2.1 Basis of preparation
These Standalone Financial Statements (‘Financial
Statements’) have been prepared to comply in all
material respects with the Indian Accounting Standards
(‘Ind AS’) as notified by the Ministry of Corporate Affairs
(‘MCA’) under section 133 of the Companies Act, 2013
(‘Act’), read together with Rule 3 of the Companies
(Indian Accounting Standards) Rules, 2015 (as amended
from time to time) and other accounting principles
generally accepted in India.
The Financial Statements are approved for issue by the
Company’s Board of Directors on May 13, 2025, held in
New Delhi.
The Financial Statements are based on the classification
provisions contained in Ind AS 1, ‘Presentation of Financial
Statements’ and Division II of Schedule III (as amended)
to the Act. Further, for the purpose of clarity, various
items are aggregated in the Standalone Balance Sheet
(‘Balance Sheet’) and Standalone Statement of Profit and
Loss (‘Statement of Profit and Loss’). Nonetheless, these
items are disaggregated separately in the notes to the
Financial Statements, where applicable or required.
All the amounts included in the Financial Statements
are reported in millions of Indian Rupee (‘Rupee’ or ‘ C’)
and are rounded off to the nearest million, except per
share data and unless stated otherwise. Further, due to
rounding off, certain amounts are appearing as ‘0’.
The preparation of the said Financial Statements
requires the use of certain critical accounting estimates
and judgements. It also requires the management to
exercise judgement in the process of applying the
Company’s accounting policies. The areas where
estimates are significant to the Financial Statements,
or areas involving a higher degree of judgement or
complexity, are disclosed in note 3.
The accounting policies, as set out in the following
paragraphs of this note, have been consistently applied,
by the Company, to all the periods presented in the said
Financial Statements, except in case of adoption of any
new standards and amendments during the year.
To provide more reliable and relevant information about
the effect of certain items in the Balance Sheet and
Statement of Profit and Loss, the Company has changed
the classification of certain items. Previous year figures
have been re-grouped or reclassified, to conform to such
current year’s groupings / classifications. There is no
impact on Equity or Net profit due to these regroupings
/ reclassifications.
Amendments to Ind AS
New amendments adopted during the year
The Ministry of Corporate Affairs (‘MCA’), vide notification
no. G.S.R. 492(E) dated August 12, 2024, issued the
Companies (Indian Accounting Standards) Amendment
Rules, 2024, introducing a new accounting standard, Ind
AS 117 relating to the accounting of Insurance Contracts
and MCA through notification no. G.S.R. 554(E) dated
September 9, 2024, issued the Companies (Indian
Accounting Standards) Second Amendment Rules,
2024, amending Ind AS 116 relating to the accounting
for sale and leaseback transactions with variable lease
payments. Both these amendments were applicable for
annual periods beginning on or after April 1, 2024. The
Company has reviewed both these pronouncements and
based on its evaluation has determined that it does not
have any significant impact in its financial statements.
Amendments to Ind AS issued but not yet effective
MCA has notified amendment to Ind AS 21, The
Effects of Changes in Foreign Exchange Rates, vide the
Companies (Indian Accounting Standards) Amendment
Rules, 2025 through Notification No. G.S.R. 291(E) dated
May 7, 2025. The amendment provide comprehensive
guidance on assessing the exchangeability of currencies,
determining spot exchange rates when currencies are
not exchangeable and enhancing related disclosures.
The amendment is effective for annual reporting periods
beginning on or after April 1, 2025. The Company will
evaluate the impact of this amendment and implement
the necessary changes in its financial reporting for
periods commencing on or after the effective date.
2.2 Basis of measurement
The Financial Statements have been prepared on the
accrual and going concern basis, and the historical cost
convention except where the Ind AS requires a different
accounting treatment. The principal variations from the
historical cost convention relate to financial instruments
classified as fair value through profit or loss (‘FVTPL) or
fair value through other comprehensive income (‘FVTOCI’)
(refer note 2.10(b)) - which are measured at fair value.
Fair value measurement
Fair value is the price at the measurement date, at which
an asset can be sold or a liability can be transferred, in
an orderly transaction between market participants. The
Company’s accounting policies require measurement
of certain financial instruments at fair values (either on a
recurring or non-recurring basis).
