
to determine whether a right-of-use asset is impaired
and accounts for any identified impairment loss as per
its accounting policy on 'property, plant and equipment'.
As a practical expedient, Ind AS 116 permits a lessee not to
separate non-lease components when bifurcation of the
payments is not available between the two components,
and instead account for any lease and associated
non-lease components as a single arrangement. The
Company has used this practical expedient.
Extension and termination options are included in
many of the leases. In determining the lease term, the
management considers all facts and circumstances that
create an economic incentive to exercise an extension
option, or not exercise a termination option.
12) Revenue Recognition
Revenue is measured at the fair value of the consideration
received or receivable, and represents amount receivable
from sale of copper products, sale of energy, lease rental
and export incentives, stated net of discounts.
Ind AS 115 "Revenue from Contracts with Customers",
introduced one single new model for recognition
of revenue which includes a 5-step approach and
detailed guidelines. Among other, such guidelines are
on allocation of revenue to performance obligations
within multi-element arrangements, measurement and
recognition of variable consideration and the timing of
revenue recognition.
The Company considers the terms of the contract in
determining the transaction price. The transaction
price is based upon the amount the entity expects to
be entitled to in exchange for transferring of promised
goods and services to the customer after deducting
incentive programs, included but not limited to
discounts, volume rebates etc.
a) Revenue from sale of goods
Revenue from the sale copper products is measured
based on the consideration specified in a contract with
a customer and excludes amounts collected on behalf of
third parties. Company recognizes revenue at a point in
time, when control is transferred to the customer, and
the consideration agreed is expected to be received.
Control is generally deemed to be transferred upon
delivery of the products in accordance with the agreed
delivery plan.
In case of related party transactions where related party
meets the definition of customer (i.e. a party that has
contracted with the Company to obtain goods or services
that are an output of the Company's ordinary activity
in exchange for consideration) and the transactions are
within the scope of the standard then the revenue is
recognized based on the principles of IND AS 115.
Export incentives and subsidies are recognized when
there is reasonable assurance that the Company will
comply with the conditions and the incentive will
be received.
Revenues for services are recognized when the service
rendered has been completed.
b) Revenue from services
Revenue from services mainly consists of the following;
Income from Lease Rent
Revenue from services, which mainly consists of
lease rentals from letting of space, is recognized over
time on satisfying performance obligations as per the
terms of agreement, that is, by reference to the period
in which services are being rendered. Revenue from
services, if any, involving single performance obligation
is recognized at a point in time
Income from job works
Income from job work is accounted for on the basis
of actual quantity dispatched. When the outcome of
a transaction involving the rendering of services can
be estimated reliably, revenue associated with the
transaction shall be recognized by reference to the stage
of completion (Percentage of Completion Method)
of the transaction at the end of the reporting period.
Advances received from the customers are reported
as customer's deposits unless the above conditions for
revenue recognition are met.
Sale of energy
Revenue from operations comprises of sale of power.
Revenue is recognized at an amount that reflects the
consideration for which the Company expects to be
entitled in exchange for transfer of power (goods /
service) to the customer. Revenue from sale of power is
accounted for in accordance with tariff provided in Power
Purchase Agreement (PPA) read with the regulations
of respective regulatory authorities and no significant
uncertainty as to the measurability or collectability
exist. There is no impact on the adoption of the standard
in the financial statement as the Company's revenue
primarily comprised of revenue from sale of power and
the recognition criteria of this revenue stream is largely
unchanged by Ind AS 115.
Contract Assets
Contract assets are recognized when there is excess
of revenue earned over billings on contracts. Unbilled
receivables where further subsequent performance
obligation is pending are classified as contract assets
when the company does not have unconditional right
to receive cashes per contractual terms. Revenue
recognition for fixed price development contracts is
based on percentage of completion method. Invoicing
to the clients is based on milestones as defined in the
contract. This would result in the timing of revenue
recognition being different from the timing of billing the
customers. Unbilled revenue for fixed price development
contracts is classified as non-financial asset as the
contractual right to consideration is dependent on
completion of contractual milestones.
