These financial statements have been prepared on a
historical cost basis except for the following material
items in the balance sheet which are measured on the
basis stated below and in accordance with the applicable
accounting policies:
2.1 Statement of compliance
The financial statements of the Company have been
prepared in accordance with Indian Accounting
Standards ('Ind AS’) notified under the Companies (Indian
Accounting Standards) Rules, 2015 (as amended from
time to time) and presentation requirements of Division
II of Schedule III to the Companies Act, 2013, (Ind AS
compliant Schedule III), as applicable to the financial
statements.
The financial statements are presented in Indian Rupees
('?') and all values are rounded to the nearest millions,
except when otherwise indicated.
2.3 Current and non-current classification
The Company presents assets and liabilities in
the balance sheet based on current/ non-current
classification. An asset is classified as current when it is:
• Expected to be realised or intended to be sold or
consumed in the normal operating cycle;
• Held primarily for the purpose of trading.
• Expected to be realised within twelve months after
the reporting period; or
• Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least
twelve months after the reporting date.
All other assets are classified as non-current.
A liability is current when:
• It is expected to be settled in the normal operating
cycle;
• It is held primarily for the purpose of trading;
• It is due to be settled within twelve months after the
reporting period; or
• It does not have the right at the end of the reporting
period to defer the settlement of the liability for at
least twelve months after the reporting date.
The Company classifies all other liabilities as non¬
current.
Deferred tax assets and liabilities are classified as non¬
current in accordance with Ind AS 12 - "Income Taxes."
The operating cycle is the time between the acquisition
of assets for processing and their realisation in cash or
cash equivalents. The Company has identified twelve
months as its operating cycle.
2.4 Critical estimates and judgements
The preparation of the financial statements, in
conformity with Ind AS, requires the management to
make judgements, estimates and assumptions that
affects the reported amounts of assets, liabilities,
income and expenses, the accompanying disclosures,
and the disclosure of contingent liabilities as at the date
of the financial statements.
Future results could differ from these estimates.
Estimates and underlying assumptions are reviewed on
an ongoing basis. The effects of changes in accounting
estimates are reflected in the financial statements in the
period in which estimates are revised and, if material, are
disclosed in the financial statements.
Significant areas of estimation of uncertainty and critical
judgments in applying accounting policies that have the
most significant effect on the amounts recognised in the
consolidated financial statements, are:
• Impairment assessment of investments and
goodwill, and evaluation of cash-generating units
(refer note 2.23) ;
• Revenue recognition and related cost estimation;
(refer note 2.15)
• Share-based payments; (refer note 2.18)
• Provision for income tax and recoverability of
deferred tax assets; (refer note 2.10)
• Fair Value measurement of financial instruments;
and (refer note. 2.21)
• Allowance for expected credit losses on trade
receivables and contract assets. (refer note 2.23)
2.5 Business combinations and goodwill
The Company accounts for its business combinations
under the acquisition method of accounting as
prescribed under Ind As 103. The consideration
transferred in a business combination is measured at fair
value, which is calculated as the sum of the acquisition
date fair value of the assets transferred by the Company,
liabilities incurred by the Company to the former
owners of the acquiree and the equity interest issued
by the Company in exchange for control of the acquiree.
Acquisition related costs are generally recognised in the
statement of profit and loss as incurred.
Goodwill is measured as the excess of the sum of the
consideration transferred over the net of the acquisition
date amounts of the identifiable assets acquired and the
liabilities assumed.
When the consideration transferred by the Company in
the business combination includes assets or liabilities
resulting from a contingent consideration arrangement,
the contingent consideration is measured at its
acquisition date fair value and included as part of the
consideration transferred in business combination.
Changes in the fair value of the contingent consideration
that qualify as measurement period adjustments
are adjusted retrospectively, with corresponding
adjustments against goodwill or capital reserve, as the
case may be. Measurement period adjustments are
adjustments that arise from the additional information
obtained during the 'measurement period’ (which
cannot exceed one year from the acquisition date)
about facts and circumstances that existed as on the
acquisition date.
The subsequent accounting for changes in the fair value
of the contingent consideration that do not qualify as
measurement period adjustments and are classified as
an asset or liability and are remeasured at fair value at
subsequent reporting dates with the corresponding gain
or loss being 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 acquisition
date. The discount rate used generally reflects weighted
average cost of capital, adjusted for risks specific to the
liability where appropriate.
After initial recognition, goodwill is measured at cost
less any accumulated impairment losses. For the
purpose of impairment testing, a cash generating unit
('CGU’) to which goodwill has been allocated is tested
for impairment annually or more frequently if there is an
indication that the unit may be impaired. Any impairment
loss for goodwill is recognised directly in the statement
of profit and loss. An impairment loss recognised for
goodwill is not reversed in the subsequent periods.