The Company is required to classify the fair valuation
method of the financial/non-financial assets and liabilities,
either measured or disclosed at fair value in the Financial
Statements, using a three level fair-value-hierarchy
(which reflects the significance of inputs used in the
measurement). Accordingly, the Company uses valuation
techniques that are appropriate in the circumstances and
for which sufficient data is available to measure fair value,
maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.
The three levels of the fair-value-hierarchy are
described below:
Level 1: Quoted (unadjusted) prices for identical assets
or liabilities in active markets
Level 2: Significant inputs to the fair value measurement
are directly or indirectly observable
Level 3: Significant inputs to the fair value measurement
are unobservable
2.3 Business combinations
The Company accounts for business combinations using
the acquisition method of accounting. Accordingly, the
identifiable assets acquired and the liabilities assumed
of the acquiree are recorded at their acquisition date
fair values (except certain assets and liabilities which
are required to be measured as per the applicable
standard). The choice of measurement basis is made on
an acquisition-by-acquisition basis. The consideration
transferred for the acquisition of a business is
aggregation of the fair values of the assets transferred,
the liabilities incurred and the equity interests issued by
the Company in exchange for control of the business.
The consideration transferred also includes the
fair value of any asset or liability resulting from a
contingent consideration arrangement. Any contingent
consideration to be transferred by the acquirer
is recognised at fair value at the acquisition date.
Contingent consideration classified as an asset or
liability is subsequently measured at fair value with
changes in fair value recognised in Statement of Profit
and Loss. Contingent consideration that is classified as
equity is not re-measured and its subsequent settlement
is accounted for within equity.
Acquisition-related costs are expensed in the period in
which the costs are incurred.
I f the initial accounting for a business combination
is incomplete as at the reporting date in which the
combination occurs, the identifiable assets and liabilities
acquired in a business combination are measured at
their provisional fair values at the date of acquisition.
Subsequently adjustments to the provisional values
are made retrospectively within the measurement
period, if new information is obtained about facts and
circumstances that existed as of the acquisition date
and, if known, would have affected the measurement of
the amounts recognised as of that date or would have
resulted in the recognition of those assets and liabilities
as of that date; otherwise the adjustments are recorded
in the period in which they occur.
A contingent liability recognised in a business combination
is initially measured at its fair value. Subsequent to initial
recognition, it is measured at the higher of:
(i) the amount that would be recognised in accordance
with Ind AS 37, ‘Provisions, Contingent Liabilities
and Contingent Assets’, and
(ii) the amount initially recognised less, where
appropriate, cumulative amount of income
recognised in accordance with Ind AS 115
‘Revenue from Contracts with Customers’.
2.4 Common control transactions
Transactions arising from transfers of assets/liabilities,
interest in entities or businesses between entities
that are under the common control, are accounted
at their carrying amounts. The difference, between
any consideration paid/received and the aggregate
carrying amounts of assets/liabilities and interests in
entities acquired/disposed (other than impairment, if
any), is recorded in capital reserve / retained earnings /
common control reserve, as applicable.
2.5 Foreign currency transactions
a) Functional and presentation currency
The Financial Statements are presented in Indian Rupee
which is the functional and presentation currency of
the Company.
b) Transactions and balances
Transactions in foreign currencies are initially recorded
in the relevant functional currency at the exchange rate
prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at
the closing exchange rate prevailing as at the reporting
date with the resulting foreign exchange differences,
on subsequent re-statement/settlement, recognised
in the Statement of Profit and Loss. Non-monetary
assets and liabilities denominated in foreign currencies
are translated into the functional currency using the
exchange rate prevalent, at the date of initial recognition
(in case they are measured at historical cost) or at the
date when the fair value is determined (in case they are
measured at fair value) - the resulting foreign exchange
difference, on subsequent re-statement/settlement,
recognised in the Statement of Profit and Loss, except
to the extent that it relates to items recognised in the
other comprehensive income (‘OCI’) or directly in equity.
The equity items denominated in foreign currencies are
translated at historical cost.
2.6 Current versus non-current classification
The Company presents assets and liabilities in the balance
sheet based on current/non-current classification.
Deferred tax assets and liabilities, and all other assets
and liabilities which are not current (as discussed in the
below paragraphs) are classified as non-current assets
and liabilities.
