2.1 Summary of Significant Accounting Policies
a) Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.
Financial assets
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.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation
or convention in the market place (e.g., regular way trades) are recognised on the trade date, i.e., the date that
the Company commits to purchase or sell the asset. Trade receivables are recognised initially at the amount of
consideration that is unconditional unless they contain significant financing components, in which case they
are recognised at fair value. The Company's trade receivables do not contain any significant financing
component and hence are measured at the transaction price measured under Ind AS 115 “Revenue from
Contracts with Customers”.
Subsequent Measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
• Debt instruments at amortised cost;
• Debt instruments at FVTOCI;
• Debt instruments, derivatives and equity instruments at FVTPL; and
• Equity instruments measured at FVTOCI.
Debt instruments at amortised cost
A “debt instrument” is measured at the amortised cost if both the following conditions are met:
a) the asset is held within a business model whose objective is to hold assets for collecting contractual cash
flows; and
b) contractual terms of the asset give rise on specified dates to cash flows that are solely payments of
principal and interest (“SPPI”) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective
interest rate method and are subject to impairment. 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 effective interest rate.
Interest income from these financial assets is included in finance income using the effective interest rate
method. Any gain or loss arising on derecognition is recognised directly in statement of profit and loss and
presented in other income. The losses arising from impairment are recognised in the statement of profit and
loss. This category generally applies to trade and other receivables.
Debt instrument at FVTOCI
A “debt instrument” is classified as at the FVTOCI if both of the following criteria are met:
a) the objective of the business model is achieved both by collecting contractual cash flows and selling the
financial assets; and
b) the asset's contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date
at fair value. Fair value movements are recognised in the OCI. However, the Company recognises interest
income, impairment losses and reversals and foreign exchange gain or loss in the statement of profit and loss.
On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified to the
statement of profit and loss. Interest earned while holding a FVTOCI debt instrument is reported as interest
income using the effective interest rate method.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for
categorisation as at amortised cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may
elect to designate a debt instrument, which otherwise meets amortised cost or FVTOCI criteria, as at FVTPL.
However, such election is allowed only if doing so reduces or eliminates a measurement or recognition
inconsistency (referred to as an “accounting mismatch”).
Debt instruments included within the FVTPL category are measured at fair value with all changes recognised
in the statement of profit and loss.
Equity investments
All equity investments within the scope of Ind AS 109 are measured at fair value. Equity instruments which are
held for trading and contingent consideration recognised by an acquirer in a business combination to which
Ind AS 103 applies are classified as at FVTPL. For all other equity instruments, the Company may make an
irrevocable election to present in OCI subsequent changes in the fair value. The Company makes such election
on an instrument-by-instrument basis. The classification is made upon initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the
instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to
the statement of profit and loss, even on sale of investment.
However, on sale the Company may transfer the cumulative gain or loss within equity. Equity investments
designated as FVTOCI are not subject to impairment assessment.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognised
in the statement of profit and loss.
Investments in subsidiaries and joint venture:
Investments in subsidiaries and joint venture are carried at cost less accumulated impairment losses, if any.
Where an indication of impairment exists, the carrying amount of the investment is assessed and written down
immediately to its recoverable amount. On disposal of investments in subsidiaries and joint venture, the
difference between net disposal proceeds and the carrying amounts are recognised in the statement of profit
and loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets)
is primarily derecognised (i.e. removed from the Company's balance sheet) when:
• the rights to receive cash flows from the asset have expired; or
• Both (1) the Company has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a “pass-
through”arrangements and (2) either (a) the Company has transferred substantially all the risks and rewards
of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards
of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass¬
through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership.
When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred
control of the asset, the Company continues to recognise the transferred asset to the extent of the Company's
continuing involvement. In that case, the Company also recognises an associated liability. The transferred
asset and the associated liability are measured on a basis that reflects the rights and obligations that the
Company has retained.
Impairment of trade receivables and other financial assets
In accordance with Ind AS 109, the Company applies the expected credit loss (“ECL’) model for measurement
and recognition of impairment loss on trade receivables or any contractual right to receive cash or another
financial asset. For this purpose, the Company follows a “simplified approach” for recognition of impairment
loss allowance on the trade receivable balances. The application of this 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. As a practical expedient, the Company uses a
provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision
matrix is based on its historically observed default rates over the expected life of the trade receivables and is
adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated
and changes in the forward-looking estimates are analysed.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at FVTPL, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial
liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs. The Company's financial liabilities include trade and other payables,
loans and borrowings including bank overdrafts and derivative financial instruments.
