1.4 Material Accounting Policies

a) Property, plant and equipment (‘PPE’) and
Capital Work-in-Progress

i) Recognition and initial measurement

Land

Freehold land is carried at historical cost. For
freehold land, as no finite useful life can be
determined, related carrying amounts are
not amortized.

Leasehold land is carried at historical cost. For
leasehold land, cost of land amortized over
lease term as per lease agreement.

Other tangible assets

PPE other than land, is initially recognized at
acquisition cost or construction cost.

The cost of an item of PPE comprises:

• its purchase price, including import duties
and non-refundable purchase taxes, after
deducting trade discounts and rebates.

• any costs directly attributable to bringing
the asset to the location and condition
necessary for it to be capable of operating
in the manner intended by management.

Where cost of a part of an asset (asset
component) is material to total cost of the
asset and useful life of that part is different
from the useful life of the remaining asset,
useful life of that material part is determined
separately, and such asset component is
depreciated over its separate useful life.

Income and expenses related to the incidental
operations, not necessary to bring the item
to the location and condition necessary for
it to be capable of operating in the manner
intended by management, are recognized in
the Statement of profit and loss.

Capital Work-in-Progress

PPE which are not ready for intended use as
on the date of Balance sheet are disclosed as
Capital work-in-progress.

Advances paid towards the acquisition of
property, plant and equipment outstanding
at each reporting date is classified as capital
advances under ‘other non-current assets' and
the cost of assets not put to use before such
date are disclosed under ‘Capital work-in¬
progress'.

ii) Subsequent expenditure

Subsequent costs are included in the carrying
amount of asset or recognized as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated
with the item will flow to the Company and

the cost of the item can be measured reliably.
The carrying amount of any component
accounted for as a separate asset is de¬
recognized when replaced. All other repairs
and maintenance are charged to Statement
of Profit and Loss during the year in which they
are incurred.

iii) Depreciation method, useful lives, residual
value, and impairment

PPE are subsequently measured at cost less
accumulated depreciation and impairment
losses, if any.

A depreciable amount for assets is the cost of
an asset or other amount substituted for cost
less its estimated residual value. Depreciation
on PPE (other than leasehold land) is provided
based on useful life of the assets as estimated
by the management on Straight Line Method.
The useful lives used are in agreement with
those specified in Part ‘C' of Schedule II to
the Companies Act, 2013 except in respect
of following category of property, plant and
equipment where the useful life is considered
differently based on technical evaluation,
taking into account the nature of the asset
and the estimated usage basis management's
best judgement of economic benefits from
those classes of assets.

Management believes that such estimated
useful lives are realistic and reflect a fair
approximation of the period over which the
assets are likely to be used.

Premium paid on leasehold lands are
amortized over the period of lease.

Buildings constructed on leasehold land are
depreciated based on the management
estimate of useful life, where the lease period

is beyond the life of the building. In other
cases, buildings constructed on leasehold land
are amortized over the primary lease period of
the land.

Depreciation on addition to/deductions from,
owned assets is calculated pro rata to the
period of use. The residual values, useful lives,
and method of depreciation are reviewed at
the end of each financial year, and the effect
of any change in the estimates of useful life/
residual value is adjusted prospectively. PPE
other than land is tested for impairment
whenever events or changes in circumstances
indicate that the carrying amount may not
be recoverable.

iv) De-recognition

An item of PPE and any significant part initially
recognized is de-recognized upon disposal
or when no future economic benefits are
expected from its use. Any gain or loss arising
from de-recognition of an item of PPE is
determined as the difference between the net
disposal proceeds and the carrying amount of
the asset and is accordingly recognized in the
Statement of Profit and Loss.

b) Goodwill, other intangible assets and
intangible assets under development

i) Recognition and initial measurement
Goodwill

Goodwill represents the future economic
benefits arising from a business combination
that are not individually identified and
separately recognized. Goodwill is carried
at cost less accumulated impairment losses.
(Refer Note 34 for a description of impairment
testing procedures)

Other Intangible assets

Other intangible assets are initially measured
at cost. Such assets are recognized where it is
probable that the future economic benefits
attributable to the assets will flow to the
Company and the cost of the asset can be
measured reliably.

The cost of an intangible asset comprises:

• its purchase price, including any import
duties and other taxes (other than those
subsequently recoverable from the taxing
authorities)

• any directly attributable expenditure on
making the asset ready for its intended use.

Intangible assets acquired in a business
combination are recognized at fair value at
the acquisition date.