An asset is classified as current when it is expected
to be realised or intended to be sold or consumed in
normal operating cycle, held primarily for the purpose
of trading, expected to be realised within twelve months
after the reporting period, or cash or cash equivalent
unless restricted from being exchanged or used to
settle a liability for at least twelve months after the
reporting period.
A liability is classified as current when it is expected to
be settled in normal operating cycle, it is held primarily
for the purpose of trading, it is due to be settled within
twelve months after the reporting period, or there is no
unconditional right to defer the settlement of the liability
for at least twelve months after the reporting period.
Separated embedded derivatives are classified basis the
host contract.
2.7 Property, plant and equipment (‘PPE’)
An item is recognised as an asset, if and only if, it is
probable that the future economic benefits associated
with the item will flow to the Company and its cost can
be measured reliably. PPE are initially recognised at
cost. The initial cost of PPE comprises its purchase price
(including non-refundable duties and taxes but excluding
any trade discounts and rebates), assets retirement
obligations (‘ARO’) and any directly attributable cost of
bringing the asset to its working condition and location
for its intended use. Further, it includes assets installed
on the premises of customers as the associated risks,
rewards and control remain with the Company.
Subsequent to initial recognition, PPE are stated at cost
less accumulated depreciation and impairment losses,
if any. When significant parts of PPE are required to be
replaced at regular intervals, the Company recognises
such parts as separate component of assets. When
an item of PPE is replaced, then its carrying amount is
derecognised from the Balance Sheet and cost of the new
item of PPE is recognised. Further, in case the replaced
part was not being depreciated separately, the cost of
the replacement is used as an indication to determine the
cost of the replaced part at the time it was acquired.
Cost of assets not ready for use, as on the Balance Sheet
date, is shown as capital work-in-progress (‘CWIP’) and
advances given towards acquisition of PPE outstanding
at each Balance Sheet date are disclosed under other
non-current assets.
The expenditures that are incurred after the item of
PPE has been available for use, such as repairs and
maintenance, are normally charged to the Statement
of Profit and Loss in the period in which such costs
are incurred. However, in situations where the said
expenditure can be measured reliably and is probable
that future economic benefits associated with it will flow
to the Company, it is included in the asset’s carrying
value or as a separate asset, as appropriate.
Depreciation on PPE is computed using the straight¬
line method over the estimated useful lives. The
management basis its past experience and technical
assessment has estimated the useful lives, which is at
variance with the life prescribed in Part C of Schedule II
to the Act and has accordingly, depreciated the assets
over such useful lives. Freehold land is not depreciated
as it has an unlimited useful life. The Company has
established the estimated range of useful lives for
different categories of PPE as follows:
The useful lives, residual values and depreciation method
of PPE are reviewed, and adjusted appropriately, at least,
as at each financial year end to ensure that the method and
period of depreciation are consistent with the expected
pattern of economic benefits from these assets. The
effect of any change in the estimated useful lives, residual
values and/or depreciation method are accounted
prospectively, and accordingly the depreciation is
calculated over the PPE’s remaining revised useful life.
The cost and the accumulated depreciation for PPE
sold, scrapped, retired or otherwise disposed off are
derecognised from the Balance Sheet and the resulting
gains/losses are included in the Statement of Profit and
Loss within other income/other expenses.
2.8 Intangible assets
I ntangible assets are recognised when the Company
controls the asset, it is probable that future economic
benefits attributed to the asset will flow to the Company
and the cost of the asset can be measured reliably.
Goodwill represents the cost of the acquired business in
excess of the fair value of identifiable net assets purchased
(refer note 2.3). Goodwill is not amortised; however, it is
tested annually for impairment and whenever there is
an indication that the cash-generating-unit (‘CGU’) may
be impaired (refer note 2.9), and carried at cost less any
accumulated impairment losses. The gains/(losses) on
the disposal of a CGU include the carrying amount of
goodwill relating to the CGU sold (in case goodwill has
been allocated to group of CGUs; it is determined on the
basis of the relative fair value of operations sold).
The intangible assets that are acquired in a business
combination are recognised at its fair value. Other
intangible assets are initially recognised at cost. Those
assets having finite useful life are carried at cost less
accumulated amortisation and impairment losses, if any.
