2. MATERIAL ACCOUNTING POLICIES
2.1 Basis of preparation
(i) Compliance with Ind AS
The standalone financial statements comply in
all material aspects with the Indian Accounting
standards ('Ind AS') notified under the Companies
(Indian Accounting Standards) Rules, 2015 and
Companies (Indian Accounting Standards)
Amendment Rules, 2016 read with section 133 of the
Companies Act 2013 ('the Act') and other relevant
provisions of the Act. The Company's standalone
financial statement consistently apply uniform
accounting policies across all periods.
These financial statements were authorised for
issue by the Company’s Board of Directors as on
24 April 2025.
(ii) Functional and presentation currency
Items included in the standalone financial
statements of the Company are measured using
the currency of the primary economic environment
in which the Company operates (i.e. the "functional
currency”). The standalone financial statements
are presented in Indian Rupee ("' or "INR"), which
is Company's functional and presentation currency
and is rounded-off to the nearest million except
when otherwise indicated.
(iii) Basis of Measurement
These standalone financial statements have been
prepared on an accrual basis under the historical
cost convention except for the following items:
a) Certain financial assets and liabilities that are
measured at fair value;
b) Share based payments that are measured at fair
value;
c) Net defined benefit liability that are measured
at fair value of present value of defined benefit
obligations;
d) Right of use assets and lease liabilities are
measured at fair value as per IND AS 116;
e) Security deposits are measured at fair value as
per IND AS 109;
f) Derivative instruments in designated hedge
accounting relationship;
g) Call Option.
Historical cost is generally based on the fair value of
the consideration given in exchange for goods and
services. 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.
(iv) Going Concern
The Company has incurred a loss of ' 2,192.14
million for the year ended 31 March, 2025 and has
accumulated losses of ' 24,517.62 million as at
31 March 2025.
Notwithstanding the above, the Company’s net
current assets exceed its net current liabilities
by ' 4,128.88 million as at 31 March 2025. During
the year ended 31 March 2025, the Company has
raised compulsorily convertible preference shares
(""CCPS"") for a consideration of ' 7,091.46 million to
meet its long and short- term objectives. Further,
the Management has assessed it has successfully
able to grow revenue from the existing stores over
the years with significant new stores additions which
has resulted in improved margins and increased
revenue, which it expects to continue in near future.
Further, regulatory approval on its draft red herring
prospectus for its IPO and strategic expansion plans
which would lead to increased revenue over the
coming years, provide a basis for the Company to
prepare its standalone financial statements on a
going concern basis.
(v) Use of estimates, assumptions and judgements
The preparation of standalone financial statements
in conformity with Ind AS requires management to
make judgements, estimates and assumptions that
affect the application of accounting policies and the
reported amount of assets and liabilities, revenues
and expenses and disclosure of contingent liabilities.
Such estimates, assumptions and judgement are
based on management’s evaluation of relevant
facts and circumstances as on the date of financial
statements. The actual result may differ from these
estimates.
Estimates and assumptions are reviewed on a
periodic basis. Revisions to accounting estimates are
recognised prospectively.
Information about assumptions and estimation
uncertainties that have significant risk of resulting
in a material adjustment in the year ended 31 March
2025 is included in the following notes:
a) Estimation of current tax/deferred tax expenses
and payable - Point 2.12 of Material Accounting
Policies
b) Estimation of defined benefit obligation - Point
2.9 of Material Accounting Policies;
c) Estimation of useful lives, residual values of
property, plant & equipment - Point 2.2 of
Material Accounting Policies;
d) Fair value measurement of financial instruments
- Point 2.11 of Material Accounting Policies;
e) Leases - Whether an arrangement contains a
lease - Point 2.5 of Material Accounting Policies;
f) Fair value of employee stock option plans - Point
2.10 of Material Accounting Policies;
g) Impairment testing of property, plant &
equipment and Right-to-use assets - Point 2.4
of Material Accounting Policies;
h) Estimation of fair value of call option - refer note
53;
i) Derivative instruments in designated hedge
accounting relationship - Point 2.11 of Material
Accounting Policies.
