2a) Material Accounting Policies
i) Investments in subsidiaries
Investments in subsidiaries and associates are
recognized at cost, less impairment loss (if any)
as per Ind AS 27. Investments are reviewed for
impairment if events or changes in circumstances
indicate that the carrying amount may not be
recoverable.
ii) Property, Plant and Equipment
Property, Plant and Equipment are carried at
cost, net of recoverable taxes, trade discount
and rebates less accumulated depreciation and
impairment losses, if any. Cost includes purchase
price, borrowing cost and any cost directly
attributable to bringing the assets to its working
condition for its intended use. Subsequent costs
are included in the asset's carrying amount or
recognised as a separate asset, as appropriate,
only when it is probable that future economic
benefits associated with the item will flow to the
entity and the cost can be measured reliably.
In case of Property, Plant and Equipment, the
Company has availed the carrying value as
deemed cost on the date of Ind AS transition i.e.
April 1,2016.
The carrying amount of any component accounted
for as a separate asset is derecognised when
replaced. All other repairs and maintenance are
charged to statement of profit and loss during the
reporting period in which they are incurred.
Depreciation on the Property, Plant and Equipment
is provided using straight line method over the
useful life of the assets as specified in Schedule II
to the Companies Act, 2013.
The asset's residual values, useful lives and
method of depreciation are reviewed at each
financial year end and are adjusted prospectively,
if appropriate.
Losses arising from the retirement of, and gains
or losses arising from disposal of Property, Plant
and Equipment are recognised in the Statement
of Profit and Loss.
iii) Intangible Assets
Intangible assets are stated at acquisition cost,
net of accumulated amortisation and impairment
losses, if any.
Intangible Assets with finite useful lives are
amortized on a straight line basis over the
following period:
The assets' residual values and useful lives are
reviewed, and adjusted if appropriate, at the end
of each reporting period.
Gains or losses arising from the retirement or
disposal of an intangible asset are determined
as the difference between the disposal proceeds
and the carrying amount of the asset and are
recognised as income or expense in the Statement
of Profit and Loss.
iv) Impairment of Non-Financial Assets-Property,
Plant and Equipment and Intangible Assets:
The Company assesses at each Balance Sheet
date whether there is any indication that an
asset may be impaired. For the purposes of
assessing impairment, 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 group
of assets is considered as a cash generating
unit. If any such indication exists, the Company
estimates the recoverable amount of the asset.
The recoverable amount is the higher of an
asset's fair value less costs of disposal and value
in use. If such recoverable amount of the asset or
the recoverable amount of the cash generating
unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced
to its recoverable amount. The reduction is treated
as an impairment loss and is recognised in the
Statement of Profit and Loss. If at the Balance
Sheet date there is an indication that a previously
assessed impairment loss no longer exists or
may have decreased, the recoverable amount
is reassessed and the asset is reflected at the
recoverable amount.
v) Financial instruments
Financial assets and financial liabilities are
recognised when the Company becomes a party
to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue
of financial assets and financial liabilities (other
than financial assets and financial liabilities at
fair value through profit or loss) are added to
or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on
initial recognition. Transaction costs directly
attributable to the acquisition of financial assets
or financial liabilities at fair value through profit
or loss are recognised immediately in statement
of profit and loss.
Investments and Other Financial Assets
Classification
The Company classifies its financial assets in the
following measurement categories:
• those to be measured subsequently at fair
value (either through other comprehensive
income, or through profit or loss), and
• those 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.
For assets measured at fair value, gains and
losses will either be recorded in profit or loss or
other comprehensive income. For investments
in debt instruments, this will depend on the
business model in which the investment is held.
For investments in equity instruments, this will
depend on whether the Company has made
an irrevocable election at the time of initial
recognition to account for the equity investment
at fair value through other comprehensive income.
The Company reclassifies debt investments when
and only when its business model for managing
those assets changes.
Debt instruments
Subsequent measurement of debt instruments
depends on the Company's business model
for managing the asset and the cash flow
characteristics of the asset.
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. A gain or loss on a
debt investment that is subsequently measured
at amortised cost and is not part of a hedging
relationship is recognised in statement of profit
and loss when the asset is derecognised or
impaired. Interest income from these financial
assets is included in finance income using the
effective interest rate method.
Fair value through profit or loss:
Assets that do not meet the criteria for amortised
cost or FVTOCI are measured at fair value through
profit or loss. A gain or loss on a debt investment
that is subsequently measured at fair value
through profit or loss and is not part of a hedging
relationship is recognised in profit or loss and
presented net in the statement of profit and loss
within other gains/(losses) in the period in which it
arises. Interest income from these financial assets
is included in other income.
Impairment of financial assets
The Company applies the expected credit loss
model for recognising impairment loss on financial
assets measured at amortised cost including
Loans, Unbilled Revenue, trade receivables and
other contractual rights to receive cash or other
financial asset.
For trade receivables or any contractual right to
receive cash or another financial asset that result
from transactions that are within the scope of
Ind AS 115, the Company always measures the
loss allowance at an amount equal to lifetime
expected credit losses.
Further, for the purpose of measuring lifetime
expected credit loss ("ECL”) allowance for trade
receivables, the Company has used a practical
expedient as permitted under Ind AS 109. This
expected credit loss allowance is computed based
on a provision matrix which takes into account
historical credit loss experience and adjusted for
forward-looking information.