Subsequent Measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at FVTPL
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon
initial recognition as at FVTPL. Financial liabilities are classified as held for trading if they are incurred for the
purpose of repurchasing in the near term. This category also includes derivative financial instruments entered
into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind
AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as
effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
Financial liabilities designated upon initial recognition at FVTPL are designated as such at the initial date of
recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value
gains or losses attributable to changes in own credit risk are recognised in OCI. These gains or losses are not
subsequently transferred to the statement of profit and loss.
However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of
such liability are recognised in the statement of profit and loss. The Company has not designated any financial
liability as FVTPL.
Loans and Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in the statement of profit and loss over the period of the borrowings using the effective
interest method. After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortised cost using the effective interest rate method. Gains and losses are recognised in the statement of
profit and loss when the liabilities are derecognised as well as through the effective interest rate 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 effective interest rate. The effective interest rate amortisation is included
as finance costs in the statement of profit and loss.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as
the derecognition of the original liability and the recognition of a new liability. The difference in the respective
carrying amounts is recognised in the statement of profit and loss.
Derivative financial instruments
The Company uses derivative financial instruments such as foreign exchange forward contracts, option contracts
and swap contracts to mitigate its risk of changes in foreign currency exchange rates. The Company also uses
non-derivative financial instruments as part of its foreign currency exposure risk mitigation strategy. Derivatives
are classified as financial assets when the fair value is positive and as financial liabilities when the fair value is
negative.
Hedges of highly probable forecasted transactions
The Company classifies its derivative financial instruments that hedge foreign currency risk associated with
highly probable forecasted transactions as cash flow hedges and measures them at fair value. The effective
portion of such cash flow hedges is recorded in the Company's hedging reserve as a component of equity
and re-classified to the statement of profit and loss as part of the hedged item in the period corresponding to
the occurrence of the forecasted transactions. The ineffective portion of such cash flow hedges is recorded in
the statement of profit and loss as finance costs immediately. The Company also designates certain non¬
derivative financial liabilities, such as foreign currency borrowings from banks, as hedging instruments for
hedge of foreign currency risk associated with highly probable forecasted transactions. Accordingly, the
Company applies cash flow hedge accounting to such relationships. Remeasurement gain or loss on such
non-derivative financial liabilities is recorded in the Company's hedging reserve as a component of equity and
reclassified to the statement of profit and loss as part of the hedged item in the period corresponding to the
occurrence of the forecasted transactions.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or
exercised, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously
recognised in OCI, remains there until the forecasted transaction occurs. If the forecasted transaction is no
longer expected to occur, then the balance in OCI is recognised immediately in the statement of profit and
loss.
Hedges of recognised Assets and Liabilities
Changes in the fair value of derivative contracts that economically hedge monetary assets and liabilities in
foreign currencies, and for which no hedge accounting is applied, are recognised in the statement of profit
and loss. The changes in fair value of such derivative contracts, as well as the foreign exchange gains and
losses relating to the monetary items, are recognised in the statement of profit and loss. If the hedged item is
derecognised, the unamortised fair value is recognised immediately in the statement of profit and loss.
Hedges of changes in the interest rates
Consistent with its risk management policy, the Company uses interest rate swaps to mitigate the risk of
changes in interest rates. The Company does not use them for trading or speculative purposes.
Cash and Cash equivalents
Cash and cash equivalents consist of cash on hand, demand deposits and short-term, highly liquid investments
that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes
in value. For this purpose, “short-term” means investments having original maturities of three months or less
from the date of investment. Bank overdrafts that are repayable on demand form an integral part of the
Company's cash management and are included as a component of cash and cash equivalents for the purpose
of the statement of cash flows.
b) Business combinations and goodwill
Business combinations are accounted for using the acquisition method regardless of whether equity instruments
or other assets are acquired. The acquisition date is the date on which control is transferred to the acquirer.
Judgement is applied in determining the acquisition date and determining whether control is transferred from
one party to another. Control exists when the Company is exposed to, or has rights to variable returns from its
involvement with the entity and has the ability to affect those returns through power over the entity. In assessing
control, potential voting rights are considered only if the rights are substantive.