(vi) Measurement of fair values
"A number of the Company’s accounting policies
and disclosures require the measurement of fair
values, for both financial and non-financial assets
and liabilities. Fair values are categorised into
different levels in a fair value hierarchy based on the
inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included
in Level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are
not based on observable market data
(unobservable inputs).
When measuring the fair value of an asset or a
liability, the Company uses observable market data
as far as possible. If the inputs used to measure
the fair value of assets or liability fall into different
levels of fair value hierarchy, then the fair value
measurement is categorised in its entirety in
the same level of the fair value hierarchy as the
lowest level input that is significant to the entire
measurement.
The Company recognises transfers between levels
of the fair value hierarchy at the end of the reporting
period during which the change has occurred.
(vii) Current versus non-current classification
The Company presents assets and liabilities in
the Balance Sheet based on current/non-current
classification:
An asset is treated 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.
All other assets are classified as non-current.
A liability is 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.
The Company classifies all other liabilities as non¬
current.
The operating cycle is the time between the
acquisition of assets for processing and their
realisation in cash and cash equivalents. The
Company has identified twelve months as its
operating cycle.
2.2 Property, plant and equipment (PPE) and
depreciation
The cost of any item of PPE shall be recognised as
an asset only if it is probable that future economic
benefit associated with the item will flow to the
group and the cost of the item can be measured
reliably.
Items of Property, plant and equipment are
measured at cost less accumulated depreciation
and accumulated impairment losses, if any.
The cost of an item of property, plant and equipment
comprises its purchase price/acquisition cost, net of
any trade discounts and rebates, any import duties
and other taxes (other than those subsequently
recoverable from the tax authorities), any directly
attributable expenditure on making the asset ready
for its intended use, other incidental expenses and
interest on borrowings attributable to acquisition of
qualifying property, plant and equipment up to the
date the asset is ready for its intended use.
Subsequent expenditure on property, plant
and equipment after its purchase/completion
is capitalized only if such expenditure results
in an increase in the future benefits from such
asset beyond its previously assessed standard of
performance.
Advance paid towards acquisition of PPE outstanding
at each balance sheet date is disclosed as capital
advances under non-current assets.
Any gain or loss on disposal of an item of property,
plant and equipment is recognized in the standalone
statement of profit or loss. Capital work-in-progress
comprises the cost of assets that are not ready for
their intended use at the balance sheet date.
When significant parts of plant and equipment are
required to be replaced at intervals, the Company
depreciates them separately based on their specific
useful lives. Repairs and maintenance costs are
recognised in the statement of profit and loss as
incurred.
The Company identifies and determines cost of each
component/part of property, plant and equipment
separately, if the component/part has a cost which
is significant to the total cost of the property. plant
and equipment and has useful life that is materially
different from that of the remaining asset. Leasehold
improvements are amortized over the estimated
useful life of the asset or the lease period whichever
is less.
An item of property, plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Gains or losses
arising from de-recognition of Property, plant and
equipment and intangible assets are measured as
the difference between the net disposal proceeds
and the carrying amount of Property. plant and
equipment and are recognized in the standalone
statement of profit and loss when the property, plant
and equipment is derecognized.
Depreciation for assets purchased/sold during the
year is proportionally charged.
The residual value, useful life and the methods of
depreciation of property, plant and equipment
are reviewed at each financial year and adjusted
prospectively, if appropriate. Based on technical
evaluation and consequent advice, the management
believes that its estimate of useful life as given above
best represent the period over which management
expects to use these assets. Changes in the expected
useful life or the expected pattern of consumption
of future economic benefits embodied in the assets
are considered to modify the amortization period or
method as appropriate, and are treated as changes
in accounting estimates.
2.3 Other intangible assets and amortization
a) Intangible assets acquired separately are
measured on initial recognition at cost.
Subsequent expenditure is capitalised only
when it increases the future economic benefits
attributable to the asset will flow to the Company
and the cost of asset can be measured reliably.
All other expenditure is recognised in profit or
loss as incurred.
