3 Material accounting policies
3.01 Functional and presentation currency
These standalone financial statements are presented
in Indian Rupees ('Rs.', 'INR' or '?'), which is also the
Company’s functional currency. All the amounts
have been rounded-off to the nearest millions, unless
otherwise indicated.
3.02 Basis of measurement
The standalone financial statements have been
prepared on a historical cost basis, except for
certain financial assets, financial liabilities and share
based payments which are measured at fair values
as explained in relevant accounting policies and
accounting for business combination carried out by
the Company during the previous year (refer note 50)
3.03 Use of estimates and judgements
The preparation of standalone financial statements
in conformity with Indian Accounting Standards(“IND
AS”) requires the management to make judgments,
estimates and assumptions that affect the reported
amounts of revenues, expenses, assets, liabilities and
the disclosure of contingent liabilities, at the end
of the reporting period. Although these estimates
are based on the management’s best knowledge
of current events and actions, uncertainty about
these assumptions and estimates could result in
the outcomes requiring a material adjustment
to the carrying amounts of assets or liabilities in
future periods.
Accounting policies have been consistently applied
except where a newly issued accounting standard is
initially adopted or a revision to an existing accounting
standard requires a change in the accounting policy
hitherto in use.
Judgments
Information about judgments in applying accounting
policies that have the most significant effect on the
amounts recognised in the standalone financial
statements is included in the following notes:
(i) Classification of assets as investment property or
as property, plant and equipment- refer note 3.24
(ii) Determination of the amount and timing of
revenue from contracts with customers -
refer note 3.07
(iii) Estimation of cost to be incurred for discharge of
contractual obligations.
(iv) During the year ended March 31, 2025,
business combination has been accounted
as reverse acquisition under Ind AS 103,
“Business Combination”. Significant estimates
and judgements are required to be made in
determination of business, accounting acquirer,
accounting acquiree and acquisition date and
identification of assets and liabilities acquired.
Ind AS 103 requires identification and valuation
of assets (including intangible assets) and
liabilities (including contractual obligations) of
the accounting acquiree and its subsidiaries as
at the acquisition date. Based on the third party
expert advice, the management determines
the appropriate valuation technique, related
inputs, estimates and assumptions for fair
valuation measurements. The Company has
engaged third party experts to perform the fair
valuation methodology for identified tangibles
and intangible assets and liabilities. Information
about the business combination and related
valuation is provided separately in these
standalone financial statements.
3.04 Business combination and Goodwill
The Company applies the acquisition method of
accounting for business combinations. Acquisition
costs are generally recognized in the statement
of profit and loss as incurred. Identifiable assets
acquired and liabilities/contingent liabilities taken
over in a business combination are measured initially
at their acquisition-date fair values.
Goodwill is initially measured as excess of the
aggregate of the consideration transferred and the
amount recognised for non-controlling interests, and
any previous interest held, over the net identifiable
assets acquired and liabilities assumed. If the fair
value of the net assets acquired is in excess of the
aggregate consideration transferred and where exists
clear evidence of underlying reasons of classifying
business combinations as bargain purchase, the
difference is recognised in other comprehensive
income and accumulated in equity as capital reserve.
However, if there is no clear evidence of bargain
purchase, the entity recognises the gain directly in
equity as capital reserve, without routing the same
through other comprehensive income.
Impairment testing of Goodwill
Companies operations are managed as an integrated
real estate business and are considered to constitute
a single cash-generating unit (“CGU”). Accordingly, all
goodwill arising on business combinations is allocated
to, and tested for impairment at the level of, this
single CGU. The recoverable amount of the CGU is
determined using an appropriate valuation technique
based on either value in use or fair value less costs of
disposal. Any impairment loss recognised for goodwill
is not reversed in subsequent periods.
3.05 Fair value measurement
The Company measures financial instruments, such as,
derivatives at fair value at each balance sheet 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 marked participants at the
measurement date.
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, assuming that
market participants act in their economic best interest.
