1A Material Accounting Policies
1A.1 Property, plant, and equipment
Freehold land is carried at historical cost. All other property,
plants and equipment are recognised at historical cost
less depreciation.
Depreciation is calculated using the straight-line method to
allocate the cost of the assets, net of their residual values, over
their estimated useful lives.
The useful lives have been determined based on technical
evaluation done by the management which are different than
those specified by Schedule II to the Companies Act, 2013, in
order to reflect the actual usage of the assets. Estimated useful
life of assets are as follows:
Refer note 1B.1 for other accounting policies relevant to
property, plant and equipment.
1A.2 Investment Property
Investment properties are carried at cost and depreciated
using straight line method.
The useful lives have been determined based on technical
evaluation done by the management which are different than
those specified by Schedule II to the Companies Act, 2013,
in order to reflect the actual usage of the assets. The residual
values are not more than 5% of the original cost of the asset.
Estimated useful lives of the assets are as follows:
Intangible assets are stated at acquisition cost, net of
accumulated amortisation and accumulated impairment
losses, if any.
The Company amortises intangible assets with a limited
useful life using the straight-line method.
Useful lives of intangible assets
The useful lives have been determined based on technical
evaluation done by the management which are different than
those specified by Schedule II to the Companies Act, 2013,
in order to reflect the actual usage of the assets. The residual
values are not more than 5% of the original cost of the asset.
Estimated useful lives of the intangible assets are as follows:
Refer note 1B.3 for other accounting policies relevant to
intangible assets.
1A.4 Leases (where the Company is the lessee)
Assets and liabilities arising from a lease are initially measured
on present value basis. The lease payments are discounted
using the interest rate implicit in the lease. If that rate cannot
be readily determined, the Company's incremental borrowing
rate is used, being the rate, the Company would have to pay
to borrow fund 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.
Right-of-use assets are generally depreciated over the
shorter of asset's useful life and the lease term on a straight¬
line basis. If the Company is reasonably certain to exercise a
purchase option, the right-of-use asset is depreciated over the
underlying asset's useful life.
Payments associated with short-term leases of equipment
and all leases of low-value assets are recognised on a
straight-line basis as an expense in statement of profit and
loss. Short-term leases are leases with a lease term of 12
months or less, without a purchase option. Low value assets
comprise small items.
Refer note 1B.4 for other accounting policies relevant to leases.
1A.5 Financial Assets
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 investment is assessed and an impairment provision is
recognised, if required immediately to its recoverable amount.
On disposal of such investments, difference between the net
disposal proceeds and carrying amount is recognised in the
statement of profit and loss.
All other recognised financial assets are subsequently
measured in their entirety at either amortized cost or fair
value, depending on the classification of the financial assets.
The Company classifies its financial assets in the following
measurement categories:
I. Those measured subsequently at fair value through
other comprehensive income (in case of certain
investments in equity instruments - an irrevocable
option exercised on an instrument-by-instrument basis
on initial recognition) and through profit or loss (in
case of investments in mutual funds and other equity
instruments); and
II. Those measured at amortised cost.
The classification is based on the Company's business
model for managing financial assets and the contractual
terms of the cash flows. For assets measured at fair
value, gains and losses will either be recorded in profit
or loss or other comprehensive income. For investments
in debt instruments, this will depend on the business
model in which the investment is held.
III. Impairment of financial assets
The Company applies the expected credit loss model
for recognising impairment loss on financial assets
measured at amortised cost, trade receivables, other
contractual rights to receive cash or other financial asset,
and financial guarantees not designated as at FVTPL.
This expected credit loss allowance is computed based
on a provision matrix which takes into account historical
credit loss experience and adjusted for forward-looking
information on case to case basis.
Refer note 1B.5 for other accounting policies relevant to
financial assets.
1A.6 Inventories
Inventories are stated at the lower of cost and net realizable
value. Inventories of by-products are valued at net realizable
value. Cost of inventories are determined on weighted
average basis.
Refer note 1B.24 for the other accounting policies
relevant to inventory.
1A.7 Trade Receivables
Trade receivables are amounts due from customers for
goods sold or services performed in the ordinary course of
business and reflect the Company's unconditional right to
consideration (that is, payment is due only on the passage
of time). Trade receivables are recognised initially at the
transaction price as they do not contain significant financing
components. The Company holds the trade receivables with
the objective of collecting the contractual cash flows and
therefore measures them subsequently at amortised cost
using the effective interest method, less loss allowance.