Amortisation is computed using the straight-line method
over the expected useful life of intangible assets.
Subsequent expenditure on intangible assets is
capitalised only when it increases the future economic
benefits embodied in the specific asset to which it
relates. All other expenditures are recognised in profit
or loss as incurred.
The Company has established the estimated useful lives
of different categories of intangible assets as follows:
a. Software
Software (including PAAS) are amortised over the
period of license, generally not exceeding five years.
b. Licenses (including spectrum)
Acquired licenses and spectrum are amortised
commencing from the date when the related network
is available for intended use in the relevant jurisdiction.
The useful life of acquired licenses and spectrum range
upto twenty years.
The revenue-share based fee on licenses/spectrum
is charged to the Statement of Profit and Loss in the
period such cost is incurred.
The useful lives and amortisation method are reviewed,
and adjusted appropriately, at least at each financial
year end to ensure that the method and period of
amortisation are consistent with the expected pattern of
economic benefits from these assets. The effect of any
change in the estimated useful lives and/or amortisation
method is accounted for prospectively, and accordingly
the amortisation is calculated over the remaining revised
useful life.
Further, the cost of intangible assets under development
(‘IAUD’) includes the following:
(a) The amount of spectrum allotted to the Company
and related costs (including borrowing costs)
that are directly attributable to the acquisition or
construction of qualifying assets (refer note 6), if
any, for which services are yet to be rolled out and
are presented separately in the Balance Sheet.
(b) The amount of software/IT platform under
development.
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 and Loss when the asset
is derecognised.
2.9 Impairment of non-financial assets
a. Goodwill
Goodwill is tested for impairment, at least annually
and whenever circumstances indicate that it may be
impaired. For the purpose of impairment testing, the
goodwill is allocated to a CGU or group of CGUs, which
are expected to benefit from the acquisition-related
synergies and represent the lowest level within the
entity at which the goodwill is monitored for internal
management purposes, within an operating segment.
A CGU is the smallest identifiable group of assets that
generates cash inflows that are largely independent of
the cash inflows from other assets or group of assets.
Impairment occurs when the carrying value of a CGU/
CGUs including the goodwill, exceeds the estimated
recoverable amount of the CGU/CGUs. The recoverable
amount of a CGU/CGUs is the higher of its fair value
less costs to sell and its value in use. Value in use is
the present value of future cash flows expected to be
derived from the CGU/CGUs.
The total impairment loss of a CGU/CGUs is allocated
first to reduce the carrying value of goodwill allocated
to that CGU/CGUs and then to the other assets of that
CGU/CGUs - on pro-rata basis of the carrying value of
each asset.
b. PPE, right-of-use assets (‘ROU’), intangible assets
and IAUD
PPE (including CWIP), ROU and intangible assets with
definite lives, are reviewed for impairment, whenever
events or changes in circumstances indicate that
their carrying values may not be recoverable. IAUD is
tested for impairment, at least annually and whenever
circumstances indicate that it may be impaired.
For the purpose of impairment testing, the recoverable
amount (that is, higher of the fair value less costs 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 which case the recoverable amount is determined at
the CGU level to which the said asset belongs. If such
individual assets or CGU are considered to be impaired,
the impairment to be recognised in the Statement of
Profit and Loss is measured by the amount by which
the carrying value of the asset/CGU exceeds their
estimated recoverable amount and allocated on pro¬
rata basis.
c. Reversal of impairment losses
I mpairment loss in respect of goodwill is not reversed.
Other impairment losses are reversed in the Statement
of Profit and Loss and the carrying value is increased
to its revised recoverable amount provided that this
amount does not exceed the carrying value that would
have been determined had no impairment loss been
recognised for the said asset/CGU previously.
2.10 Financial instruments
a. Recognition, classification and presentation
The financial instruments are recognised in the Balance
Sheet when the Company becomes a party to the
contractual provisions of the financial instrument.
The Company determines the classification of its
financial instruments at initial recognition.
The Company recognises its investment in subsidiaries,
associates and joint ventures at cost less any impairment
losses. The said investments are tested for impairment
whenever circumstances indicate that their carrying
values may exceed the recoverable amount (viz. higher
of the fair value less costs to sell and the value in use).