The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient date 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 - quoted prices (unadjusted) in active
markets for identical assets or liabilities.
- Level 2 - Inputs other than quoted prices included
in Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
- Level 3 - Inputs for the asset or liability that
are not based on observable market data
(unobservable inputs).
The management regularly reviews significant
unobservable inputs and valuation adjustments.
When measuring the fair value of an asset or a liability,
the Company uses observable market data as far as
possible. If the inputs used to measure the fair value
of an asset or a liability fall into different levels of the
fair value hierarchy, then the fair value measurement
is categorized in its entirety in the same level of the
fair value hierarchy as the lowest level input that is
significant to the fair value measurement as a whole
at the end of the reporting period.
3.06 Current versus non-current classification
The Company presents assets and liabilities in
the balance sheet based on current/non-current
classification.
An asset is treated as current when it is:
- Expected to be realized 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 period
All other assets are classified as non-current.
A liability is current when it is:
- Due to be settled within twelve months after the
reporting period, or
- There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period.
The Company classifies all other liabilities as non¬
current. Deferred tax assets and liabilities are
classified as non- current assets and liabilities.
3.07 Revenue recognition
Revenue is recognized to the extent that it is probable
that the economic benefits will flow to the Company
and the revenue can be reliably measured.
i. Revenue from sale of properties
Revenue from sale of properties is recognized
when the performance obligations are
essentially complete and credit risks have
been significantly eliminated. The performance
obligations are considered to be complete when
the property is ready to be transferred to the
buyer (occupancy certificate received from the
issuing authority) offer for possession can be
issued to the buyers by issuing the possession
request letter and substantial sales consideration
is received from the customers.
The Company considers the terms of the
contract and its customary business practices to
determine the transaction price. The transaction
price is the amount of consideration to which
the Group expects to be entitled in exchange
for transferring property to a customer,
excluding amounts collected on behalf of
third parties (for example, indirect taxes). The
consideration promised in a contract with a
customer may include fixed consideration,
variable consideration (if reversal is less likely in
future), or both.
The Company considers the terms of the
contract and its customary business practices to
determine the transaction price. The transaction
price is the amount of consideration to which
the Group expects to be entitled in exchange for
transferring property to a customer, excluding
amounts collected on behalf of third parties
(for example, indirect taxes). The consideration
promised in a contract with a customer
may include fixed consideration, variable
consideration (if reversal is less likely in future),
or both.
For each performance obligation identified,
the Company determines at contract inception
whether it satisfies the performance obligation
over time or satisfies the performance obligation
at a point in time. If an entity does not satisfy
a performance obligation over time, the
performance obligation is satisfied at a point in
time. A receivable is recognised by the Company
when the control is transferred as this is the case
of point in time recognition where consideration
is unconditional because only the passage of
time is required.
When either party to a contract has performed,
an entity shall present the contract in the
balance sheet as a contract asset or a
contract liability, depending on the relationship
between the entity’s performance and the
customer’s payment.
In respect of Joint development arrangements
(‘JDA’), wherein the land owner/possessor
provides land and in lieu of land owner providing
land, the Company transfers certain percentage
of constructed area/revenue proceeds, the
revenue from development and transfer of
constructed area/revenue proceeds, to land
owner is recognised over time or at a point in time.
ii. Revenue from business management &
support services
Income arising from business management &
support services is recognised in the period in
which the services are rendered. The Company
considers the terms of the contract and its
customary business practices to determine the
transaction price.
iii. Guarantee Income
Financial guarantees issued by the company are
recognised initially at fair value, and the financial
guarantee is recognised in statement of profit
and loss over the tenure of the guarantee.
iv. Interest income
Interest income is recognised on a time
proportion basis as and when accrued. Interest
income on financial instruments are recognised
using the effective interest rate method. The
effective interest rate is the rate that exactly
discounts the estimated future cash receipts
through the expected life of the financial asset
to the gross carrying amount of the asset.
v. Dividend income
Dividends is recognised when the share
holder’s or unit holder’s right to receive the
payment is established, which is generally when
shareholders approve the dividend.
vi. Facility rental income
Facility rental income leased under operating
lease is recognised in the statement of profit
and loss on a straight-line basis over the term
of the lease and rental income is recognised as
per the agreement, if there is no lock-in-period.