For trade receivables, the Company applies the simplified
approach required by Ind AS 109, which requires expected
lifetime losses to be recognised from initial recognition of
the receivables.
1A.8 Revenue Recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue
can be reliably measured, regardless of when the payment
is being made.
Revenue is measured at the transaction price for each separate
performance obligation taking into account contractually
defined terms of payment and excluding taxes or duties
collected on behalf of the government. The transaction
price is net of estimated customer returns, rebates and other
similar allowances.
Payment for the sale is made as per the credit terms in the
agreements with the customers. The credit period is generally
short term, thus there is no significant financing component.
The specific recognition criteria described below must also be
met before revenue is recognised.
Sale of goods
Revenue is recognised at the transaction price when the
performance obligations are satisfied and the control of the
product is transferred, being when the goods are delivered as
per the relevant terms of the contract at which point in time
the Company has a right to payment for the goods/service,
customer has legal title of the goods/service, customer bears
significant risk and rewards of ownership and the customer
has accepted the goods/service of the Company has objective
evidence that all criteria for acceptance have been satisfied.
Variable consideration
If the consideration in a contract includes a variable amount,
the Company estimates the amount of consideration to
which it will be entitled in exchange for transferring the goods
to the customer. The variable consideration is estimated
at contract inception and constrained until it is highly
probable that a significant revenue reversal in the amount
of cumulative revenue recognised will not occur when the
associated uncertainty with the variable consideration is
subsequently resolved.
Refund liabilities
A refund liability is the obligation to refund some or all of the
consideration received (or receivable) from the customer and
is measured at the amount the Company ultimately expects it
will have to return to the customer. The Company updates its
estimates of refund liabilities (and the corresponding change
in the transaction price) at the end of each reporting period.
1A.9 Financial guarantee contracts
Financial guarantee contracts issued by the Company are
initially measured at their fair values and, 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 recognised less, when appropriate,
the cumulative amount of income recognised in
accordance with the principles of Ind AS 115.
1A.10 Employee benefit obligations
Gratuity for certain employees is covered under Schemes of
Life Insurance Corporation of India (LIC) and ICICI. The cost
of providing benefits is determined using the projected unit
credit method, with actuarial valuations being carried out at
the end of each annual reporting period.
The Company makes contributions to Provident Fund
Trusts for certain employees, at a specified percentage of
the employee's salary. The interest rate payable by the Trust
to the beneficiaries is being notified by the Government
every year. The Company obtains an independent actuarial
valuation of the Interest Guarantees as at the Balance Sheet
date and provides for the shortfall, if any, in the present
value of obligation of interest over the fair value of the
surplus in the Fund.
Refer note 1B.12 for other accounting policies related to
employee benefit obligations.
1A.11 Investments in equity instruments at FVTOCI
The Company has equity investments which are not held for
trading. The Company has elected the FVTOCI irrevocable
option for these investments (see note 6). Fair value is
determined in the manner described in note 49.8.
Refer note 1B.5.c for other accounting policies related to
Investments in equity instruments at FVTOCI.
1A.12 Segment Reporting
The Company is focused on the following business segments:
Sugar, Co-generation, Distillery, Nutraceuticals and Consumer
products. Based on the "management approach" as defined
in Ind AS 108 - Operating Segments, the Chief Operating
Decision Maker evaluates the Company's performance
and allocates resources based on an analysis of various
performance indicators by business segments. Accordingly,
information has been presented along these business
segments. The accounting principles used in the preparation
of the financial statements are consistently applied to record
revenue and expenditure in individual segments.
Inter-segment revenue is accounted on the basis of
transactions which are primarily determined based on
market/fair value factors.
1A.13 Impairment losses
At the end of each reporting period, where there is an
indicator of impairment, the recoverable amount of the
asset is estimated in order to determine the extent of the
impairment loss (if any).
Recoverable amount is the higher of fair value less costs
of disposal and value in use. 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 for which the estimates of future cash flows have
not been adjusted.
Refer note 1B.16 for other accounting policies related to
impairment losses.