The Company classifies its financial assets in the following
categories: a) those to be measured subsequently at
fair value (either through OCI, or through profit or loss)
and b) those to be measured at amortised cost. The
classification depends on the entity’s business model
for managing the financial assets and the contractual
terms of the cash flows.
The Company measures all the non-derivative financial
liabilities at amortised cost.
The entire hybrid contract, financial assets with
embedded derivatives, are considered in their entirety
for determining the contractual terms of the cash flow
and accordingly the embedded derivatives are not
separated. However, derivatives embedded in non¬
financial instrument/financial liabilities (measured at
amortised cost) host contracts are classified as separate
derivatives if their economic characteristics and risks
are not closely related to those of the host contracts.
Financial assets and liabilities arising from different
transactions are off-set against each other and the
resultant net amount is presented in the Balance Sheet,
if and only when, the Company currently has a legally
enforceable right to set-off the related recognised
amounts and intends either to settle on a net basis or to
realise the assets and settle the liabilities simultaneously.
b. Measurement - Non-derivative financial
instruments
I. Initial measurement
All financial assets are recognised initially at fair value
plus, in the case of financial assets not recorded at FVTPL,
transaction costs that are attributable to the acquisition
of the financial asset. However, trade receivables that
do not contain a significant financing component are
measured at transaction price. All financial liabilities are
recognised initially at fair value, in the case of loans and
borrowings and payables, net of directly attributable
transaction costs. Other transaction costs are expensed
as incurred in the Statement of Profit and Loss.
The transaction price is generally the best evidence of
the financial instrument’s initial fair value. However, it is
possible for an entity to determine that the instrument’s
fair value is not the transaction price. The difference
between the transaction amount and the fair value
(if any) is accounted for as follows:
• The difference is recognised as a gain or loss in
the Statement of Profit and Loss only if fair value is
evidenced by a quoted price in an active market for
an identical asset or liability (that is, a Level 1 input)
or based on a valuation technique that uses only data
from observable markets.
• In all other cases, an entity recognises the instrument
at fair value and defers the difference between the
fair value at initial recognition and the transaction
price in the statement of financial position.
The liability component of a compound financial
instrument is initially recognised at the fair value of a
similar liability that does not have an equity conversion
option. The equity component is initially recognised at
the difference between the fair value of the compound
financial instrument as a whole and the fair value of the
liability component. Any directly attributable transaction
costs are allocated to the liability and equity components
in proportion to their initial carrying amounts.
II. Subsequent measurement - financial assets
The subsequent measurement of the non-derivative
financial assets depends on their classification as follows:
i. Financial assets measured at Amortised Cost
Assets that are held for collection of contractual cash
flows where those cash flows represent solely payments
of principal and interest are measured at amortised
cost using the effective-interest rate (‘EIR’) method
(if the impact of discounting/any transaction costs is
significant). Interest income from these financial assets
is included in other income.
ii. Financial assets at Fair Value Through OCI
(‘FVTOCI’)
Equity investments which are not held for trading and for
which the Company has elected to present the change
in the fair value in OCI and debt instruments that are
held for collection of contractual cash flows and for
selling the financial assets, where the assets’ cash flow
represent solely payment of principal and interest, are
measured at FVTOCI.
The changes in fair value are taken to OCI, except the
impairment (on debt instruments), interest (basis EIR
method), dividend and foreign exchange differences
which are recognised in the Statement of Profit and Loss.
iii. Financial assets measured at FVTPL
All financial assets that do not meet the criteria for
amortised cost or FVTOCI are measured at FVTPL.
Interest (basis EIR method) and dividend income from
financial assets at FVTPL is recognised in the Statement
of Profit and Loss within other income separately from
the other gains/losses arising from changes in the
fair value.
Impairment
The Company assesses on a forward looking basis
the expected credit losses associated with its assets
carried at amortised cost and debt instrument carried at
FVTOCI. The impairment methodology applied depends
on whether there has been a significant increase in
credit risk since initial recognition. If credit risk has not
increased significantly, twelve month expected credit
loss (ECL) is used to provide for impairment loss,
otherwise lifetime ECL is used.
However, only in case of trade receivables, the Company
applies the simplified approach which requires expected
lifetime losses to be recognised from initial recognition
of the receivables.