The Company determines that it has acquired a business when the acquired set of activities and assets
include an input and a substantive process that together significantly contribute to the ability to create outputs.
The acquired process is considered substantive if it is critical to the ability to continue producing outputs, and
the inputs acquired include an organized workforce with the necessary skills, knowledge, or experience to
perform that process or it significantly contributes to the ability to continue producing outputs and is considered
unique or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue
producing outputs.
The consideration transferred for the acquisition of a subsidiary is comprised of:
• fair values of the assets transferred;
• liabilities incurred to the former owners of the acquired business;
• equity interests issued by the Company;
• fair value of any asset or liability resulting from a contingent consideration arrangement; and
• fair value of any pre-existing equity interest in the subsidiary.
At the acquisition date, the identifiable assets acquired and liabilities and contingent liabilities assumed are,
with limited exceptions, measured initially at their fair values.
For each business combination, the Company elects whether to measure the non-controlling interests in the
acquiree at fair value or at the proportionate share of the acquiree's identifiable net assets.
Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages, the
acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is re-measured
to fair value at the acquisition date. Any gains or losses arising from such re-measurement are recognised in
the statement of profit and loss.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted
to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing
rate, being the rate at which a similar borrowing could be obtained from an independent financier under
comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Contingent consideration classified
as equity is not re-measured and its subsequent settlement is accounted for within equity. Amounts classified
as a financial liability are subsequently re-measured to fair value, with changes in fair value recognised in the
statement of profit and loss.
Goodwill is initially measured at cost, being the excess of the aggregate of:
• the consideration transferred;
• the amount of any non-controlling interest in the acquired entity; and
• the acquisition-date fair value of any previous equity interest in the acquired entity.
over the fair value of the net identifiable assets acquired. If the fair value of the net assets acquired is in excess
of the aggregate consideration transferred, the Company re-assesses whether it has correctly identified all of
the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts
to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net
assets acquired over the aggregate consideration transferred, then the gain is recognised in OCI and
accumulated in equity as capital reserve. However, if there is no clear evidence of bargain purchase, the entity
recognises the gain directly in equity as capital reserve, without routing the same through OCI.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose
of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to
each of the Group's cash-generating units that are expected to benefit from the combination, irrespective of
whether other assets or liabilities of the acquiree are assigned to those units.
c) Property, plant and equipment
Recognition and Measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses, if any. Cost includes expenditures that are directly attributable to the acquisition of the
asset. The cost of self-constructed assets includes the cost of materials and other costs directly attributable to
bringing the asset to a working condition for its intended use.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily
takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of
the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of
interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also
includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment. Capital work in progress is stated at
cost, net of accumulated impairment loss, if any. 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 and losses upon disposal of an item of property, plant and equipment are
determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment
and are recognised net within “Other income/ Selling and other expense” in the statement of profit and loss.
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of
the item if it is probable that the future economic benefits embodied within the part will flow to the Company
and its cost can be measured reliably. The costs of repairs and maintenance are recognised in the statement
of profit and loss as incurred.
Items of property, plant and equipment acquired through exchange of non-monetary assets are measured at
fair value, unless the exchange transaction lacks commercial substance or the fair value of either the asset
received or asset given up is not reliably measurable, in which case the asset exchanged is recorded at the
carrying amount of the asset given up.
Depreciation
Depreciation is recognised in the statement of profit and loss on a straight line basis over the estimated useful
lives of property, plant and equipment. Land is not depreciated but subject to impairment. Depreciation methods,
useful lives and residual values are reviewed at each reporting date and any changes are considered
prospectively.
Schedule II to the Companies Act, 2013 (“Schedule”) prescribes the useful lives for various classes of tangible
assets. For certain class of assets, based on the technical evaluation and assessment, the Company believes
that the useful lives adopted by it best represent the period over which an asset is expected to be available for
use. Accordingly, for these assets, the useful lives estimated by the Company are different from those prescribed
in the Schedule.
d) Intangible Assets
Intangible assets other than acquired in a business combination are measured at cost at the date of acquisition.
Following initial recognition, intangible assets are carried at cost less any accumulated amortization and
accumulated impairment losses, if any.