IA. 14 Other income
Dividend income from investments is recognised when the
shareholder's right to receive payment has been established.
1B OTHER ACCOUNTING POLICIES
IB. 1 Property, Plant and Equipment
Cost includes professional fees and, for qualifying assets,
borrowing costs capitalized in accordance with the
Company's accounting policy. Such properties are classified to
the appropriate categories of property, plant and equipment
when completed and ready for intended use. Depreciation
of these assets, on the same basis as other property assets,
commences when the assets are ready for their intended use.
Depreciation is recognised so as to write off the cost of assets
(other than freehold land and properties under construction)
less their residual values over their useful lives, using the
straight-line method. The estimated useful lives, residual
values and depreciation method are reviewed at the end
of each reporting period, with the effect of any changes in
estimate accounted for on a prospective basis.
Assets on leased premises are depreciated on the remaining
period of lease or as per the useful life tabulated above
whichever is less.
The residual values are not more than 5% of the original
cost of the asset.
An item of property, plant and equipment is derecognized
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 statement of profit and loss.
1B.2 Investment Property
Investment properties are properties held to earn rentals
and/or for capital appreciation (including property under
construction for such purposes). Depreciation is recognised
so as to write off the cost of assets (other than freehold
land and properties under construction) less their residual
values over their useful lives, using the straight-line method.
The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period,
with the effect of any changes in estimate accounted for on a
prospective basis.
An investment property is derecognised upon disposal or
when the investment property is permanently withdrawn
from use and no future economic benefits are expected
from the disposal. Any gain or loss arising on derecognition
of the property (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is
included in statement of profit and loss in the period in which
the property is derecognised.
The Company classifies cash outflows to acquire or construct
investment property and rental inflow as investing cash flows.
1B.3 Intangible Assets
a. Intangible assets acquired separately
The estimated useful life and amortization method are
reviewed at the end of each reporting period, with the
effect of any changes in estimate being accounted for
on a prospective basis. Intangible assets with indefinite
useful lives that are acquired separately are carried at
cost less accumulated impairment losses.
An intangible asset is derecognized on disposal, or when
no future economic benefits are expected from use or
disposal. 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 recognised in statement of profit and loss
when the asset is derecognized.
1B.4 Leases
(Company as Lessee)
The Company leases various offices, building etc. Rental
contracts are typically for the period of 1 year to 25
years, contracts but might have extension options as
described below.
Leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset is
available for use by the Company. Contracts may contain both
lease and non-lease components. The Company allocates
the consideration in the contract to the lease and non-lease
components based on their relative stand-alone prices.
Lease liability include the net present value of the
following payments:
• fixed payments (including in substance fixed payments),
less any lease incentives receivable
• variable lease payments that are based on an index or
a rate, initially measured using the index or rates at the
commencement date
• amounts expected to be payable by the Company
under residual value guarantees
• the exercise price of purchase options if the Company is
reasonably certain to exercise that option
• payment of penalties for terminating the lease, if the
lease term reflects the Company exercising that option.
Lease payments to be made under reasonably certain
extension options are also included in the measurement of
the liability. Lease payments are allocated between principal
and finance cost. The finance 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.
Variable lease payments that are dependent on sales are
recognised in statement of profit and loss in the period in
which the conditions that triggers those payments occurs.
Right-of-use assets are measured at cost
comprising the following:
• the amount of initial measurement of lease liability
• any lease payments made at or before the
commencement date less any incentives received
• any initial direct costs and
• restoration costs.
Company as Lessor
Lease income from operating leases is recognised on a straight¬
line basis over the term of the relevant lease. Initial direct costs
incurred in negotiating and arranging an operating lease
are added to the carrying amount of the leased asset and
recognised as expenses over the lease term on the same basis
as lease income. The respective leased assets are included in
the balance sheet based on their nature.
1B.5 Financial assets
All regular way purchases or sales of financial assets are
recognised and derecognized on a trade date basis. Regular
way purchases or sales are purchases or sales of financial
assets that require delivery of assets within the time frame
established by regulation or convention in the marketplace.
a. Classification of financial assets
Debt instruments that meet the following conditions
are subsequently measured at amortized cost (except
for debt instruments that are designated as at fair value
through profit or loss on initial recognition). Financial
assets carried at amortised cost include trade receivable,
Deposits, interest receivables, insurance claims and
advances to employees.