Intangible assets are subsequently stated
at cost less accumulated amortisation and
impairment. Intangible assets are amortised
over their respective estimated useful lives on a
straight line basis, from the date that they are
available for use.
b) Internally generated assets
Expenditure on research activities are recognised
in the statement of profit and loss as incurred.
Development expenditure is capitalised as
part of the cost of the resulting intangible
asset only if the expenditure can be measured
realibly, the product or process is technically
and commercially feasible, future economic
benefits are probable, and the Company
intends to and has sufficient resources to
complete development and to use or sell the
assets. Otherwise, it is recognised in profit or loss
as incurred. Subsequent to initial recognition,
the asset is measured at cost less accumulated
amortization and any accumulated impairment
losses.
c) Amortization
Amortization is calculated to write off the
cost of intangible asset less their estimated
residual values over their estimated lives using
the straight-line method, and is included in
depreciation and amortisation in statement of
profit and loss.
2.4 Impairment of non-financial assets
Assessment is done at each balance sheet date
as to whether there is any indication that an asset
may be impaired. If any such indication exists, an
estimate of the recoverable amount of the asset/
cash generating unit is made. Recoverable amount
is higher of an asset’s or cash generating unit’s
net selling price and its value in use. Value in use
is the present value of estimated future cash flows
expected to arise from the continuing use of an
asset and from its disposal at the end of its useful
life. For the purpose of assessing impairment, 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 group of assets. The smallest identifiable
group of assets that generates cash inflows from
continuing use that are largely independent of the
cash inflows from other assets or groups of assets, is
considered as a cash generating unit (CGU). An asset
or CGU whose carrying value exceeds its recoverable
amount is considered impaired and is written down
to its recoverable amount. Assessment is also done
at each balance sheet for possible reversal of an
impairment loss recognized for an asset, in prior
accounting periods.
2.5 Leases
The Company’s lease asset classes primarily
consist of leases for certain stores facilities
under non-cancellable lease arrangements. 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 assesses whether a contract
contains a lease, at inception of a contract. A
contract is, or contains, a lease if the contract
conveys the right to control the use of an
identified asset for a period of time in exchange
for consideration. To assess whether a contract
conveys the right to control the use of an
identified asset, the Company assesses whether:
(i) the contract involves the use of an identified
asset (ii) the Company has substantially all of the
economic benefits from use of the asset through
the period of the lease and (iii) the Company has
the right to direct the use of the asset.
At the date of commencement of the lease, the
Company recognizes a right-of-use (ROU) asset
and a corresponding lease liability for all lease
arrangements in which it is a lessee, except for
leases with a term of 12 months or less (short-term
leases). For these short-term leases, the Company
recognizes the lease payments as an operating
expense on a straight-line basis over the term of
the lease.
The Company applies the short-term lease
recognition exemption to its short-term leases
(i.e., those leases that have a lease term of 12
months or less from the commencement date
and do not contain a purchase option).
Lease payments on short-term leases and leases
of low-value assets are recognised as expense on
a straight-line basis over the lease term.
Certain lease arrangements includes the options
to extend or terminate the lease before the end
of the lease term. ROU assets and lease liabilities
includes these options when it is reasonably
certain that they will be exercised. The ROU assets
are initially recognized at cost, which comprises
the initial amount of the lease liability adjusted
for any lease payments made at or prior to the
commencement date of the lease plus any initial
direct costs less any lease incentives. They are
subsequently measured at cost less accumulated
depreciation and impairment losses.
ROU 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. ROU assets are evaluated
for recoverability whenever events or changes
in circumstances indicate that their carrying
amounts may not be recoverable. For the purpose
of assessing impairment, assets are grouped at
the lowest levels for which there are separately
identifiable cash inflows which are largely
independent of the cash inflows from other assets
or group of assets (cash-generating units). Non¬
financial assets that suffered an impairment are
reviewed for possible reversal of the impairment
at the end of each reporting period.
The lease liability is initially measured at amortized
cost at the present value of the future lease
payments. The lease payments are discounted
using the incremental borrowing rate. Lease
liabilities are re-measured with a corresponding
adjustment to the related ROU asset if the
Company changes its assessment of whether it
will exercise an extension or a termination option.