Research costs are expensed as incurred. Internally generated intangible asset arising from development
activity is recognized at cost on demonstration of its technical feasibility, the intention and ability of the company
to complete, use or sell it, only if, it is probable that the asset would generate future economic benefit and the
expenditure attributable to the said assets during its development can be measured reliably.
An item of Intangible assets is derecognised upon disposal or when no future economic benefits are expected
to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of
Intangible assets are determined as the difference between the sales proceeds and the carrying amount of the
asset and is recognised in the profit or loss.
e) Leases
Company as a lessee
The Company assesses at contract inception whether a contract is or contains a lease, which applies if the
contract conveys the right to control the use of the identified asset for a period of time in exchange for
consideration. The Company recognises a right-of-use asset at the commencement date of the lease, i.e. the
date the underlying asset is available for use. Assets and liabilities arising from a lease are initially measured
on a present value basis. Lease liabilities include the net present value of the following lease payments to be
made over the lease term:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payment that are based on an index or a rate, initially measured using the index or rate as
at the commencement date
• amounts expected to be payable by the Company under residual value guarantees
• the exercise price of a purchase option if the Company is reasonably certain to exercise that option, and
• payments of penalties for terminating the lease, if the lease term reflects the Company exercising that
option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Company, then the lessee's incremental borrowing
rate is used. Such borrowing rate is calculated as the rate that the individual lessee would have to pay to
borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic
environment with similar terms, security and conditions. The Company's lease liabilities are included in
borrowings.
Lease payments are allocated between principal and interest cost. The interest cost is charged to statement of
profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period.
Right-of-use assets are measured at cost less accumulated depreciation and accumulated impairment
comprised of the following:
• the amount of the initial measurement of lease liability
• any lease payments made at or before the commencement date less any lease incentives received
• any initial direct costs, and
• restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on
a straight-line basis. Payments associated with short-term leases of equipment and vehicles and all leases of
low-value assets are recognised on a straight-line basis as an expense in the statement of profit and loss.
Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment
and small items of office furniture.
The right-of-use assets are initially recognised on the balance sheet at cost, which is calculated as the amount
of the initial measurement of the corresponding lease liability, adjusted for any lease payments made at or
prior to the commencement date of the lease, any lease incentive received and any initial direct costs incurred
by the Company.
Company as a lessor:
At the inception of the lease the Company classifies each of its leases as either an operating lease or a finance
lease. The Company recognises lease payments received under operating leases as income on a straight¬
line basis over the lease term. In case of a finance lease, finance income is recognised over the lease term
based on a pattern reflecting a constant periodic rate of return on the lessor's net investment in the lease.
When the Company is an intermediate lessor it accounts for its interests in the head lease and the sub-lease
separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising
from the head lease, not with reference to the underlying asset. If a head lease is a short term lease to which
the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.
Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the
contract is classified as a finance lease.
If an arrangement contains lease and non-lease components, the Company applies Ind AS 115 “Revenue
from Contracts with Customers” to allocate the consideration in the contract.
f) Inventories
Inventories are valued at the lower of cost and net realisable value. Inventories consist of work-in-progress and
finished goods and are measured at the lower of cost and net realisable value.
The cost of all categories of inventories is based on the weighted average method. Cost includes expenditures
incurred in acquiring the inventories, conversion costs and other costs incurred in bringing them to their
existing location and condition.
In the case of finished goods and work-in-progress, cost includes an appropriate share of overheads based
on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs
of completion and selling expenses.
The factors that the Company considers in determining the provision for slow moving and other non-saleable
inventory include estimated shelf life, planned product discontinuances, price changes and introduction of
competitive new products, to the extent each of these factors impact the Company's business and markets.
The Company considers all these factors and adjusts the inventory provision to reflect its actual experience on
a periodic basis.
g) Impairment
Non-financial assets
The carrying amounts of the Company's non-financial assets, other than inventories and deferred tax assets
are reviewed at each reporting date to determine whether there is any indication of impairment. If any such
indication exists, then the asset's recoverable amount is estimated. For goodwill and intangible assets that
have indefinite lives or that are not yet available for use, an impairment test is performed each year at 31
March.
The recoverable amount of an asset or cash-generating unit (as defined below) is the greater of its value in use
and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset or the cash-generating unit. For the purpose of impairment testing,
assets are grouped together into the smallest group of assets that generate cash inflows from continuing use
that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating
unit”).