De-recognition 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.
Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by a company/
entity 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 Instrument
An equity instrument is any contract that
evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity
instruments issued are recognised at the proceeds
received, net of direct issue costs.
Financial liabilities
All financial liabilities are subsequently measured
at amortised cost using the effective interest
method or at fair value through profit and loss.
Financial liabilities that are not held-for-trading
and are not designated as FVTPL are measured
at amortised cost at the end of subsequent
accounting periods. The carrying amounts
of financial liabilities that are subsequently
measured at amortised cost are determined
based on the effective interest method.
The effective interest method is a method of
calculating the amortised cost of a financial
liability and of allocating interest expense over
the relevant period. The effective interest rate
is the rate that exactly discounts estimated
future cash payments (including all fees paid
or received that form an integral part of the
effective interest rate, transaction costs and
other premiums or discounts) through the
expected life of the financial liability, or (where
appropriate) a shorter period, to the amortised
cost of a financial liability.
Borrowings are classified as current liabilities
unless the Company has an unconditional right
to defer settlement of the liability for at least 12
months after the reporting period. Where there
is a breach of a material provision of a long¬
term loan arrangement on or before the end
of the reporting period with the effect that the
liability becomes payable on demand on the
reporting date, the Company does not classify
the liability as current, if the lender has agreed,
after the reporting period and before the
approval of the financial statements for issue,
not to demand payment as a consequence of
the breach.
Offsetting Financial Instruments
Financial Assets and Liabilities are offset and
the net amount is reflected in the balance sheet
where there is a legally enforceable right to offset
the recognised amounts and there is an intention
to 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 Company
or counterparty.
vi) Inventories
Inventories comprise of stock-in-trade and
consumables. Inventories are valued at the
lower of cost and the net realisable value after
providing for obsolescence and other losses,
where considered necessary. Cost is determined
on Simple Average basis. Cost includes all charges
in bringing the goods to their present location and
condition, including octroi and other levies, transit
insurance and receiving charges.
Net realizable value is the estimated selling
price in the ordinary course of business less the
estimated cost necessary to make the sale.
vii) Employee Benefits
(i) Short-term obligations
Liabilities for salaries, including non¬
monetary benefits that are expected to be
settled wholly within 12 months after the
end of the period in which the employees
render the related service are 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) Other long-term employee benefit
obligations
The liabilities for earned leave which are
not expected to be settled wholly within
12 months after the end of the period in
which the employees render the related
service. They are therefore measured as the
present value of expected future payments
to be made in respect of services provided
by employees up to the end of the reporting
period using the projected unit credit method.
The benefits are discounted using the market
yields at the end of the reporting period that
have terms approximating to the terms of
the related obligation. Re-measurements
as a result of experience adjustments
and changes in actuarial assumptions are
recognised in profit or loss.
The obligations are presented as current
liabilities in the balance sheet if the entity
does not have an unconditional right to defer
settlement for at least twelve months after
the reporting period, regardless of when the
actual settlement is expected to occur.
(iii) Post-employment obligations
The company operates the following post¬
employment schemes:
- Defined Contribution plans such as
provident fund, pension and employee
state insurance scheme
- Defined Benefit plans such as Gratuity
Defined Contribution Plans
The Company's contribution to provident
fund (in case of contributions to the Regional
Provident Fund office), pension and employee
state insurance scheme are considered as
defined contribution plans, as the Company
does not carry any further obligations apart
from the contributions made on a monthly
basis and are charged as an expense based
on the amount of contribution required to be
made.
Defined Benefit Plan
The liability or asset recognised in the
balance sheet in respect of gratuity 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 defined
benefit obligation is calculated annually
by actuary using the projected unit credit
method.
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 terms of the related
obligation.
The net interest cost is calculated by
applying the discount rate to the net balance
of the defined benefit obligation and the fair
value of plan assets. This cost is included in
employee benefit expense in the statement
of profit and loss.
Re-measurement gains and losses arising
from experience adjustments, changes in
actuarial assumptions and return on plan
assets (excluding interest income) are
recognised in the period in which they occur,
directly in other comprehensive income.
They are included in retained earnings in the
statement of changes in equity and in the
balance sheet.
Changes in the present value of the defined
benefit obligation resulting from plan
amendments or curtailments are recognised
immediately in profit or loss as past service
cost.
(iv) Termination benefits
Termination benefits are payable when
employment is terminated by the Company
before the normal retirement date, or when
an employee accepts voluntary redundancy
in exchange of these benefits. The Company
recognises termination benefits at earlier of
the following dates: (a) when the Company
can no longer withdraw the offer of those
benefits; and (b) when the entity recognises
cost for a restructuring that is within the
Scope of Ind As 37 and involves the payment
of termination benefits. In case of an offer
made to encourage voluntary redundancy,
the termination benefits are based on the
number of employees expected to accept
the offer. Benefits falling due more than 12
months after the end of reporting period are
discounted to the present value.
(v) Bonus Plans
The Company recognises a liability and
an expense for bonuses. The Company
recognises a provision where contractually
obliged or where there is a past practice that
has created a constructive obligation.
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