Lease liability and ROU assets have been
separately presented in the Balance Sheet and
lease payments have been classified as financing
cash flows.
2.6 Inventories
Inventories (other than quantities of gold for which
the price is yet to be determined with the suppliers
(Unfixed gold) or where hedge contracts have been
entered into for quantities of gold and accounted for
as fair value hedge) are stated at the lower of cost and
net realisable value. Cost is determined as follows:
a) Raw materials are valued at weighted average
except Solitaires which is valued on specific
identification basis.
b) Work-in-progress and finished goods (other
than gold) are valued at weighted average cost
of production.
c) Gold is valued on First-in-First-out basis.
Cost comprises all costs of purchase including
duties and taxes (other than those subsequently
recoverable by the Company), freight inwards
and other expenditure directly attributable to
acquisition. Work in progress and finished goods
include appropriate proportion of overheads.
Unfixed gold is valued at the provisional gold price
prevailing on the period closing date.
Net realisable value represents the estimated
selling price for inventories less estimated costs of
completion and costs necessary to make the sale.
2.7 Foreign currency transactions
Transactions in foreign currencies entered into by
the Company are accounted at the exchange rates
prevailing on the date of the transaction or at rates
that closely approximate the rate at the date of the
transaction.
As at the reporting date, foreign currency monetary
items are translated using the closing rate and
non-monetary items that are measured in terms of
historical cost in a foreign currency are translated
using the exchange rate at the date of the transaction.
Exchange gains and losses arising on the settlement
of monetary items or on translating monetary items
at rates different from those at which they were
translated on initial recognition during the period
or in previous financial statements are recognised in
the Statement of Profit or Loss in the year in which
they arise.
2.8 Revenue recognition
(a) Sale of goods:
The Company maintains both physical stores and an
online platform for business with its customers. The
mode of operation in case of physical stores include
franchise owned & Company operated stores,
Company owned & Company operated stores. The
Company recognizes revenue when the control of
goods being sold is transferred to the customer and
when there are no longer any unfulfilled obligations.
The performance obligations in the contracts are
fulfilled based on various customer terms including
at the time of delivery of goods or upon dispatch
based on various distribution channels.
The Company acts as the principal in its revenue
arrangements and the franchisees qualify as agents,
since it typically controls the goods or services before
transferring them to the customer.
Revenue is measured based on the transaction
price, which is the consideration, net of customer
incentives, discounts, variable considerations,
payments made to customers, right of return and
other similar charges, as specified in the contract with
the customer. Additionally, revenue excludes taxes
collected from customers, which are subsequently
remitted to governmental authorities.
For contracts that permit the customer to return
an item, revenue is recognised to the extent that
is highly probable that a significant reversal in the
amount of cumulative revenue recognised will not
occur.
Therefore, the amount of revenue recognised is
adjusted for expected returns, which are estimated
based on the historical data. In these circumstances,
a refund liability and a right to recover returned goods
assets are recognised. The right to recover returned
goods asset is measured after reducing the average
gross margin from the estimated refund liability.
The refund liability is included in other current
liability (note 26) and right to recover returned goods
is included in other current assets (note 11). The
Company reviews its estimate of expected returns at
each reporting date and updates the amounts of the
assets and liability accordingly.
Interest income is recognized on a time proportion
basis, taking into account the amount outstanding
and the rate applicable.
(b) Gift vouchers:
The amount collected on sale of a gift voucher is
recognized as a liability and transferred to revenue
(sales) on redemption by the customers or is
transferred to other income on expiry as per the
policy.
2.9 Employee benefits
(i) Short-term obligations
Liabilities for salaries, including other monetary
and 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 recognised in respect of employees’
services up to 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.