III. Subsequent measurement - financial liabilities
Any off-market financial guarantees are amortised
over the life of the guarantee and are measured at
each reporting date at the higher of (i) the remaining
unamortised balance of the amount at initial recognition
and (ii) the best estimate of expenditure required to
settle the obligation at the end of the reporting period.
Other financial liabilities are subsequently measured
at amortised cost using the EIR method (if the impact
of discounting/any transaction costs is significant),
except for contingent consideration and financial liability
under option arrangements recognised in a business
combination which is subsequently measured at FVTPL.
For trade and other payables maturing within one year
from the Balance Sheet date, the carrying amounts
approximate the fair value due to the short maturity of
these instruments.
Subsequent to initial recognition, the liability component
of a compound financial instrument is measured at
amortised cost using the effective interest method. The
equity component of a compound financial instrument
is not re-measured. Interest related to the financial
liability is recognised in profit or loss under finance
cost. On conversion, the financial liability is reclassified
to equity and no gain or loss is recognised. The original
equity component remains as equity (which may be
transferred from one-line item within equity to another)
upon conversion or maturity.
c. Measurement - derivative financial instruments
Derivative financial instruments, including separated
embedded derivatives are classified as financial
instruments at FVTPL - Held for trading. Such derivative
financial instruments are initially recognised at fair value.
They are subsequently measured at their fair value, with
changes in fair value being recognised in the Statement
of Profit and Loss.
d. Derecognition
The financial assets are derecognised from the Balance
Sheet when the rights to receive cash flows from the
financial assets have expired, or have been transferred
and the Company has transferred substantially all risks
and rewards of ownership. The financial liabilities are de¬
recognised from the Balance Sheet when the underlying
obligations are extinguished, discharged, lapsed,
cancelled, expires or legally released. The resultant
impact of derecognition is recognised in the Statement
of Profit and Loss.
2.11 Leases
The Company, at the inception of a contract, assesses
the contract as, or containing, 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 the contract involves the use of an identified
asset, the Company has the right to obtain substantially
all of the economic benefits from use of the asset
throughout the period of use; and the Company has the
right to direct the use of the asset.
Company as a lessee
The Company recognises a ROU and a corresponding
lease liability with respect to all lease agreements in
which it is the lessee in the Balance Sheet. The lease
liability is initially measured at the present value of the
lease payments that are not paid at the commencement
date, discounted by using the incremental borrowing
rate (as the rate implicit in the lease cannot be readily
determined). Lease liabilities include the net present
value of fixed payments (including any in-substance fixed
payments) and payments of penalties for terminating
the lease, if the lease term reflects the lessee exercising
that option.
Subsequently, the lease liability is measured at
amortised cost using the effective interest method. It
is remeasured when there is a change in future lease
payments including or when the lease contract is
modified and the lease modification is not accounted
for as a separate lease. The corresponding adjustment is
made to the carrying amount of the ROU, or is recorded
in profit or loss if the carrying amount of the related
ROU has been reduced to zero and there is a further
reduction in the measurement of the lease liability.
ROU are measured at cost, comprising the amount of the
initial measurement of lease liability, any lease payments
made at or before the commencement date and any
initial direct costs less any lease incentives received.
Subsequent to initial recognition, ROU are stated at
cost less accumulated depreciation and any impairment
losses and adjusted for certain remeasurements of
the lease liability. Depreciation is computed using the
straight-line method from the commencement date
to the end of the useful life of the underlying asset or
the end of the lease term, whichever is shorter. The
estimated useful lives of ROU are determined on the
same basis as those of the underlying asset.
I n the Balance Sheet, the ROU and lease liabilities are
presented separately. In the Statement of Profit and
Loss, interest expense on lease liabilities are presented
separately from the depreciation charge for the ROU.
Interest expense on the lease liability is a component
of finance costs, which are presented separately in the
Statement of Profit or Loss. In the Statement of Cash
Flows, cash payments for the principal portion of lease
payments and the interest portion of lease liability are
presented as financing activities.
When a contract includes lease and non-lease
components, the Company allocates the consideration
in the contract on the basis of the relative stand-alone
prices of each lease component and the aggregate
stand-alone price of the non-lease components.