Impairment of Contract asset
The Company assesses a contract asset for impairment
in accordance with Ind AS 109.An impairment of a
contract asset is measured, presented and disclosed
on the same basis as a financial asset that is within the
scope of Ind AS 109.
Contract Liability
Contract Liability is recognized when there are billings
in excess of revenues and it also includes consideration
received from customers for whom the company has
pending obligation to transfer goods or services.
The billing schedules agreed with customers include
periodic performance-based payments and / or
milestone-based progress payments. Invoices are
payable within contractually agreed credit period.
Modification in contract
Contracts are subject to modification to account for
changes in contract specification and requirements.
The Company reviews modification to contract in
conjunction with the original contract, basis which the
transaction price could be allocated to a new performance
obligation, or transaction price of an existing obligation
could undergo a change. In the event transaction price is
revised for existing obligation, a cumulative adjustment
is accounted for.
c) Interest Income
Interest income from a financial asset is recognized
when it is probable that the economic benefit will
flow to the company and the amount of income can
be measured reliably. Interest income is accrued on a
time basis, by reference to principal outstanding and
the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts
through the expected life of the financial assets to that
assets' net carrying amount on initial recognition.
13) Retirement and other employee benefits
a) Short Term Employee Benefits
Short term employee benefit obligations are measured
on an undiscounted basis and are expensed as the related
services are provided. Liabilities for wages and salaries,
including non-monetary benefits that are expected to
be settled wholly within twelve months after the end
of the period in which the employees render the related
service are recognized in respect of employees' services
up to the end of the reporting period.
b) Other Long Term Employee Benefits
The liabilities for earned leaves that are not expected to
be settled wholly within twelve months are measured
as the present value (determined by actuarial valuation
using the projected unit credit method) of the expected
future payments to be made in respect of services
provided by employees up to the end of the reporting
period and recognized in books of accounts. The present
value of the defined benefit plan liability is calculated
using a discount rate which is determined by reference
to market yields at the end of the reporting period on
government bonds. Re-measurements as the result
of experience adjustment and changes in actuarial
assumptions are recognized in statement of profit
and loss.
c) Post-Employment Benefits
The Company operates the following post¬
employment schemes:
i) Defined Benefit Plan
The liability or asset recognized in the Balance Sheet
in respect of defined benefit plans is the present value
of the defined benefit obligation at the end of the
reporting period less the fair value of plan assets. The
Company's net obligation in respect of defined benefit
plans is calculated by estimating the amount of future
benefit that employees have earned in the current and
prior periods.
The defined benefit obligation is calculated annually
by Actuaries using the projected unit credit method.
The liability recognized for defined benefit plans is the
present value of the defined benefit obligation at the
reporting date less the fair value of plan assets, together
with adjustments for unrecognized actuarial gains or
losses and past service costs. Net interest is calculated
by applying the discount rate at the beginning of the
period to the net defined benefit liability or asset. Past
service cost is recognized in the statement of profit and
loss in the period of a plan amendment. The present
value of the defined benefit plan liability is calculated
using a discount rate which is determined by reference
to market yields at the end of the reporting period on
government bonds.
Re-measurement, comprising actuarial gains and
losses, the effect of the changes to the asset ceiling
(if applicable) and the return on plan assets (excluding
net interest), is reflected immediately in the Balance
Sheet with a charge or credit recognized in Other
Comprehensive Income (OCI) in the period in which
they occur. Re-measurement recognized in OCI is
reflected immediately in retained earnings and will not
be reclassified to statement of profit and loss.
ii) Defined Contribution Plan
Retirement benefit in the form of provident fund is a
defined contribution scheme. The Company has no
obligation other than the contribution payable to the
Provident fund. Contribution payable under the provident
fund is recognized as expenditure in the statement of
profit and loss and/or carried to Construction work-in¬
progress when an employee renders the related service.
14) Government Grants
Government grants are recognized at their fair values
when there is reasonable assurance that the grants will
be received and the Company will comply with all the
attached conditions.
a) Government grants are recognized in the statement of
profit or loss on a systematic basis over the periods in
which the Company recognizes the related costs for
which the grants are intended to compensate.
b) Grants related to acquisition/ construction of property,
plant and equipment are recognized as deferred revenue
in the Balance Sheet and transferred to the statement
of profit or loss on a systematic and rational basis over
the useful lives of the related asset.