• the asset is held within a business model whose
objective is to hold assets in order to collect
contractual cash flows; and
• the contractual terms of the instrument give rise
on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding.
For the impairment policy on financial assets measured
at amortized cost, refer note 1B.5.e.
All other financial assets are subsequently
measured at fair value.
b. Effective interest method
The effective interest method is a method of calculating
the amortized cost of a debt instrument and of
allocating interest income over the relevant period. The
effective interest rate is the rate that exactly discounts
estimated future cash receipts (including all fees and
points paid or received that form an integral part of
the effective interest rate, transaction costs and other
premiums or discounts) through the expected life of the
debt instrument, or, where appropriate, a shorter period,
to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for
debt instruments other than those financial assets
classified as at FVTPL. Interest income is recognised in
statement of profit and loss and is included in the 'other
income' line item.
c. Investments in equity instruments at FVTOCI
The Company has elected to carry investment in equity
instruments at Fair value through other comprehensive
income. On initial recognition, the Company can make
an irrevocable election (on an instrument-by-instrument
basis) to present the subsequent changes in fair value in
other comprehensive income pertaining to investments
in equity instruments. This election is not permitted if
the equity investment is held for trading. These elected
investments are initially measured at fair value plus
transaction costs. Subsequently, they are measured at
fair value with gains and losses arising from changes in
fair value recognised in other comprehensive income
and accumulated in the 'Reserve for equity instruments
through other comprehensive income. The cumulative
gain or loss is not reclassified to statement of profit and
loss on disposal of the investments.
Dividends on these investments in equity instruments
are recognised in statement of profit and loss when the
Company's right to receive the dividends is established,
it is probable that the economic benefits associated with
the dividend will flow to the entity, the dividend does
not represent a recovery of part of cost of the investment
and the amount of dividend can be measured reliably.
Dividends recognised in statement of profit and loss are
included in the 'Other income' line item.
d. Financial assets at fair value through profit or loss
(FVTPL)
The Company carries derivative contracts not
designated in a hedge relationship at FVTPL. Financial
assets at FVTPL also includes assets held for trading.
A financial asset is held for trading if:
• it has been acquired principally for the purpose of
selling it in the near term; or
• on initial recognition it is part of a portfolio of
identified financial instruments that the Company
manages together and has a recent actual pattern
of short-term profit-taking; or
• it is a derivative that is not designated and effective
as a hedging instrument or a financial guarantee.
Financial assets at FVTPL are measured at fair value at the
end of each reporting period, with any gains or losses
arising on remeasurement recognised in statement
of profit and loss. The net gain or loss recognised in
statement of profit and loss incorporates any dividend
or interest earned on the financial asset and is included
in the 'Other income' line item. Dividend on financial
assets at FVTPL is recognised when the Company's right
to receive the dividends is established, it is probable that
the economic benefits associated with the dividend
will flow to the entity, the dividend does not represent
a recovery of part of cost of the investment and the
amount of dividend can be measured reliably.
e. Impairment of financial assets
Expected credit losses are the weighted average
of credit losses with the respective risks of default
occurring as the weights. Credit loss is the difference
between all contractual cash flows that are due to the
Company in accordance with the contract and all the
cash flows that the Company expects to receive (i.e.
all cash shortfalls), discounted at the original effective
interest rate (or credit-adjusted effective interest rate for
purchased or originated credit-impaired financial assets).
The Company estimates cash flows by considering all
contractual terms of the financial instrument through
the expected life of that financial instrument.
For trade receivables or any contractual right to
receive cash or another financial asset that result from
transactions that are within the scope of Ind AS 115,
the Company always measures the loss allowance at an
amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected
credit loss allowance for trade receivables, the
Company has used a practical expedient as permitted
under Ind AS 109.
f. Derecognition of financial assets
The Company derecognises a financial asset when
the contractual rights to the cash flows from the asset
expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership of the
asset to another party. If the Company neither transfers
nor retains substantially all the risks and rewards of
ownership and continues to control the transferred
asset, the Company recognises its retained interest in
the asset and an associated liability for amounts it may
have to pay. If the Company retains substantially all the
risks and rewards of ownership of a transferred financial
asset, the Company continues to recognise the financial
asset and also recognises a collateralised borrowing for
the proceeds received.