For the purposes of impairment testing, goodwill is
allocated to each of the Company’s cash generating
units that is expected to benefit from the synergies of
the combination.
2.6 Foreign currency translation
i) Functional and presentation currency
These financial statements are presented in Indian
Rupees ("?"), which is both the functional and
presentation currency of the Company.
ii) Transactions and balances
Foreign currency denominated monetary assets and
liabilities are translated into the relevant functional
currency at exchange rates prevailing at the balance
sheet date. The gains or losses resulting from such
translations are included in the statement of profit and
loss. Non-monetary assets and non-monetary liabilities
denominated in a foreign currency and measured at fair
value are translated at the exchange rate prevalent at the
date when the fair value was determined. Non-monetary
assets and non-monetary liabilities denominated in a
foreign currency and measured at historical cost are
translated at the exchange rate prevalent at the date of
the transaction.
Exchange differences on settlement or translation of
monetary items are recognised in profit or loss in the
period in which they arise.
2.7 Property, plant and equipment
Initial recognition and measurement
The cost of an item of property, plant and equipment
shall be recognised as an asset if, and only if 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.
Items of Property, plant and equipment (including
capital work-in-progress) are measured at cost, less
accumulated depreciation and impairment losses, if any.
Freehold land is carried at historical cost.
Cost of an item of property, plant and equipment
comprises its purchase price, including import duties
and non-refundable purchase taxes, after deducting
trade discounts and rebates, and any directly attributable
costs of bringing the asset to the location and condition
necessary for it to be capable of operating in the manner
intended by management, and estimated costs of
dismantling and removing the asset and restoring the
site on which it is located.
Subsequent expenditure is capitalized only if it meets
the above initial recognition criteria as an asset.
Depreciation
Depreciation is calculated on the cost of items of
property, plant and equipment less their estimated
residual values using the straight-line method over the
useful lives prescribed in Schedule II to the Companies
Act, 2013 except in respect of the following categories
of assets, in whose case the life of the assets has been
assessed based on technical advice, taking into account
the nature of the asset, the estimated usage of the
asset, the operating conditions of the asset, past history
of replacement, anticipated technological changes,
manufacturers’ warranties and maintenance support.
Freehold land is not depreciated.
*Buildings constructed over leasehold land are
depreciated over the lower of the remaining lease term
of land or the estimated useful life of the building
An item of property, plant and equipment 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 property, plant and equipment is determined
as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in 'other
income’ in the statement of profit and loss.
The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.
2.8 Intangible assets
Initial recognition and measurement:
Intangible assets are measured at cost.
The cost of intangible assets acquired in a business
combination, is initially recognised at their fair value at
the date of acquisition. An intangible asset is recognised
only if 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.
Subsequent measurement:
Subsequent to initial recognition, intangible assets are
measured at cost less accumulated amortisation and
accumulated impairment losses, if any.
Subsequent expenditure is capitalized only if it meets
the above initial recognition criteria.
Amortisation: Intangible assets are amortised over their
estimated useful life on a straight-line basis as follows.
Goodwill is not amortised.
An intangible asset is de-recognised on disposal, or
when no future economic benefits are expected from
use. Amortisation methods and useful lives are reviewed
at each financial year end and adjusted prospectively, if
appropriate.
Research and development costs
Research costs are expensed as incurred. Development
costs are expensed as incurred unless technical and
commercial feasibility of the project is demonstrated,
future economic benefits are probable, availability of
resources to complete the asset is established, the
Company has intention and ability to complete and
use the asset and the costs are reliably measured, in
which case such expenditure is capitalised. The amount
capitalised comprises expenditure that can be directly
attributed or allocated on a reasonable and consistent
basis for creating, producing and making the asset ready
for its intended use.
2.9 Leases
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. The
Company assesses whether a contract contains a lease,
at inception of a contract.
At the date of commencement of the lease, the
Company recognises 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
recognises the lease payments as an operating expense
on a straight-line basis over the term of the lease.
The Company has several lease contracts that include
extension and termination options. Management
exercises significant judgement in determining whether
these extension and termination options are reasonably
certain to be exercised.
i) Right-of-use assets
The right of use ('ROU') assets are initially recognised
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, if any and adjusted
for any remeasurement of lease liabilities.
Right of use 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. Right of use assets are evaluated for recoverability
whenever events or changes in circumstances indicate
that their carrying amounts may not be recoverable.
The right of use assets are also subject to impairment.
Refer to the accounting policies in note 2.23.
ii) Lease liabilities
The lease liability is initially measured at amortised cost,
being the present value of the future lease payments.
The lease payments are discounted using the interest
rate implicit in the lease or, the Company’s incremental
borrowing rate in the country of domicile of the leases
at the lease commencement date if the interest rate
implicit is not readily determinable.