15) Foreign Currency Transactions
a) The functional currency and presentation currency of
the company is Indian Rupee (C).
b) Transactions in currencies other than the company's
functional currency are recorded on initial recognition
using the exchange rate at the transaction date. At each
balance sheet date, foreign currency monetary items are
reported using the closing rate.
c) Non- monetary items that are measured in terms of
historical cost in foreign currency are not retranslated.
Exchange difference that arises on settlement of
monetary items or on reporting of monetary items at
each Balance sheet date at the closing spot rate are
recognized in profit or loss in the period in which they
arise except for:
i) exchange difference on foreign currency
borrowings related to assets under construction
for future productive use, which are included in
the cost of those assets when they are regarded
as an adjustment to interest cost on those foreign
currency borrowings; and
ii) exchange differences on transactions entered into
in order to hedge certain foreign currency risks.
iii) exchange differences on monetary items receivable
from or payable to a foreign operation for which
settlement is neither planned nor likely to occur
(therefore forming part of the net investment in
the foreign operation), which are recognised initially
in other comprehensive income and reclassified
from equity to the Statement of Profit and Loss on
repayment of the monetary items.
According to Appendix B of Ind AS 21 "Foreign currency
transactions and advance consideration", purchase or
sale transactions must be translated at the exchange
rate prevailing on the date the asset or liability is initially
recognized. In practice, this is usually the date on
which the advance payment is paid or received. In the
case of multiple advances, the exchange rate must be
determined for each payment and collection transaction
16) Borrowing Cost
Borrowing cost include interest expense calculated
using the Effective interest method, finance charges in
respect of assets acquired on finance lease and exchange
difference arising on foreign currency borrowings to
the extent they are regarded as an adjustment to the
finance cost.
Borrowing costs (including other ancillary borrowing
cost) directly attributable to the acquisition or
construction of a qualifying asset are capitalized as
a part of the cost of that asset that necessarily takes
a substantial period of time to complete and prepare
the asset for its intended use or sale. The Company
considers a period of twelve months or more as a
substantial period of time.
Transaction costs in respect of long-term borrowing
are amortized over the tenure of respective loans using
Effective Interest Rate (EIR)method. All other borrowing
costs are recognized in the statement of profit and loss
in the period in which they are incurred.
17) Earnings per Share
Earnings per share is calculated by dividing the net
profit or loss before OCI for the year attributable to
equity shareholders by the weighted average number of
equities shares outstanding during the period. For the
purpose of calculating diluted earnings per share, the
net profit or loss before OCI for the period attributable
to equity shareholders and the weighted average number
of shares outstanding during the period are adjusted for
the effects of all dilutive potential equity shares.
18) Exceptional Item
Exceptional items include income or expense that are
considered to be part of ordinary activities, however
are of such significance and nature that separate
disclosure enables the user of the financial statements
to understand the impact in a more meaningful manner.
Exceptional items are identified by virtue of either their
size or nature so as to facilitate comparison with prior
periods and to assess underlying trends in the financial
performance of the Company.
19) Financial Guarantee Contract
Financial guarantee contract provided to the lenders
of the Company by its Parent Company is measured at
their fair values and benefit of such financial guarantee
is recognized to equity as a capital contribution from
the parent.
20) Financial Instruments
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity. Financial assets
and financial liabilities are recognized when a Company
entity 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 and
ancillary costs related to borrowings) 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 recognized immediately in
statement of profit and loss.
a) Financial Assets
i) Classification and Subsequent Measurement
For purposes of subsequent measurement, financial
assets are classified in four categories:
• Measured at Amortized Cost
• Measured at Fair Value Through Other
Comprehensive Income (FVTOCI)
• Measured at Fair Value Through Profit or Loss
(FVTPL)and
• Equity Instruments measured at Fair Value Through
Other Comprehensive Income (FVTOCI)
Financial assets are not reclassified subsequent to
their initial recognition, except if and in the period the
Company changes its business model for managing
financial assets.