On derecognition of a financial asset in its entirety, the
difference between the asset's carrying amount and the
sum of the consideration received and receivable and
the cumulative gain or loss that had been recognised
in other comprehensive income and accumulated
in equity is recognised in statement of profit and
loss if such gain or loss would have otherwise been
recognised in statement of profit and loss on disposal of
that financial asset.
g. Foreign exchange gains and losses
The fair value of financial assets denominated in a
foreign currency is determined in that foreign currency
and translated at the spot rate at the end of each
reporting period.
• For foreign currency denominated financial
assets measured at amortized cost and FVTPL,
the exchange differences are recognised in
statement of profit and loss except for those
which are designated as hedging instruments in a
hedging relationship.
• Changes in the carrying amount of investments in
equity instruments at FVTOCI relating to changes
in foreign currency rates are recognised in other
comprehensive income.
• For the purposes of recognizing foreign exchange
gains and losses, FVTOCI debt instruments are
treated as financial assets measured at amortized
cost. Thus, the exchange differences on the
amortized cost are recognized in statement of
profit and loss and other changes in the fair value
of FVTOCI financial assets are recognised in other
comprehensive income.
1B.6 Financial liabilities and equity instruments
a. Classification as debt or equity
Debt and equity instruments issued by the Company
are classified as either financial liabilities or as equity
in accordance with the substance of the contractual
arrangements and the definitions of a financial liability
and an equity instrument.
b. Equity instruments
An equity instrument is any contract that evidences a
residual interest in the assets of an entity after deducting
all of its liabilities. Equity instruments issued by the
Company are recognised at the proceeds received, net
of direct issue costs.
Repurchase of the Company's own equity instruments is
recognised and deducted directly in equity. No gain or
loss is recognised in statement of profit and loss on the
purchase, sale, issue or cancellation of the Company's
own equity instruments.
c. Financial liabilities
All financial liabilities are subsequently measured
at amortised cost using the effective interest
method or at FVTPL.
However, financial liabilities that arise when a transfer
of a financial asset does not qualify for derecognition or
when the continuing involvement approach applies,
financial guarantee contracts issued by the Company, and
commitments issued by the Company to provide a loan
at below-market interest rate are measured in accordance
with the specific accounting policies set out below.
c.1. Financial liabilities at FVTPL
Financial liabilities at FVTPL includes derivative liabilities.
Non-derivative financial liabilities are classified as at
FVTPL when the financial liability is either contingent
consideration recognised by the Company as an acquirer
in a business combination to which Ind AS 103 applies
or is held for trading or it is designated as at FVTPL. There
are no non-derivative financial liabilities carried at FVTPL.
Financial liabilities at FVTPL are stated at fair value,
with any gains or losses arising on remeasurement
recognised in statement of profit and loss. The net
gain or loss recognised in statement of profit and loss
incorporates any interest paid on the financial liability
and is included in the 'Other income' line item.
Fair value is determined in the manner
described in note 49.8.
c.2. Financial liabilities subsequently measured at
amortised cost
Financial liabilities that are not held-for-trading and
are not designated as at FVTPL are measured at
amortized cost at the end of subsequent accounting
periods. The carrying amounts of financial liabilities
that are subsequently measured at amortized cost are
determined based on the effective interest method.
Interest expense that is not capitalized as part of costs of
an asset is included in the 'Finance costs' line item.
The effective interest method is a method of calculating
the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated
future cash payments (including all fees and points paid
or received that form an integral part of the effective
interest rate, transaction costs and other premiums or
discounts) through the expected life of the financial
liability, or (where appropriate) a shorter period, to the
net carrying amount on initial recognition.
c.3. Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign
currency and are measured at amortized cost at the end
of each reporting period, the foreign exchange gains
and losses are determined based on the amortized cost
of the instruments and are recognised in 'Other income.