Lease payments are allocated between the principal
and the interest cost. The interest cost is charged to
the statement of profit and loss over the lease period.
After the commencement date, the amount of the lease
liabilities is increased to reflect the accretion of interest
and reduced by the lease payments made and any change
in the assessment of extension or termination options.
Lease liabilities are remeasured with a corresponding
adjustment to the related right of use asset if there is
a modification, a change in the lease term, a change in
the lease payments (e.g., changes to future payments
resulting from a change in an index or rate used to
determine such lease payments).
Lease liability and ROU assets have been separately
presented in the balance sheet and lease payments have
been classified as financing cash flows.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition
exemption to leases that have a lease term of 12 months
or less from the commencement date and do not contain
a purchase option. It also applies the low-value lease
recognition exemption to leases of office equipment and
other items that are considered to be of low value. Lease
payments on short-term leases and leases of low-value
assets are recognised as expense on a straight-line basis
over the lease term.
Lease and non-lease component
As per Ind AS - 116, as a practical expedient, a lessee may
elect, by class of underlying asset, not to separate non¬
lease components from lease components, and instead
account for each lease component and any associated
non-lease components as a single lease component.
The Company has not opted for this practical expedient
and have accounted for Lease component only.
2.10 Income taxes
The income tax expense or credit for the period is the tax
payable on the taxable income based on the applicable
income tax rate adjusted by changes in deferred
tax assets and liabilities attributable to temporary
differences and to unused tax losses.
Current and deferred tax is recognised in the statement
of profit and loss, except to the extent that it relates
to items recognised in other comprehensive income
or directly in equity. In this case, the tax is recognised
in other comprehensive income or directly in equity,
respectively.
The current tax and deferred tax is calculated on the
basis of the tax laws enacted or substantively enacted
at the end of the reporting period where the Company
operates and generate taxable income.
Deferred tax is provided in full, using the balance sheet
method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying
amounts in the financial statements. However, deferred
tax liabilities are not recognised if they arise from the
initial recognition of goodwill. Deferred tax is also not
accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business
combination that at the time of the transaction affects
neither accounting profit nor taxable profit/loss.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount
and tax bases of investments in subsidiaries, branches
and interest in joint arrangements where the Company is
able to control the timing of the reversal of the temporary
differences and it is probable that the differences will not
reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate
to the same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on
a net basis, or to realise the asset and settle the liability
simultaneously.
In the situations where one or more units in the
Company are entitled to a tax holiday under the Income-
tax Act, 1961 enacted in India or tax laws prevailing in
the respective tax jurisdictions where they operate, no
deferred tax (asset or liability) is recognised in respect
of temporary differences which reverse during the tax
holiday period, to the extent the concerned unit’s gross
total income is subject to the deduction during the tax
holiday period. Deferred tax in respect of temporary
differences which reverse after the tax holiday period is
recognised in the year in which the temporary differences
originate. However, the Company restricts recognition
of deferred tax assets to the extent it is probable that
sufficient future taxable income will be available against
which such deferred tax assets can be realized. For
recognition of deferred taxes, the temporary differences
which originate first are considered to reverse first.
2.11 Cash and cash equivalents
Cash comprises cash on hand, cash in banks, demand
deposits with banks and with financial institutions. The
Company considers all highly liquid financial instruments,
which are readily convertible into cash and have original
maturities of three months or less from the date of
purchase, to be cash equivalents. Such cash equivalents
are subject to insignificant risk of changes in value.
Cash flows are reported using indirect method, whereby
profit / (loss) after tax is adjusted for the effects of
transaction of non- cash nature and any deferrals or
accruals of past or future cash receipts or payments for
the year. Cash flows arising from taxes on income shall
be classified as cash flows from operating activities
unless they can be specifically identified with financing
and investing activities
2.12 Equity share capital
Ordinary shares are classified as equity. No gain or
loss is recognised in the statement of profit and loss
on purchase, sale, issue or cancellation of equity
instruments, except in case of employee stock options.
Incremental costs directly attributable to the issuance of
equity shares or buyback of equity shares are recognised
as a deduction from equity, net of taxes.
2.13 Treasury shares
The Company has created an Employee Benefit Trust
('Trust') for providing share-based payment to its
employees. The Company uses Trust as a vehicle for
distributing shares to employees under the employee
remuneration schemes. The Trust buys shares of the
Parent from the market, for giving shares to employees.
The Company treats Trust as its extension and shares
held by Trust are treated as treasury shares.
Own equity instruments that are reacquired (treasury
shares) are recognised at cost and deducted from
equity. No gain or loss is recognised in profit or loss on
the purchase, sale, issue or cancellation of the own
equity instruments. Any difference between the carrying
amount and the consideration, if reissued, is recognised
in capital reserve. Share options exercised during the
reporting period are satisfied with treasury shares.
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