Short-term leases and leases of low-value assets
The Company has elected not to recognise ROU and
lease liabilities for short term leases that have a lease
term of twelve months or less and leases of low value
assets. The Company recognises lease payments
associated with these leases as an expense on a
straight-line basis over the lease term.
Sale and leaseback
In case of sale and leaseback transactions, the Company
first considers whether the initial transfer of the
underlying asset to the buyer-lessor is a sale by applying
the requirements of Ind AS 115. If the transfer qualifies
as a sale and the transaction is on market terms, the
Company effectively derecognises the asset, recognises
a ROU asset (and lease liability) and recognises a
portion of the total gain or loss on the sale. The amount
recognised is calculated by splitting the total gain or
loss into:
• an amount recognised in Statement of Profit and Loss
relating to the buyer-lessor’s rights in the underlying
asset, and
• an unrecognised amount relating to the rights
retained by the seller-lessee which is deferred by way
of reducing the ROU initially recognised.
2.12 Taxes
The income tax expense comprises of current and
deferred income tax. Income tax is recognised in the
Statement of Profit and Loss, except to the extent that
it relates to items recognised in the OCI or directly in
equity, in which case the related income tax is also
recognised accordingly.
a. Current tax
The current tax is calculated on the basis of the tax
rates, laws and regulations, which have been enacted
or substantively enacted as at the reporting date. The
payment made in excess/(shortfall) of the Company’s
income tax obligation for the period are recognised
in the Balance Sheet under assets as income tax
assets/under current liabilities as current tax liabilities.
Any interest, related to accrued liabilities for potential tax
assessments are not included in income tax charge or
(credit), but are rather recognised within finance costs.
The Company periodically evaluates positions taken
in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation.
The Company considers whether it is probable that
a taxation authority will accept an uncertain tax
treatment. If the Company concludes it is probable
that the taxation authority will accept an uncertain tax
treatment, it determines the taxable profit (tax loss), tax
bases, unused tax losses, unused tax credits or tax rates
consistently with the tax treatment used or planned
to be used in its income tax filings. If the Company
concludes it is not probable that the taxation authority
will accept an uncertain tax treatment, the entity reflects
the effect of uncertainty in determining the related
taxable profit (tax loss), tax bases, unused tax losses,
unused tax credits or tax rates.
Current tax assets and tax liabilities are offset where
the entity has a legally enforceable right to offset and
intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
b. Deferred tax
Deferred tax is recognised on temporary differences
arising between the tax bases of assets and liabilities
and their carrying values in the Financial Statements.
Deferred tax is also recognised in respect of carried
forward tax losses and tax credits. Deferred tax assets/
liabilities recognised for temporary differences and
unused carry forward losses arising from a business
combination, affect the amount of goodwill or the bargain
purchase gain that the Company recognises. However,
deferred tax liabilities are not recognised if they arise
from the initial recognition of goodwill. Deferred tax is
not recognised if it arises from initial recognition of an
asset or liability in a transaction other than a business
combination that at the time of the transaction affects
neither accounting nor taxable profit or loss.
The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from
the manner in which the Company expects, at the end
of the reporting period, to recover or settle the carrying
amount of its assets and liabilities.
Deferred tax assets are recognised only to the extent that it
is probable that future taxable profit will be available against
which the temporary differences can be utilised. The
Company considers the projected future taxable income
and tax planning strategies in making this assessment.
The unrecognised deferred tax assets/carrying amount
of deferred tax assets are reviewed at each reporting
date for recoverability and adjusted appropriately.
Deferred tax is determined using tax rates (and laws)
that have been enacted or substantively enacted by
the reporting date and are expected to apply when the
asset is realised or the liability is settled.
Deferred tax assets and liabilities are off-set where there
is a legally enforceable right to enforceable right to offset
current tax assets and liabilities and where the deferred
tax balances relate to the same taxation authority.
2.13 Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank
balances and any deposits with original maturities of
three months or less (that are readily convertible to
known amounts of cash and cash equivalents and
subject to an insignificant risk of changes in value).
However, for the purpose of the Statement of Cash
Flows, in addition to above items, any bank overdrafts/
cash credits that are integral part of the Company’s cash
management, are also included as a component of cash
and cash equivalents.