The fair value of financial liabilities denominated in a
foreign currency is determined in that foreign currency
and translated at the spot rate at the end of the reporting
period. For financial liabilities that are measured as at
FVTPL, the foreign exchange component forms part
of the fair value gains or losses and is recognised in
statement of profit and loss.
c.4. Derecognition of financial liabilities
The Company derecognizes financial liabilities when,
and only when, the Company's obligations are
discharged, cancelled or have expired. An exchange
with a lender of debt instruments with substantially
different terms is accounted for as an extinguishment
of the original financial liability and the recognition
of a new financial liability. Similarly, a substantial
modification of the terms of an existing financial liability
(whether or not attributable to the financial difficulty
of the debtor) is accounted for as an extinguishment
of the original financial liability and the recognition of
a new financial liability. The difference between the
carrying amount of the financial liability derecognized
and the consideration paid and payable is recognised in
statement of profit and loss.
1B.7 Fair Value
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, regardless of
whether that price is directly observable or estimated using
another valuation technique. In estimating the fair value of
an asset or a liability, the Company takes into account the
characteristics of the asset or liability if market participants
would take those characteristics into account when pricing
the asset or liability at the measurement date. Fair value for
measurement and/or disclosure purposes in these financial
statements is determined on such a basis, except for share-
based payment transactions that are within the scope of Ind
AS 102, leasing transactions that are within the scope of Ind
AS 116, and measurements that have some similarities to fair
value but are not fair value, such as net realizable value in Ind
AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value
measurements are categorized into Level 1,2, or 3 based on the
degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity
can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices
included within Level 1, that are observable for the asset
or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the
asset or liability.
1B.8 Derivative financial instruments and Hedge
Accounting
The Company enters into a variety of derivative financial
instruments to manage its exposure to interest rate and
foreign exchange rate risks, by way of foreign exchange
forward contracts. Further details of derivative financial
instruments are disclosed in note 49.8.
Derivatives are initially recognised at fair value at the date the
derivative contracts are entered into and are subsequently
remeasured to their fair value at the end of each reporting
period. The resulting gain or loss is recognised in statement of
profit and loss immediately unless the derivative is designated
and effective as a hedging instrument, in which event the
timing of the recognition in statement of profit and loss
depends on the nature of the hedging relationship and the
nature of the hedged item.
1B.9 Functional and Presentation Currency and Foreign
Currency Transactions
Items included in the financial statements of the Company
are measured using the currency of the primary economic
environment in which the Company operates (i.e. the
"functional currency"). The financial statements are presented
in Indian Rupee, the national currency of India, which is the
functional currency of the Company.
In preparing the financial statements of the Company,
transactions in currencies other than the entity's functional
currency (foreign currencies) are recognised at the rates of
exchange prevailing at the dates of the transactions. At the
end of each reporting period, monetary items denominated
in foreign currencies are retranslated at the rates prevailing at
that date. Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated at the rates
prevailing at the date when the fair value was determined.
Non-monetary items that are measured in terms of historical
cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised
in statement of profit and loss in the period in which they
arise except for:
• Exchange differences on foreign currency borrowings
relating to assets under construction for future
productive use, which are included in the cost of those
assets when they are regarded as an adjustment to
interest costs on those foreign currency borrowings;
• Exchange differences on transactions entered into in
order to hedge certain foreign currency risks (see note
1B.8 above for hedging accounting policies); and
• Exchange differences on monetary items receivable from
or payable to a foreign operation for which settlement is
neither planned nor likely to occur (therefore forming
part of the net investment in the foreign operation),
which are recognised initially in other comprehensive
income and reclassified from equity to profit and loss on
repayment of the monetary items.
1B.10 Borrowings and related costs
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 statement of profit and loss over
the period of the borrowings using the effective interest
method. Fees paid on the establishment of loan facilities are
recognised as transaction costs of the loan to the extent that it
is probable that some or all of the facility will be drawn down.
In this case, the fee is deferred until the draw down occurs. To
the extent there is no evidence that it is probable that some
or all of the facility will be drawn down, the fee is capitalised
as a prepayment for liquidity services and amortised over the
period of the facility to which it relates.
Borrowings are derecognised from the balance sheet when the
obligation specified in the contract is extinguished, cancelled
or expired. The difference between the carrying amount of a
financial liability that has been extinguished or transferred to
another party and the consideration paid, including any non¬
cash assets transferred or liabilities assumed, is recognised in
statement of profit and loss as other gains/(losses).