(ii) Post-employment obligations
The Company operates the following post¬
employment schemes:
a) defined contribution plans - provident fund
b) defined benefit plans - gratuity plans
a) Defined contribution plans
The Company's contribution to provident fund and
employee state insurance scheme are considered
as defined contribution plans and are charged as
an expense based on the amount of contribution
required to be made and when services are rendered
by the employees.
b) Defined benefit plans
For defined benefit plans in the form of gratuity
(unfunded), the cost of providing benefits is
determined using the Projected Unit Credit method,
with actuarial valuations being carried out at each
Balance Sheet date. The present value of the defined
benefit obligation is determined by discounting
the estimated future cash outflows by reference to
market yields at the end of the reporting period on
government bonds that have terms approximating
to the tenor of the related obligation. The liability or
asset recognized in the balance sheet in respect of
gratuity is the present value of the defined benefit
obligation at the end of the reporting period. The net
interest cost is calculated by applying the discount
rate to the net balance of the defined benefit
obligation. This cost is included in employee benefit
expense in the statement of profit and loss.
Remeasurements of the net defined liability,
comprising of actuarial gains and losses, are
recognised immediately in the balance sheet with
a corresponding debit or credit to retained earnings
through Other Comprehensive Income (OCI) in the
period in which they occur. Remeasurements are not
reclassified to profit or loss in subsequent periods.
Change in the present value of the defined benefit
obligation resulting from plan amendments or
curtailments are recognised immediately in the
profit or loss as past service cost.
(iv) Compensated absences
The Company has changed leave encashment
policy during the year ended 31 March 2024,The
Company offers a leave encashment policy as part
of compensated absences, which is categorized as
a short-term benefit. Employees become eligible
for earned leaves after successfully completing their
probation period. Once confirmed, earned leaves
accrue on a monthly basis. The company also allows
employees to carry forward a specific number of
unused leave days from the previous year to the next
anniversary cycle. Leave encashment will be paid
upon an employee's departure from the company,
up to the balance of carried-forward leaves. The
provision for this benefit is estimated and measured
on an undiscounted basis.
In the earlier years, the Company has leave
encashment policy in the form of compensated
absence which is considered as a long-term benefit
and accordingly the provision has been created
based on actuarial valuation.
2.10 Share based payments
Employees of the Company receive remuneration
in the form of employee option plan of the
Company (equity settled instruments) for
rendering services over a defined vesting period.
Equity instruments granted to the employees of
the Company are measured by reference to the
fair value of the instrument at the date of grant.
The expense is recognised in the statement of
profit and loss with a corresponding increase in
equity (stock options outstanding account). The
equity instruments generally vest in a graded
manner over the vesting period. The fair value
determined at the grant date is expensed over the
vesting period of the respective tranches of such
grants (accelerated amortisation). At the end of
each period, the Company revises its estimates of
the number of options that are expected to vest
based on the non-market vesting and service
conditions. It recognises the impact of the revision
to original estimates, if any, in the statement of
profit and loss, with a corresponding adjustment
to equity. The stock option compensation expense
is determined based on the Company's estimate of
equity instruments that will eventually vest.
The cost of the share based payments is
determined by the fair value at the date when the
grant is made using the Black-Scholes Model. The
expected term of an option is estimated based on
the vesting term and contractual life of the option.
Expected volatility during the expected term of the
option is based on the historical volatility of similar
companies. Risk free interest rates are based on
the government securities yield in effect at the
time of the grant.
2.11 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
instruments are recognised in the Company’s
balance sheet when the Company becomes a party
to the contractual provisions of the instrument.
Financial assets and liabilities are initially recognized
at fair value. Transaction costs that are directly
attributable to financial assets and liabilities [other
than financial assets and liabilities measured at fair
value through profit and loss (FVTPL)] are added to
or deducted from the fair value of the financial assets
or liabilities, as appropriate on initial recognition.
Transaction costs directly attributable to acquisition
of financial assets or liabilities measured at FVTPL
are recognized immediately in the Statement of
Profit and Loss.
a) Financial Assets
(i) Initial recognition and measurement
All financial assets are recognised initially at fair value
plus, in the case of financial assets not recorded at
fair value through profit or loss, transaction costs that
are attributable to the acquisition of the financial
asset. Trade receivables are initially measured at
transaction price.
(ii) Classification and Subsequent measurement
For purposes of subsequent measurement, financial
assets are classified in three categories:
1. Financial assets carried at amortised cost
A financial asset is subsequently measured at
amortized cost if it is held within a business model
whose objective is to hold the asset in order to collect
contractual cash flows and the contractual terms
of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and
interest on the principal amount outstanding.