Lease income from assets given on finance lease
are recognized based on a pattern reflecting
constant periodic rate of return on the net
investment outstanding.
3.08 Investment properties
i. Recognition and measurement
Investment properties are properties held to
earn rentals or for capital appreciation, or both.
Investment properties are measured initially
at their cost of acquisition. The cost comprises
purchase price, borrowing cost, if capitalization
criteria are met and directly attributable cost
of bringing the asset to its working condition
for the intended use. Any trade discount and
rebates are deducted in arriving at the purchase
price. The cost of the assets not ready for their
intended use before such date, are disclosed as
Investment property under development.
Subsequent costs are included in the asset’s
carrying amount 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. All other
repair and maintenance costs are recognized in
statement of profit or loss as incurred.
Investment properties are depreciated on
straight-line method over their estimated
useful lives. However, where the Management’s
estimate of the remaining useful life of the assets
on a review subsequent to the time of acquisition
is different, then depreciation is provided over
the remaining useful life based on the revised
useful life. The residual values, useful lives and
methods of depreciation are reviewed at each
financial year end and adjusted prospectively.
ii. Subsequent expenditure
Subsequent expenditure is capitalised only if it
is probable that the future economic benefits
associated with the expenditure will flow to
the company and the cost of the investment
property can be measured reliably.
iii. Depreciation
Based on an independent assessment, the
management has estimated the useful lives
of the following class of assets. Depreciation
is provided on straight line method as per the
following useful life of the assets estimated by
the management:
The residual values, useful lives and method
of depreciation are reviewed at the end of
each financial year. In case of assets taken
over through demerger, the balance useful
life of the assets in the transferor entity have
been considered as the useful life of the assets
in the Company.
iv Derecognition
Investment properties are de-recognized either
when they have been disposed off or when
they are permanently withdrawn from use and
no future economic benefit is expected from
their disposal. The difference between the net
disposal proceeds and the carrying amount
of the asset is recognized in profit or loss in the
period of de-recognition.
3.09 Property, plant and equipment
Property, plant and equipment are stated at cost,
less accumulated depreciation/impairment losses
if any. Cost comprises of the purchase price and
any attributable cost of bringing the asset to its
working condition for its intended use. Borrowing
costs relating to acquisition of assets which takes
substantial period of time to get ready for its intended
use is capitalised up to the date the assets are ready
for commercial use. The cost of the assets not ready
for their intended use before such date, are disclosed
as capital work in progress
Subsequent expenditure relating to an item of the
asset is added to its book value only if it increases
the future benefits from the existing asset beyond
its previously assessed standard of performance.
All other related expenses, including day to day
repair and maintenance expenditure and cost of
replacing parts, are charged to the statement of
profit and loss (P&L) for the period during which such
expenses are incurred.
An item of property, plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gains or
losses arising from derecognition of the asset are
measured as differences between the net disposal
proceeds and the carrying amount of the asset and
are recognised in the statement of profit and loss
when the asset is derecognised.
Depreciation
Based on an independent assessment, the
management has estimated the useful lives of the
following class of assets. Depreciation is provided
on straight line method as per the following useful
life of the assets:
A leased asset is depreciated on a straight-line basis
over the useful life of the asset. However, if there
is no reasonable certainty that the company will
obtain the ownership by the end of the lease term,
the capitalized asset is depreciated on a straight-line
basis over the shorter of the estimated useful life of
the asset or the lease term.
In case of assets taken over through demerger, the
balance useful life of the assets in the transferor entity
have been considered as the useful life of the assets
in the Company.
3.10 Intangible assets
Intangible assets (software’s) are stated at their cost
of acquisition. The cost comprises purchase price,
borrowing cost if capitalization criteria are met and
directly attributable cost of bringing the asset to its
working condition for the intended use. Any trade
discount and rebates are deducted in arriving at the
purchase price.