Measured at Amortized Cost
The Financial assets are subsequently measured at the
amortized cost if both the following conditions are met:
• The asset is held within a business model whose
objective is achieved by both collecting 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 (SPPI) on the
principal amount outstanding.
After initial measurement, such financial assets are
subsequently measured at amortized cost using
the effective interest rate (EIR)method. Income is
recognized on an effective interest basis for debt
instruments other than those financial assets classified
as FVTPL. Interest income is recognized in the
statement of profit and loss.
Measured at Fair Value Through Other Comprehensive
Income (FVTOCI)
The financial assets are measured at the FVTOCI if both
the following conditions are met:
• The objective of the business model is achieved by
both collecting contractual cash flows and selling
the financial assets; and
• The asset's contractual cash flows represent SPPI.
Debt instruments meeting these criteria are measured
initially at fair value plus transaction costs. They are
subsequently measured at fair value with any gains
or losses arising on re-measurement recognized in
other comprehensive income, except for impairment
gains or losses and foreign exchange gains or losses.
Interest calculated using the effective interest method
is recognized in the statement of profit and loss in
investment income.
Measured at Fair Value Through Profit or Loss
(FVTPL)
Financial assets are measured at fair value through profit
or Loss unless it is measured at amortised cost or at fair
value through other comprehensive income on initial
recognition. Gains or losses arising on re-measurement
are recognized in the statement of profit and loss. The
net gains or loss recognized in statement of profit and
loss incorporates any dividend or interest earned on the
financial assets and is included in the "Other income"
line item.
Equity Instruments measured at Fair Value Through
Other Comprehensive Income (FVTOCI)
All equity investments in scope of Ind AS - 109 are
measured at fair value. Equity instruments which
are, held for trading are classified as at FVTPL. For all
other equity instruments, the company may make an
irrevocable election to present in other comprehensive
income subsequent changes in the fair value. The
company makes such election on an instrument-by
instrument basis. The classification is made on initial
recognition and is irrevocable. In case the company
decides to classify an equity instrument as at FVTOCI,
then all fair value changes on the instrument, excluding
dividends, are recognized in the OCI. There is no
recycling of the amounts from OCI to P&L, even on sale
of investment.
ii) Derecognition
The Company derecognizes a financial asset on trade
date only 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 entity.
iii) Impairment of Financial Assets
In accordance with Ind AS 109, the Company uses
'Expected Credit Loss' (ECL model, for evaluating
impairment of financial assets other than those
measured at fair value through profit and loss (FVTPL).
Expected credit losses are measured through a loss
allowance at an amount equal to:
The 12-months expected credit losses (expected credit
losses that result from those default events on the
financial instrument that are possible within 12 months
after the reporting date]; or
Full lifetime expected credit losses (expected credit
losses that result from all possible default events over
the life of the financial instrument]
For trade receivables Company applies 'simplified
approach' which requires expected lifetime losses to be
recognized from initial recognition of the receivables.
The Company uses historical default rate to determine
impairment loss on the portfolio of trade receivables.
At all reporting date these historical default rates are
reviewed and changes in the forward-looking estimates
are analyzed.
For other assets, the Company uses 12-month ELC to
provide for impairment loss where there is no significant
increase in credit risk. If there is significant increase in
credit risk full lifetime ELC is used.
iv) 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, the
exchange differences are recognized in the statement
of profit and loss.
b) Financial Liabilities and equity instruments
Debts and equity instruments issued by a Company
are classified as either financial liabilities or as equity
in accordance with the substance of the contractual
arrangements and the definitions of a financial liability
and an equity instrument.
Equity Instruments
An equity instrument is any contract that evidences
a residual interest in the assets of an equity after
deducting all of its liabilities. Equity instruments issued
by the Company are recognized at the proceeds received,
net of direct issue costs.