Borrowings are classified as current liabilities unless, at the
end of the reporting period, the Company has an right to
defer settlement of the liability for at least 12 months after
the reporting period. Where there is a breach of a material
provision of a long-term loan arrangement on or before the
end of the reporting period with the effect that the liability
becomes payable on demand on the reporting date, the
entity does not classify the liability as current, if the lender
agreed, after the reporting period and before the approval of
the financial statements for issue, not to demand payment as
a consequence of the breach.
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get
ready for their intended use or sale, are added to the cost of
those assets, until such time as the assets are substantially
ready for their intended use or sale. Interest income earned
on the temporary investment of specific borrowings pending
their expenditure on qualifying assets is deducted from the
borrowing costs eligible for capitalization. All other borrowing
costs are recognised in statement of profit and loss in the
period in which they are incurred.
1B.11 Government grants
Government grants are not recognised until there is reasonable
assurance that the Company will comply with the conditions
attaching to them and that the grants will be received.
Government grants are recognised in statement of profit
and loss on a systematic basis over the periods in which the
Company recognises as expenses the related costs for which
the grants are intended to compensate. Government grant is
recognised either as other operating income, or other income
or adjusted against expenses depending upon the nature of
the grant and the same is followed consistently.
Government grants that are receivable as compensation for
expenses or losses already incurred or for the purpose of
giving immediate financial support to the company with no
future related costs are recognised in statement of profit and
loss in the period in which they become receivable.
1B.12 Employee Benefit obligations
(a) Post employment benefit costs and termination
benefits
Payments to defined contribution plans are recognised
as an expense when employees have rendered service
entitling them to the contributions.
For defined benefit plans, the cost of providing benefits
is determined using the projected unit credit method,
with actuarial valuations being carried out at the end of
each annual reporting period.
Defined benefit costs are categorized as follows:
• Service cost (including current service cost,
past service cost, as well as gains and losses on
curtailments and settlements);
• Net interest expense or income; and
• Remeasurement
The Company presents the first two components of
defined benefit costs in statement of profit and loss in
the line item 'Employee benefits expense.
Past service cost is recognised in statement of profit and
loss in the period of a plan amendment.
Net interest is calculated by applying the discount rate
at the beginning of the period to the net defined benefit
liability or asset.
Remeasurement, comprising actuarial gains and losses,
the effect of the changes to the asset ceiling (if applicable)
and the return on plan assets (excluding net interest), is
reflected immediately in the balance sheet with a charge
or credit recognised in other comprehensive income
in the period in which they occur. Remeasurement
recognised in other comprehensive income is reflected
immediately in retained earnings and is not reclassified
to statement of profit and loss.
Curtailment gains and losses are accounted for as
past service costs. The retirement benefit obligation
recognised in the balance sheet represents the actual
deficit or surplus in the Company's defined benefit plans.
Any surplus resulting from this calculation is limited to
the present value of any economic benefits available
in the form of refunds from the plans or reductions in
future contributions to the plans.
Contributions paid/payable to defined contribution
plans comprising of Superannuation (under a scheme of
Life Insurance Corporation of India) and Provident Funds
for certain employees covered under the respective
Schemes are recognised in the Statement of Profit and
Loss each year.
A liability for a termination benefit is recognised at the
earlier of when the entity can no longer withdraw the
offer of the termination benefit and when the entity
recognizes any related restructuring costs.
(b) Short-term and other long-term employee
benefits
A liability is recognised for benefits accruing to
employees in respect of wages and salaries in the period
the related service is rendered.
Liabilities recognised in respect of short-term employee
benefits are measured at the undiscounted amount of
the benefits expected to be paid in exchange for the
related service.
Liabilities recognised in respect of other long-term
employee benefits are measured at the present value
of the estimated future cash outflows expected to be
made by the Company in respect of services provided
by employees up to the reporting date.
1B.13 Share-based payment arrangements
Equity-settled share-based payments to employees and
others providing similar services are measured at the fair value
of the equity instruments at the grant date. Details regarding
the determination of the fair value of equity-settled share-
based transactions are set out in note 50.
The fair value determined at the grant date of the equity-
settled share-based payments is expensed on a straight¬
line basis over the vesting period, based on the Company's
estimate of equity instruments that will eventually vest,
with a corresponding increase in equity. At the end of each
reporting period, the Company revises its estimate of the
number of equity instruments expected to vest. The impact
of the revision of the original estimates, if any, is recognised in
statement of profit and loss such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment
to the equity-settled employee benefits reserve.