The cost of capitalized software is amortized over a
period in the four years from the date of its acquisition
Intangible assets are de-recognised upon disposal
or when no further economic benefits are expected
from its use or disposal. Any gain or loss arising on de¬
recognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying
amount of the asset) is recognised in the statement of
profit and loss, when the asset is de-recognised.
3.11 Inventories
Related to real estate activities
Direct expenditure relating to construction activity
is added to value of inventory. Other expenditure
(including borrowing costs) during construction
period is added to value of inventory to the extent the
expenditure is directly attributable cost of bringing
the asset to its working condition for its intended
use. Other expenditure (including borrowing costs)
incurred during the construction period which is
not directly attributable for bringing the asset to its
working condition for its intended use is charged
to the statement of profit and loss. Direct and
other expenditure is determined based on specific
identification to the construction and real estate
activity. Cost incurred/ items purchased specifically
for projects are taken as consumed as and when
incurred/ received.
i. Work-in-progress - Real estate projects
(including land inventory): Represents cost
incurred in respect of unsold area of the real
estate development projects or cost incurred
on projects where the revenue is yet to be
recognised. Real estate work-in-progress is
valued at lower of cost and net realisable value.
ii. Finished goods - Plots: Valued at lower of cost
and net realisable value.
iii. Land inventory / interest on plots: Valued at
lower of cost and net realisable value.
In respect of residential projects undertaken under
Joint Development Arrangements (“JDAs”) based
on a revenue-sharing model, inventories comprise
all costs incurred in relation to the development of
the project, construction and development costs,
directly attributable employee benefits, project
management costs, borrowing costs eligible for
capitalisation, statutory levies and other costs directly
attributable to bringing the project to its present
location and condition.
Where the landowner is entitled to a specified share
of the project revenue in accordance with the terms
of the Joint Development Agreement, the Company’s
inventory includes only those costs attributable to its
development obligations. Payments or settlements
made to the landowner pursuant to the agreed revenue¬
sharing arrangement are recognised in accordance
with the substance of the contractual terms and
are included in inventory only to the extent that they
represent consideration for acquisition of development
rights or other directly attributable project costs.
3.12 Impairment of assets
Non-financial assets
The Company assesses at each reporting date
whether there is an indication that an asset may be
impaired. If any indication exists, or when annual
impairment testing for an asset is required, the
Company estimates the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an
asset’s or cash-generating unit’s (CGU) fair value less
costs of disposal and its value in use. The recoverable
amount is determined for an individual asset, unless
the asset does not generate cash inflows that are
largely independent of those from other assets or
Company’s of assets. Where the carrying amount of
an asset or CGU exceeds its recoverable amount, the
asset is considered impaired and is written down to
arrive at its recoverable amount. 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. In determining fair value less costs of disposal,
recent market transactions are taken into account, if
available. If no such transactions can be identified, an
appropriate valuation model is used.
The Company bases its impairment calculation on
detailed budgets and forecast calculations which are
prepared separately for each of the Company’s cash¬
generating units to which the individual assets are
allocated. These budgets and forecast calculations
are generally covering a period of five years.
For assets excluding goodwill, an assessment is made
at each reporting date to determine whether there is
any indication that previously recognised impairment
losses may no longer exist or may have decreased.
If such indication exists, the company estimates the
asset’s or CGU’s recoverable amount. A previously
recognised impairment loss is reversed only if there
has been a change in the assumptions used to
determine the asset’s recoverable amount since the
last impairment loss was recognised. The reversal is
limited so that the carrying amount of the asset does
not exceed its recoverable amount, nor exceed the
carrying amount that would have been determined,
net of depreciation, had no impairment loss been
recognised for the asset in prior years. Such reversal is
recognised in the statement of profit and loss unless
the asset is carried at a revalued amount, in which
case the reversal is treated as a revaluation increase.