Income and expenses related to the incidental
operations, not necessary to bring the item
to be capable of operating in the manner
intended by management, are recognized in
the Statement of profit and loss.

Intangible assets under development

Intangibles which are not ready for
intended use as on the date of Balance
sheet are disclosed as Intangible assets
under development.

Advances paid for the acquisition/
development of intangible assets which
are outstanding at the reporting date are
classified under ‘Capital Advances' under
‘other non-current assets'.

ii) Subsequent expenditure

Subsequent expenditure is capitalized only
when it increases the future economic benefit'
embodied in the specific asset to which it
relates. All other expenditures are recognized
in the statement of profit or loss as incurred.

iii) Amortization method, useful lives and
residual value

Intangible assets are subsequently measured
at cost less accumulated amortization and
impairment losses, if any.

All intangible assets with finite useful life
are amortized on a straight-line basis over
the estimated useful lives, and a possible
impairment is assessed if there is an indication
that the intangible asset may be impaired. The
amortization period and amortization method
for all intangible assets are reviewed at each
reporting date. Changes, if any, are accounted
for as changes in accounting estimates.

Intangible assets for which there is no
foreseeable limit to the period over which they
are expected to generate net cash inflows
are considered to have an indefinite life. The
assessment of which is reviewed annually
to determine whether it continues, if not, it
is impaired or changed prospectively basis
revised estimates.

iv) De-recognition

An intangible asset is de-recognized on
disposal, or when no future economic benefits
are expected from use. Gains or losses arising
from derecognition of an intangible asset,
measured as the difference between the net
disposal proceeds and the carrying amount of
the asset, are recognized in the Statement of
Profit and Loss.

c) Research and development cost

• Research cost

Revenue expenditure on research is charged to
Statement of profit and loss under the respective
heads of accounts in the period in which it
is incurred.

• Development cost

Development expenditure on new product is
capitalized as intangible asset, if the Company can
demonstrate all of the following:

• the technical feasibility of completing the
intangible asset so that it will be available for
use or sale;

• its intention to complete the development of
intangible asset and use or sell it;

• its ability to use or sell the intangible asset;

• How the asset will generate future economic
benefits including the existence of a market for
output of the intangible asset or the intangible
asset itself or if it is to be used internally, the
usefulness of the intangible asset;

• the availability of adequate technical,
financial and other resources to complete the
development and to use or sell the intangible
asset; and

• its ability to measure the expenditure
attributable to the intangible asset during the
development reliably.

Development costs on the intangible assets,
fulfilling the criteria are amortized over its useful
life, otherwise are expensed in the period in which
they are incurred.

d) Leases

The Company as a lessee:

The Company's lease asset classes primarily consist
of leases for land and buildings. 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:

• the contract contains an identified asset, which
is either explicitly identified in the contract

or implicitly specified by being identified
at the time the asset is made available to
the Company;

• the Company has the right to obtain
substantially all of the economic benefits from
use of the identified asset throughout the period
of use, considering its rights within the defined
scope of the contract; and

• the Company has the right to direct the use of
the identified asset throughout the period of
use. The Company assesses whether it has the
right to direct ‘how and for what purpose' the
asset is used throughout the period of use.

At the date of commencement of the lease,
the Company recognizes a Right-of-Use asset
(‘ROU') and a corresponding lease liability for all

lease arrangements in which it is a lessee, except
for leases with a term of twelve months or less
(short-term leases) and low value leases. For these
short-term and low value leases, the Company
recognizes the lease payments as an operating
expense on a straight-line basis over the term of
the lease.

Certain lease arrangements include the option to
extend or terminate the lease before the end of the
lease term. ROU assets and lease liabilities include
these options when it is reasonably certain that
they will be exercised.

The Company makes an assessment of the
expected lease term on a lease-by-lease basis
and thereby assesses whether it is reasonably
certain that any options to extend or terminate the
contract will be exercised. The lease term in future
periods is reassessed to ensure that the lease term
reflects the current economic circumstances.

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.

The 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 impairment testing, the recoverable amount
(i.e., the higher of the fair value less cost to sell and
the value-in-use) is determined on an individual
asset basis unless the asset does not generate
cash flows that are largely independent of those
from other assets. In such cases, the recoverable
amount is determined for the Cash Generating Unit
(‘CGU') to which the asset belongs.