1B.14 Earnings per Share
The Company presents basic and diluted earnings per share
("EPS") data for its equity shares. Basic EPS is calculated by
dividing the profit or loss attributable to equity shareholders
by the weighted average number of equity shares outstanding
during the period. Diluted EPS is determined by adjusting
the profit or loss attributable to equity shareholders and the
weighted average number of equity shares outstanding for
the effects of all dilutive potential equity shares.
1B.15 Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
a. Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from'profit before tax'as reported
in the statement of profit and loss because of items of
income or expense that are taxable or deductible in other
years and items that are never taxable or deductible.
The Company's current tax is calculated using tax rates
that have been enacted or substantively enacted by the
end of the reporting period. Management periodically
evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to
interpretation and considers whether it is probable that a
taxation authority will accept an uncertain tax treatment.
The company measures its tax balances either based on
the most likely amount or the expected value, depending
on which method provides a better prediction of the
resolution of the uncertainty.
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.
b. Deferred tax
Deferred tax is recognised on temporary differences
between the carrying amounts of assets and liabilities
in the financial statements and the corresponding
tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for
all taxable temporary differences. Deferred tax assets
are generally recognised for all deductible temporary
differences and unused tax losses to the extent that it
is probable that taxable profits will be available against
which those deductible temporary differences and
unused tax losses can be utilized. Such deferred tax
assets and liabilities are not recognised if the temporary
difference arises from the initial recognition (other than
in a business combination) of assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit. In addition, deferred tax liabilities are
not recognised if the temporary difference arises from
the initial recognition of goodwill.
Deferred tax liabilities are recognised for taxable
temporary differences associated with investments
in subsidiaries and associates, and interests in joint
ventures, except where the Company is able to control
the reversal of the temporary difference and it is
probable that the temporary difference will not reverse
in the foreseeable future. Deferred tax assets arising
from deductible temporary differences associated with
such investments and interests are only recognised to
the extent that it is probable that there will be sufficient
taxable profits against which to utilize the benefits of the
temporary differences and they are expected to reverse
in the foreseeable future.
The carrying amount of deferred tax assets is reviewed
at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the
asset to be recovered.
Deferred tax liabilities and assets are measured at the tax
rates that are expected to apply in the period in which the
liability is settled or the asset realized, based on tax rates
(and tax laws) that have been enacted or substantively
enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset where there
is a legally enforceable right to offset current tax assets
and liabilities and where the deferred tax balances relate
to the same taxation authority.
The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from
the manner in which the Company expects, at the end
of the reporting period, to recover or settle the carrying
amount of its assets and liabilities.
c. Current and deferred tax for the year
Current and deferred tax are recognised in statement of
profit and loss, except when they relate to items that are
recognised in other comprehensive income or directly
in equity, in which case, the current and deferred tax
are also recognised in other comprehensive income
or directly in equity respectively. Where current tax
or deferred tax arises from the initial accounting for a
business combination, the tax effect is included in the
accounting for the business combination.
1B.16 Impairment losses
At the end of each reporting period, the Company reviews the
carrying amounts of its assets (property, plant and equipment,
intangible assets and investments in equity instruments of
subsidiaries and joint venture) to determine whether there is
any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent of the
impairment loss (if any). When it is not possible to estimate
the recoverable amount of an individual asset, the Company
estimates the recoverable amount of the cash-generating unit
to which the asset belongs. When a reasonable and consistent
basis of allocation can be identified, corporate assets are also
allocated to individual cash-generating units, or otherwise
they are allocated to the smallest group of cash-generating
units for which a reasonable and consistent allocation basis
can be identified.
Intangible assets with indefinite useful lives, goodwill and
intangible assets not yet available for use are tested for
impairment at least annually, and whenever there is an
indication that the asset may be impaired.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to
its recoverable amount. An impairment loss is recognised
immediately in statement of profit and loss.
When an impairment loss subsequently reverses, the carrying
amount of the asset (or a cash-generating unit) is increased
to the revised estimate of its recoverable amount, but so
that the increased carrying amount does not exceed the
carrying amount that would have been determined had
no impairment loss been recognised for the asset (or cash¬
generating unit) in prior years. A reversal of an impairment
loss is recognised immediately in statement of profit and loss.
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