2. Financial assets at fair value through other
comprehensive income (FVOCI)
A financial asset is subsequently measured at fair
value through other comprehensive income if it
is held within a business model whose objective is
achieved by both collecting contractual cash flows
and selling financial assets and the contractual terms
of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and
interest on the principal amount outstanding.
3. Financial assets at fair value through profit or loss
(FVTPL)
A financial asset which is not classified in any of
the above categories are subsequently fair valued
through profit or loss.
(iii) Investment in Subsidiaries and Associates
Investment in subsidiaries and associate is measured
at cost less provision for impairment.
(iv) Impairment of financial assets
In accordance with Ind AS 109, the Company
applies expected credit loss (“ECL”) model for
measurement and recognition of impairment
loss. The Company follows 'simplified approach'
for recognition of impairment loss allowance on
receivables and unbilled revenues. The application of
simplified approach does not require the Company
to track changes in credit risk. Rather, it recognises
impairment loss allowance based on lifetime ECLs at
each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial
assets and risk exposure, the Company determines
that whether there has been a significant increase
in the credit risk since initial recognition. If credit risk
has not increased significantly, 12-month ECL is used
to provide for impairment loss. However, if credit risk
has increased significantly, lifetime ECL is used. If in
subsequent period, credit quality of the instrument
improves such that there is no longer a significant
increase in credit risk since initial recognition, then
the Company reverts to recognising impairment loss
allowance based on 12 month ECL.
Lifetime ECLs are the expected credit losses resulting
from all possible default events over the expected
life of a financial instrument. The 12-month ECL is a
portion of the lifetime ECL which results from default
events that are possible within 12-months after the
reporting date.
ECL impairment loss allowance (or reversal) is
recognised as an income/expense in the statement
of profit and loss during the period.
The Company generally operates on a cash and carry
model except in the case of franchisee partners
where there are adequate controls in place, and
hence the expected credit loss allowance for trade
receivables is insignificant. The concentration of
credit risk is also limited due to the fact that the
customer base is large and unrelated."
(v) Derecognition of financial assets
A financial asset is derecognised only when the
Company:
- has transferred the rights to receive cash flows
from the financial asset; or
- retains the contractual rights to receive the
cash flows of the financial asset, but assumes a
contractual obligation to pay the cash flows to
one or more recipients.
Where the entity has transferred an asset, the
Company evaluates whether it has transferred
substantially all risks and rewards of ownership of the
financial asset. In such cases, the financial asset is
derecognised. Where the entity has not transferred
substantially all risks and rewards of ownership
of the financial asset, the financial asset is not
derecognised.
Where the entity has neither transferred a financial
asset nor retains substantially all risks and rewards of
ownership of the financial asset, the financial asset
is derecognised if the Company has not retained
control of the financial asset.
b) Financial liabilities
(i) Initial recognition and measurement
Financial liabilities are initially measured at fair value,
net of directly attributable transaction costs. For
trade and other payables maturing within one year
from the balance sheet date, the carrying amounts
approximate fair value due to the short maturity of
these instruments.
(ii) Subsequent measurement
The measurement of financial liabilities depends on
their classification, as described below:
i. Financial liabilities at fair value through profit or
loss:
Financial liabilities at fair value through profit or
loss include financial liabilities held for trading
and financial liabilities designated upon initial
recognition as fair value through profit or loss.
Compulsorily convertible preference shares and
optionally convertible redeemable preference shares
are designated and measured at FVTPL on initial
recognition if they meet the definition of a liability as
per Ind AS 32.
ii. Financial liabilities at amortised cost (Loans and
borrowings):
After initial recognition, interest-bearing loans
and borrowings are subsequently measured at
amortised cost using the EIR method. Gains and
losses are recognised in profit or loss when the
liabilities are derecognised as well as through the EIR
amortisation process. Amortised cost is calculated
by taking into account any discount or premium
on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as
finance costs in the statement of profit and loss.