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 interest rate implicit in the lease or, if
not readily determinable, using the incremental
borrowing rates in the country of domicile of

these leases. Lease liabilities are remeasured with
a corresponding adjustment to the related ROU
asset if the Company changes its assessment
whether it will exercise an extension or a
termination option.

Lease payments included in the measurement of
the lease liability are made up of fixed payments
(including in-substance fixed), variable payments
based on an index or rate, amounts expected to
be payable under a residual value guarantee and
payments arising from options reasonably certain
to be exercised.

Subsequent to initial measurement, the liability
will be reduced for payments made and increased
for interest. It is remeasured to reflect any
reassessment or modification, or if there are
changes in in-substance fixed payments. When
the lease liability is remeasured, the corresponding
adjustment is reflected in the right-of-use asset, or
profit and loss if the right-of-use asset is already
reduced to zero.

Lease liability and ROU assets have been
separately presented in the Balance sheet and
lease payments have been classified as financing
cash flows.

e) 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 also include
derivative contracts such as foreign currency
forward contracts, interest rate swaps and
currency options; and embedded derivatives in the
host contract.

Financial assets

i) Initial recognition and measurement

All financial assets are recognized 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 are
expensed off in Statement of Profit and Loss.
However, Company's trade receivables that do
not contain a significant financial component

are measured at transaction price under
Ind-AS 115 “Revenue from Contracts with
Customers”. Purchases or sales of financial
assets that require delivery of assets within
a time frame established by regulation or
convention in the marketplace (regular way
trades) are recognized on the trade date,
i.e., the date that the Company commits to
purchase or sell the asset.

ii) Classification

The Company classifies its financial assets in
the following measurement categories:

• those measured at amortized cost, and

• those to be measured at fair value either
through other comprehensive income
(‘FVOCI') or fair value through profit or loss
(‘FVTPL') on the basis of its business model
for managing the financial assets and the
contractual cash flow characteristics of the
financial asset.

iii) Subsequent measurement

After initial recognition, financial assets
are measured at Fair value through Other
Comprehensive Income (‘FVOCI') or through
profit or loss (‘FVPL') or amortized cost.

All financial assets except for those at
FVTPL or at FVOCI are subject to review for
impairment at least at each reporting date
to identify whether there is any objective
evidence that a financial asset or a group of
financial assets is impaired.

• Equity instruments

All equity investments in scope of Ind-AS 109
are measured at fair value. Equity instruments
which are held for trading are classified
as FVTPL.

Investments in subsidiaries 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, the difference

between net disposal proceeds and the
carrying amounts are recognized in the
Statement of Profit and Loss.

• Debt instruments

A ‘debt instrument' is measured at the
amortized cost if both the following conditions
are met:

• The asset is held within a business model
whose objective is to hold assets for
collecting contractual cash flows, and

• 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.

Subsequent measurement of debt instruments
depends on the Company's business model
for managing the asset and the cash flow
characteristics of the asset. There are three
measurement categories into which the
Company classifies its debt instruments:

• Amortized 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 amortized cost.

These are measured by applying the effective
interest rate (EIR) method. The EIR method
allocates interest income over the relevant
period by applying the EIR (that is the interest
rate that exactly discounts expected future
cash flows to the gross carrying amount of the
asset).

A gain or loss on a debt investment
(unhedged) that is subsequently measured at
amortized cost is recognized in the Statement
of profit and loss when the asset is de¬
recognized or impaired. Interest income from
these financial assets is included in finance
income using the EIR method.

• Fair value through other comprehensive
income (‘FVOCI’)

Financial assets that are held within a
business model whose objective is achieved
by both, selling financial assets and

collecting contractual cash flows that are
solely payments of principal and interest,
are subsequently measured at fair value
through other comprehensive income. Fair
value movements are recognized in the other
comprehensive income (OCI).

Interest income is measured using the EIR
method and impairment losses, if any are
recognized in the statement of profit and loss.
On derecognition, cumulative gain or loss
previously recognized in OCI is reclassified
from the equity to ‘other income' in the
statement of profit and loss.

• Fair value through profit or loss (‘FVTPL’)

A financial asset not classified as either
amortized cost or FVOCI, is classified as
FVTPL. Such financial assets are measured
at fair value with all changes in fair value,
including interest income and dividend income
if any, recognized in ‘other income' in the
statement of profit and loss.

iv) De-recognition

A financial asset (or where applicable, a part
of a financial asset or part of similar assets) is
primarily de-recognized (i.e., removed from
the Company's balance sheet) when:

• The rights to receive cash flows from the
asset have expired, or

• 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' arrangement; and 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 recognize
the transferred asset to the extent of the
Company's continuing involvement. In that
case, the Company also recognizes an
associated liability. The transferred assets
and the associated liability are measured on
a basis that reflects the rights and obligations
that the Company has retained.