Financial Liabilities
i) Recognition and Initial Measurement
Financial liabilities are classified, at initial
recognition, as at fair value through profit or loss,
loans and borrowings, payables or as derivatives as
appropriate. All financial liabilities are recognized
initially at fair value and, in the case of loans and
borrowings and payables, net of directly attributable
transaction costs.
ii) Subsequent Measurement
Financial liabilities are measured subsequently at
amortized cost or FVTPL. A financial liability is
classified as FVTPL if it is classified as held for-
trading, or it is a derivative or it is designated as
such on initial recognition. Financial liabilities at
FVTPL are measured at fair value and net gains
and losses, including any interest expense, are
recognized in profit or loss. Other financial liabilities
are subsequently measured at amortized cost
using the effective interest rate method. Interest
expense and foreign exchange gains and losses are
recognized in profit or loss. Any gain or loss on de¬
recognition is also recognized in profit or loss.
iii) Financial Guarantee Contracts
Financial guarantee contracts issued by the
company are those contracts that require a
payment to be made to reimburse the holder for a
loss it incurs because the specified debtor fails to
make a payment when due in accordance with the
terms of a debt instrument.
Financial guarantee contracts are recognized
initially as a liability at fair value, adjusted for
transaction costs that are directly attributable to
the issuance of the guarantee. Subsequently, the
liability is -measured at the higher of the amount
of loss allowance determined as per impairment
requirement of Ind AS 109 and the amount
recognized less cumulative amortization.
iv) De-recognition
A financial liability is derecognized when the
obligation under the liability is discharged or
cancelled or expires.
v) 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
included in statement of profit and loss. The fair
value of the 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.
vi) Offsetting financial instruments
Financial assets and liabilities are offset and the
net amount reported in the balance sheet when
there is a legally enforceable right to offset the
recognized amounts and there is an intention to
settle on a net basis or realize 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 counterparty.
c) Derivative financial instruments
The Company uses derivative financial instruments
such as forward, swap, options etc. to hedge against
interest rate and foreign exchange rate risks, including
foreign exchange fluctuation related to highly probable
forecast sale. The realized gain / loss in respect of
hedged foreign exchange contracts which has expired
/ unwinded during the year are recognized in the
statement of profit and loss and included in other
operating revenue / other expense as the case may
be. However, in respect of foreign exchange forward
contracts period of which extends beyond the balance
sheet date, the fair value of outstanding derivative
contracts is marked to market and resultant net loss/
gain is accounted in the statement of profit and loss.
Company does not hold derivative financial instruments
for speculative purposes.
d) Derivatives and Hedge Accounting
Derivatives are initially recognized at fair value and are
subsequently remeasured to their fair value at the end
of each reporting period. The resulting gains / losses are
recognized in Statement of Profit and Loss immediately
unless the derivative is designated and effective as
a hedging instrument, in which event the timing of
recognition in profit or loss / inclusion in the initial cost
of non-financial asset depends on the nature of the
hedging relationship and the nature of the hedged item.
The Company complies with the principles of hedge
accounting where derivative contracts are designated
as hedge instruments. At the inception of the hedge
relationship, the Company documents the relationship
between the hedge instrument and the hedged item,
along with the risk management objectives and its
strategy for undertaking hedge transaction, which is a
cash flow hedge.
e) Cash Flow Hedge
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash
flow hedges is recognized in the other comprehensive
income and accumulated as 'Cash Flow Hedging
Reserve'. The gains / losses relating to the ineffective
portion are recognized in the Statement of Profit and
Loss. Amounts previously recognized and accumulated
in other comprehensive income are reclassified to profit
or loss when the hedged item affects the Statement
of Profit and Loss. However, when the hedged item
results in the recognition of a non- financial asset, such
gains / losses are transferred from equity (but not as
reclassification adjustment) and included in the initial
measurement cost of the non- financial asset. Hedge
accounting is discontinued when the hedging instrument
expires or is sold, terminated, or exercised, or when it
no longer qualifies for hedge accounting. Any gains /
losses recognized in other comprehensive income and
accumulated in equity at that time remain in equity
and is reclassified when the underlying transaction is
ultimately recognized. When an underlying transaction
is no longer expected to occur, the gains / losses
accumulated in equity are recognized immediately in the
Statement of Profit and Loss.
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