(iii) Derecognition
A financial liability is derecognised when the
Company’s obligations are discharged or cancelled
or have expired. An exchange with a lender of debt
instruments with substantially different terms is
accounted for as an extinguishment of the original
financial liability and the recognition of a new
financial liability. Similarly, a substantial modification
of the terms of an existing financial liability (whether
or not attributable to the financial difficulty of the
debtor) is accounted for as an extinguishment of the
original financial liability and the recognition of a new
financial liability. The difference between the carrying
amount of the financial liability derecognised and
the consideration paid and payable is recognised in
profit or loss.
c) Offsetting
Financial assets and financial liabilities are offset
and the net amount presented in the balance sheet
when, and only when, the Company currently has a
legally enforceable right to set off the amounts and it
intends either to settle on a net basis or to realise the
asset and settle the liability simultaneously.
d) Derivative financial instruments
The Company has adopted fair value hedge for the
derivative contracts entered into and designated
derivative contracts or non-derivative financial
liabilities as hedging instruments to mitigate the
risk of change in fair value of hedged item due to
movement in commodity prices. Changes in the fair
value of hedging instruments and hedged items
that are designated and qualify as fair value hedges
are recorded in the Statement of Profit and Loss with
an adjustment to the carrying value of the hedged
item. Hedge accounting is discontinued when
the Company revokes the hedge relationship, the
hedging instrument or hedged item expires or is
sold, terminated, or exercised or no longer meets the
criteria for hedge accounting.
The Company designates derivative contracts as
hedging instruments to mitigate the risk of change
in fair value of hedged item i.e. fixed gold inventory
due to movement in gold prices. The Company
also designated the borrowings pertaining to gold
taken on loan from banks (‘unfixed gold’) as a fair
value hedge to the corresponding gold inventory
purchased on loan.
2.12 Income tax
The income tax expense or credit for the period
is the tax payable on the current period’s taxable
income based on the applicable income tax rate for
each jurisdiction adjusted by changes in deferred
tax assets and liabilities attributable to temporary
differences and to unused tax losses.
The current income tax is calculated on the basis of
the tax rates and the tax laws enacted by the end
of the reporting period. Management periodically
evaluates positions taken in tax returns with respect
to situations in which applicable tax regulations is
subject to interpretation. It establishes provisions or
make reversals of provisions made in earlier years,
where appropriate, on the basis of amounts expected
to be paid to/received from the tax authorities.
Deferred tax is recognized for all the temporary
differences arising between the tax bases of assets
and liabilities and their carrying amounts in the
financial statements, subject to the consideration of
prudence in respect of deferred tax assets. Deferred
tax assets are recognized and carried forward only if
it is probable that sufficient future taxable amounts
will be available against which such deferred tax
asset can be realised.
Deferred tax assets and liabilities are measured using
the tax rates and tax laws that have been enacted
or substantively enacted by the end of the reporting
period and are expected to apply when the related
deferred income tax asset is realized or the deferred
income tax liability is settled.
The carrying amount of deferred tax assets are
reviewed at each Balance Sheet date and reduced 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.
Deferred tax liabilities are not recognised for
temporary differences between the carrying
amount and tax bases of investments in subsidiaries,
associates and interest in joint arrangements
where the company is able to control the timing of
the reversal of the temporary differences and it is
probable that the differences will not reverse in the
foreseeable future.
Deferred tax assets are not recognised for temporary
differences between the carrying amount and tax
bases of investments in subsidiaries, associates and
interest in joint arrangements where it is not probable
that the differences will reverse in the foreseeable
future and taxable profit will not be available against
which the temporary difference can be utilised.
Current and deferred tax is recognised in profit
or loss, except to the extent that it relates to items
recognised in other comprehensive income or
directly in equity. In this case, the tax is also recognised
in other comprehensive income or directly in equity,
respectively.
Deferred tax assets and liabilities are offset if a legally
enforceable right exists to set off current tax assets
and liabilities and the deferred tax balances relate to
the same taxable authority. Current tax assets and
liabilities are offset where the entity has a legally
enforceable right to offset and intends either to
settle on a net basis, or to realize the asset and settle
the liability simultaneously.
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