Continuing involvement that takes the form
of a guarantee over the transferred asset is
measured at the lower of the original carrying
amount of the asset and the maximum
amount of consideration that the Company
could be required to repay.

On derecognition of financial asset in
its entirety, the difference between the
carrying amount measured at the date of
derecognition and the consideration received
is recognized in profit or loss.

If the Company enters into transactions
whereby it transfers assets recognized on
its balance sheet but retains either all or
substantially all of the risks and rewards of the
transferred assets, the transferred assets are
not de-recognized, and the proceeds received
are recognized as a collateralized borrowing.

v) Impairment of financial assets

The Company assesses on a forward-looking
basis the expected credit losses associated
with its assets carried at amortized cost. The
impairment methodology applied depends on
whether there has been a Material increase in
credit risk.

The Company applies expected credit
loss (‘ECL') model for recognition and
measurement of impairment loss on the
following financial assets and credit risk
exposure based on change in credit quality
since initial recognition:

• Financial assets that are debt instruments,
and are measured at amortized cost

• Trade receivables using the simplified
approach within Ind-AS 109, using a
provision matrix in the determination of the
lifetime expected credit losses. During this
process the probability of non-payment
of the trade receivables is assessed. This
probability is then multiplied by the amount
of the expected loss arising from default
to determine the lifetime expected credit
loss for the trade receivables. This does not
require the Company to track changes in
credit risk. Rather, it recognizes impairment
loss allowance based on lifetime ECLs
at each reporting date, right from its
initial recognition.

In case the Company identifies any trade
receivables as doubtful/bad, then it
supersedes the above modus operandi, and
the doubtful/bad receivables are provided to
the extent is doubtful/bad.

ECL allowance recognized (or reversed)
during the period is recognized as expense
(or income) in the statement of profit and loss
under the head ‘Other expenses'.

vi) Write-off

The gross carrying amount of a financial
asset is written off when the Company has
no reasonable expectations of recovering
the financial asset in its entirety or a portion
thereof. A write-off constitutes a de¬
recognition event.

Financial liabilities

The Company's financial liabilities comprise
of borrowings including bank overdrafts
and derivative financial instruments, trade
payable and other liabilities.

i) Initial recognition and measurement

Financial liabilities are initially measured
at fair value. In the case of loans and
borrowings and payables, financial
liability is recognized net of directly
attributable transaction costs.

ii) Classification

The Company classifies all financial
liabilities as subsequently measured
at amortized cost, except for financial
liabilities at fair value through profit or
loss. Such liabilities, including derivatives
that are liabilities, shall be subsequently
measured at fair value.

iii) Subsequent measurement

Financial liabilities are subsequently
measured at amortized cost using
the EIR method. The EIR is a method
of calculating the amortized cost of
a financial liability and of allocating
interest expense over the relevant
period at an EIR. The EIR is the rate that
exactly discounts estimated future
cash payments through the expected
life of the financial liability, or, where
appropriate, a shorter period.

Financial liabilities carried at fair value
through profit or loss are measured at
fair value with all changes in fair value
recognized in the Statement of profit
and loss.

iv) De-recognition

Financial liability is de-recognized
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 recognized in the Statement
of profit and loss.

Other financial liabilities

Other financial liabilities are measured
at amortized cost using the effective
interest method.

at FVTPL, are subsequently measured at
the higher of:

• The amount of loss allowance
determined in accordance with
impairment requirements of Ind-AS
109; and

• The amount initially recognized less,
when appropriate, the cumulative
amount of income recognized.

f) Fair Value Measurement:

The Company measures financial instruments such
as derivatives at fair value at each reporting date.

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. The fair value measurement
is based on the presumption that the transaction
to sell the asset or transfer the liability takes
place either:

• In the principal market for the asset or
liability, or

• In the absence of a principal market, in the most
advantageous market for the asset or liability
accessible to the Company.

The principal or the most advantageous market
must be accessible by the Company.