The goodwill acquired in a business combination is, for the purpose of impairment testing, allocated to cash¬
generating units that are expected to benefit from the synergies of the combination.
An impairment loss is recognised in the statement of profit and loss if the estimated recoverable amount of an
asset or its cash-generating unit is lower than its carrying amount. Impairment losses recognised in respect of
cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units
and then to reduce the carrying amount of the other assets in the unit on a pro-rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses
recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed its recoverable amount, nor exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognised. Goodwill that
forms part of the carrying amount of an investment in joint venture is not recognised separately, and therefore
is not tested for impairment separately. Instead, the entire amount of the investment in joint venture is tested
for impairment as a single asset when there is objective evidence that the investment in joint venture may be
impaired.
h) Employee Benefits
Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the
amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount
as a result of past service provided by the employee and the obligation can be estimated reliably.
Defined contribution plans
The Company's contributions to defined contribution plans are charged to the statement of profit and loss as
and when the services are received from the employees.
Defined benefit plans
The liability in respect of defined benefit plans and other post-employment benefits is calculated using the
projected unit credit method consistent with the advice of qualified actuaries. The present value of the defined
benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-
quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have
terms to maturity approximating to the terms of the related defined benefit obligation. In countries where there
is no deep market in such bonds, the market interest rates on government bonds are used. The current
service cost of the defined benefit plan, recognized in the statement of profit and loss in employee benefit
expense, reflects the increase in the defined benefit obligation resulting from employee service in the current
year, benefit changes, curtailments and settlements. Past service costs are recognized immediately in the
statement of profit and loss.
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. Actuarial gains and losses arising from experience adjustments and changes in actuarial
assumptions for defined benefit obligation and plan assets are recognized in OCI in the period in which they
arise.
When the benefits under a plan are changed or when a plan is curtailed, the resulting change in benefit that
relates to past service or the gain or loss on curtailment is recognised immediately in the statement of profit
and loss. The Company recognises gains or losses on the settlement of a defined benefit plan obligation when
the settlement occurs.
Termination benefits
Termination benefits are recognised as an expense in the statement of profit and loss when the Company is
demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate
employment before the normal retirement date, or to provide termination benefits as a result of an offer made
to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognised as an
expense in the statement of profit and loss if the Company has made an offer encouraging voluntary redundancy,
it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.
Other long-term employee benefits
The Company's net obligation in respect of other long-term employee benefits is the amount of future benefit
that employees have earned in return for their service in the current and previous periods. That benefit is
discounted to determine its present value. Re-measurements are recognised in the statement of profit and
loss in the period in which they arise.
Compensated absences
The Company's current policies permit certain categories of its employees to accumulate and carry forward a
portion of their unutilised compensated absences and utilise them in future periods or receive cash in lieu
thereof in accordance with the terms of such policies. The Company measures the expected cost of
accumulating compensated absences as the additional amount that the Company incurs as a result of the
unused entitlement that has accumulated at the reporting date. Such measurement is based on actuarial
valuation as at the reporting date carried out by a qualified actuary.
i) Share Based Payments
Equity settled share-based payment transactions
The grant date fair value of options granted to employees is recognised as an employee benefit expense, in
the statement of profit and loss, with a corresponding increase in equity, over the period that the employees
become unconditionally entitled to the options. The amount recognised as an expense is adjusted to reflect
the number of awards for which the related service and performance conditions are expected to be met, such
that the amount ultimately recognised is based on the number of awards that meet the related service and
performance conditions at the vesting date. The expense is recorded for each separately vesting portion of
the award as if the award was, in substance, multiple awards. The increase in equity recognised in connection
with share-based payment transaction is presented as a separate component in equity under “share-based
payment reserve”. The amount recognised as an expense is adjusted to reflect the actual number of stock
options that vest.
Cash settled share-based payment transactions
The fair value of the amount payable to employees in respect of share-based payment transactions which are
settled in cash is recognised as an expense, with a corresponding increase in liabilities, over the period during
which the employees become unconditionally entitled to payment. The liability is re-measured at each reporting
date and at the settlement date based on the fair value of the share-based payment transaction. Any changes
in the liability are recognised in the statement of profit and loss.
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