2.14 Equity share capital
Ordinary shares are classified as Equity when the
Company has an un-conditional right to avoid delivery
of cash or another financial asset, that is, when the
dividend and repayment of capital are at the sole and
absolute discretion of the Company and there is no
contractual obligation whatsoever to that effect.
2.15 Employee benefits
The Company’s employee benefits mainly include
wages, salaries, bonuses, defined contribution plans,
defined benefit plans, compensated absences,
deferred compensation and share-based payments.
The employee benefits are recognised in the year in
which the associated services are rendered by the
Company employees. Short-term employee benefits
are recognised in Statement of Profit and Loss at
undiscounted amounts during the period in which the
related services are rendered.
a. Defined contribution plans
The contributions to defined contribution plans are
recognised in profit or loss as and when the services
are rendered by employees. The Company has no
further obligations under these plans beyond its
periodic contributions.
b. Defined benefit plans
I n accordance with the local laws and regulations, all
the employees in India are entitled for the Gratuity plan.
The said plan requires a lump-sum payment to eligible
employees (meeting the required vesting service
condition) at retirement or termination of employment,
based on a pre-defined formula.
The Company provides for the liability towards the said
plans on the basis of actuarial valuation carried out
quarterly as at the reporting date, by an independent
qualified actuary using the projected-unit-credit method.
The obligation towards the said benefits is recognised
in the Balance Sheet, at the present value of the
defined benefits obligations. The present value of
the said obligation is determined by discounting the
estimated future cash outflows, using interest rates of
government bonds.
The interest income/(expense) are calculated by
applying the above mentioned discount rate to the
plan assets and defined benefit obligations. The net
interest income/(expense) on the net defined benefit
obligations is recognised in the Statement of Profit
and Loss. However, the related re-measurements of
the net defined benefit obligations are recognised
directly in the OCI in the period in which they arise.
The said re-measurements comprise of actuarial gains
and losses (arising from experience adjustments and
changes in actuarial assumptions), the return on plan
assets (excluding interest). Re-measurements are not
re-classified to the Statement of Profit and Loss in any
of the subsequent periods.
c. Other employee benefits
The employees of the Company are entitled to
compensated absences as well as other long-term
benefits. Compensated absences benefits comprises
of encashment and availment of leave balances that
were earned by the employees over the period of
past employment.
The Company provides for the liability towards the said
benefits on the basis of actuarial valuation carried out
quarterly as at the reporting date, by an independent
qualified actuary using the projected-unit-credit
method. The related re-measurements are recognised
in the Statement of Profit and Loss in the period in which
they arise.
d. Share-based payments
The Company operates equity-settled employee share-
based compensation plans, under which the Company
receives services from employees as consideration for
stock options towards shares of the Company.
The fair value of stock options (at grant date) is
recognised as an expense in the Statement of Profit
and Loss within employee benefits as employee share-
based payment expenses over the vesting period, with
a corresponding increase in share-based payment
reserve (a component of equity).
The total amount so expensed is determined by
reference to the grant date fair value of the stock options
granted, which includes the impact of any market
performance conditions and non-vesting conditions
but excludes the impact of any service and non-market
performance vesting conditions. However, the non¬
market performance vesting and service conditions
are considered in the assumption as to the number of
options that are expected to vest. The forfeitures are
estimated at the time of grant and reduce the said
expense rateably over the vesting period.
The expense so determined is recognised over the
requisite vesting period, which is the period over which
all of the specified vesting conditions are to be satisfied.
As at each reporting date, the Company revises its
estimates of the number of options that are expected
to vest, if required.
I t recognises the impact of any revision to original
estimates in profit/(loss) such that the cumulative
expense reflects the revised estimate, with a
corresponding adjustment to the reserve in the period
of change. Accordingly, no expense is recognised for
awards that do not ultimately vest, except for which
vesting is conditional upon a market performance/
non-vesting condition. These are treated as vested
irrespective of whether or not the market/non-vesting
condition is satisfied, provided that service conditions
and all other non-market performance are satisfied.
Where the terms of an award are modified, in addition
to the expense pertaining to the original award, an
incremental expense is recognised for any modification
that results in additional fair value, or is otherwise
beneficial to the employee as measured at the date
of modification.
Where an existing award is cancelled (including due to
non-vesting conditions not being met), it is treated as if
it is vested thereon, and any un-recognised expense for
the award is recognised immediately.
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