The fair value of an asset or a liability is measured
using the assumptions that market participants
would use when pricing the asset or liability,
including assumptions about risk, assuming that
market participants act in their economic best
interest. A fair value measurement of a non¬
financial asset takes into account a market
participant's ability to generate economic benefits
by using the asset in its highest and best use or by
selling it to another market participant that would
use the asset in its highest and best use.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximizing the use of relevant observable inputs
and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is
measured or disclosed in the standalone financial
statements are categorized within the fair value
hierarchy, described as follows, based on the
lowest level input that is significant to the fair value
measurement as a whole:

Level 1: Financial instruments measured using
quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Company
can access at measurement date are included in
Level 1;

Level 2: The fair value of financial instruments that
are not traded in an active market is determined
using valuation techniques which maximize
the use of observable market data and rely as
little as possible on entity-specific estimates.

If all significant inputs require to fair value an
instrument are observable, the instrument is
included in Level 2; and

Level 3: If one or more of the significant inputs
is not based on observable market data, the
instrument is included in level 3.

For assets and liabilities that are recognized in
the standalone financial statements regularly,
the Company determines whether transfers
have occurred between levels in the hierarchy by
reassessing categorization (based on the lowest
level input that is significant to the fair value
measurement as a whole) at the end of each
reporting period.

g) Impairment of non-financial assets

The Company assesses at each reporting date
whether there is any indication that an asset
may be impaired.

An asset is impaired when the carrying
amount of the asset exceeds its recoverable
amount. The recoverable amount is higher of
the fair value of asset less costs of disposal
and value in use, which means the present
value of future cash flows expected to arise
from the continuing use of the asset and its
eventual disposal discounted to their present
value using a pre-tax discount rate that
reflects current market assessments of the
time value of money and the risks specific to
the asset.

For the purposes of assessing impairment,
assets are grouped at their lowest levels for
which there are separately identifiable cash
inflows which are largely independent of the
cash inflows from other assets or groups of
assets (cash generating units).

Losses are recognized in the Statement of
Profit and Loss and reflected in an allowance
account. When the Company considers that
there are no realistic prospects of recovery
of the asset, the relevant amounts are
written off.

An impairment loss for an asset is reversed
if, and only if, the reversal can be related
objectively to an event occurring after the
impairment loss was recognized or relates to
a change in the estimate of the recoverable
amount in the previous periods.

The carrying amount of an asset is increased
to its revised recoverable amount, provided
that this amount does not exceed the carrying
amount that would have been determined
(net of any accumulated amortization or
depreciation) had no impairment loss been
recognized for the asset in prior years.

h) Inventories

Inventories are initially recognized at cost, and
subsequently at the lower of cost and net realizable
value. Cost comprises all costs of purchase, costs of
conversion and other costs incurred in bringing the
inventories to their present location and condition.
Weighted average cost is used to determine the
cost of ordinarily interchangeable items.

Raw materials, packaging materials and stores
and spare parts:

Cost includes purchase price, (excluding those
subsequently recoverable by the enterprise from
the concerned revenue authorities), freight inwards
and other expenditure incurred in bringing such
inventories to their present location and condition.
In determining the cost, the weighted average cost
method is used.

The aforesaid items are valued at the lower of cost
and net realizable value. However, these inventories
are valued at net realizable value if the finished

products in which they are to be incorporated are
expected to be sold at a loss.

Work in progress, manufactured finished goods
and traded goods:

The cost of work in progress and manufactured
finished goods is determined on a weighted
average basis and comprises direct material, cost
of conversion and other costs incurred in bringing
these inventories to their present location and
condition. The cost of traded goods is determined
on a weighted average basis.

The aforesaid items are valued at the lower of cost
and net realizable value. Provision for obsolescence
on inventories is considered on the basis of
management's estimate based on demand and
market of the inventories.

Net realizable value is the estimated selling price in
the ordinary course of business, less the estimated
cost of completion and the estimated costs
necessary to make the sale.

The comparison of cost and net realizable value is
made on an item-by-item basis.

i) Cash and cash equivalents

Cash and cash equivalents include cash on hand,
cash at banks, call deposits and other short-term,
highly liquid investments with original maturities of
three months or less that are readily convertible to
known amounts of cash and which are subject to
an insignificant risk of changes in value. Cash and
cash equivalents consist of balances with banks
which are unrestricted for withdrawal and usage.

For the purposes of the cash flow statement,
cash and cash equivalents include cash on hand,
cash in banks and short-term deposits net of
bank overdraft.

j) Business combination

The Company applies the acquisition method
in accounting for business combinations. The
consideration transferred by the Company to
obtain control of a business is calculated as
the sum of the fair values of assets transferred,
liabilities incurred, and the equity interests
issued by the Company as at the acquisition
date i.e., date on which it obtains control of

the acquiree which includes the fair value of
any asset or liability arising from a contingent
consideration arrangement.

Directly attributable transaction costs are
included in the initial measurement of investments
in subsidiaries accounted for at cost. Identifiable
assets acquired and liabilities assumed in a
business combination are measured initially at
their fair values on the acquisition date. Intangible
Assets acquired in a Business Combination and
recognized separately from Goodwill are initially
recognized at their fair value at the acquisition
date (which is regarded as their cost).

Subsequent to initial recognition, intangible Assets
acquired in a Business Combination are reported
at cost less accumulated amortization and
accumulated impairment losses, on the same basis
as intangible assets that are acquired separately.

Goodwill is measured as the excess of the
aggregate of the consideration transferred
and the amount recognized for non-controlling
interests, and any previous interest held, over the
net identifiable assets acquired and liabilities
assumed. Such goodwill is tested annually
for impairment.

k) Employee benefit plans

i) Short-term employee benefits:

A Short-term employee benefits including
salaries, wages, short term compensated
absences (such as a paid annual leave) where
the absences are expected to occur within
twelve months after the end of the period
in which the employees render the related
service, performance incentives, bonuses
payable and ex-gratia etc. are payable
within twelve months after the end of the
period in which the employees render the
related services, and non-monetary benefits
for current employees are estimated and
measured on an undiscounted basis.

ii) Post-employment benefits:

• Defined contribution plans:

A defined contribution plan is a plan under
which the Company pays fixed contributions in

respect of the employees into a separate fund.
The Company has no legal or constructive
obligation to pay further contributions after
its payment of the fixed contribution. The
contributions made by the Company towards
defined contribution plans, namely, State
governed provident fund, superannuation
fund, employee state insurance scheme,
employee pension scheme and labour welfare
fund, are charged to the profit or loss in the
period to which the contributions relate.

• Defined benefit plans:

The Company has an obligation towards
gratuity which is being considered as defined
benefit plan covering eligible employees.
Under the defined benefit plan, the amount
that an employee will receive on retirement
is defined by reference to the employee's
length of service, final salary, and other
defined parameters. The legal obligation for
any benefits remains with the Company, even
if plan assets for funding the defined benefit
plan have been set aside.

The Company's obligation towards defined
benefit plan is determined using the Projected
Unit Credit Method, with actuarial valuations
being carried out at each reporting date,
which recognizes each period of service as
giving rise to additional unit of employee
benefit entitlement and measures each unit
separately to build up the final obligation.

The obligation is measured at the present
value of the estimated future cash flows. The
discounting rate used for determining the
present value of the obligation under defined
benefit plans, is based on the market yields
on government securities as at the reporting
date, having maturity periods approximately
to the terms of related obligations.

Changes in the present value of the
defined benefit obligation resulting from
Investment plan amendments are recognized
immediately in the Statement of profit or loss
as past service cost.

The liability recognized in the statement of
financial position for defined benefit plans
is the present value of the Defined Benefit

Obligation (DBO) at the reporting date less
the fair value of plan assets. Management
estimates the DBO annually with the
assistance of independent actuaries.

Actuarial gains/losses resulting from re¬
measurements of the liability/asset are
included in Other Comprehensive Income.

In the case of funded plans, the fair value
of the plan asset is reduced from the gross
obligations under the defined benefit plans to
recognize the obligation on a net basis.

iii) Other long-term employee benefits:

Liability in respect of compensated absences
becoming due or expected to be availed more
than one-year after the reporting date is
estimated on the basis of actuarial valuation
performed by an independent actuary using
the projected unit credit method.

Actuarial gains and losses arising from
past experience and changes in actuarial
assumptions are charged to statement of
profit and loss in the period in whn which such gains
or losses are determined.

iv) Termination benefits:

Termination benefits are recognized as
an expense in the period in which they
are incurred.

v) Share-based Payments:

Employees of the Company receive
remuneration in the form of Share-
based Payments in consideration of the
services rendered.

Under the equity settled share-based
payment, the fair value on the grant date of
the award given to employees is recognized
as ‘employee benefit expense' with a
corresponding increase in equity over the
vesting period.

The fair value of the options at the grant date
is calculated by an independent valuer basis
‘Black Scholes model'. At the end of each
reporting period, apart from the non-market
vesting condition, the expense is reviewed

and adjusted to reflect changes to the level
of options expected to vest. When the options
are exercised, the Company issues fresh
equity shares.