Financial assets
The Company recognises loss allowances using the
expected credit loss (ECL) model for the financial
assets which are not fair valued through profit or
loss. The Company tests for impairment using the
ECL model for financial assets such as loans and
advances to be settled in cash.
Loss allowance for loans with no significant financing
component is measured at an amount equal to
lifetime ECL. Life time ECL are the expected credit
losses resulting from all possible default events over
the expected life of a financial instrument. The 12
month ECL is a portion of the lifetime ECL which results
from default events on a financial instrument that are
possible within 12 months after the reporting date.
ECL impairment loss allowance (or reversal)
recognised during the period is recognised as
income/expense in the statement of profit and loss
(P&L). This amount is reflected in a separate line in the
P&L as an impairment gain or loss. For financial assets
measured at amortised cost, ECL is presented as an
allowance which reduces the net carrying amount of
the financial asset.
3.13 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.
Initial recognition and measurement
All financial assets are recognised initially at fair value
plus, transaction costs that are attributable to the
acquisition of the financial asset except in the case
of financial assets recorded at fair value through
profit or loss.
Financial liabilities are classified as financial
liabilities at fair value through profit or loss, loans and
borrowings, payables, or as derivatives designated
as hedging instruments in an effective hedge, as
appropriate. All financial liabilities are recognised
initially at fair value and, in the case of loans and
borrowings and payables, net of directly attributable
transaction costs.
Subsequent measurement
(i) Financial assets carried at amortised cost
A financial asset is subsequently measured at
amortised cost if it is held within a business
model whose objective is to hold the asset in
order to collect contractual cash flows and the
contractual terms of the financial asset give
rise on specified dates to cash flows that are
solely payments of principal and interest on the
principal amount outstanding.
(ii) Financial assets at fair value through other
comprehensive income (FVTOCI)
A financial asset is subsequently measured at fair
value through other comprehensive income if it
is held within a business model whose objective
is achieved by both collecting contractual
cash flows and selling financial assets and the
contractual terms of the financial asset give
rise on specified dates to cash flows that are
solely payments of principal and interest on the
principal amount outstanding. Further, in cases
where the Company has made an irrevocable
election based on its business model, for its
investments which are classified as equity
instruments, the subsequent changes in fair value
are recognised in other comprehensive income.
(iii) Financial assets at fair value through profit or
loss (FVTPL)
A financial asset which is not classified in any
of the above categories are subsequently fair
valued through profit or loss.
(iv) Equity investments
All equity investments in scope of Ind AS 109
are measured at fair value. Equity instruments
which are held for trading and contingent
consideration recognised by an acquirer in
a business combination to which Ind AS 103
applies are classified as at FVTPL. Equity
instruments included within the FVTPL category
are measured at fair value with all changes
recognised in the P&L.
(v) Financial liabilities
Financial liabilities are subsequently carried
at amortised cost using the effective interest
method, except for contingent consideration
recognised in a business combination which is
subsequently measured at fair value through
profit and loss. For trade and other payables
maturing within one year from the balance
sheet date, the carrying amounts approximate
the fair value due to the short maturity of
these instruments.
Interest-bearing loans and borrowings are
subsequently measured at amortised cost
using the EIR method. Gains and losses are
recognised in statement of profit or loss when
the liabilities are derecognised as well as
through the EIR amortisation process. Amortised
cost is calculated by taking into account any
discount or premium on acquisition and fees or
costs that are an integral part of the EIR. The EIR
amortisation is included as finance costs in the
statement of profit and loss.
Reclassification of financial assets
The Company determines classification of financial
assets and liabilities on initial recognition. After
initial recognition, no reclassification is made for
financial assets which are equity instruments and
financial liabilities. For financial assets which are debt
instruments, a reclassification is made only if there is
a change in the business model for managing those
assets. Changes to the business model are expected
to be infrequent. The Company’s senior management
determines change in the business model as a result of
external or internal changes which are significant to
the Company’s operations. A change in the business
model occurs when the Company either begins or
ceases to perform an activity that is significant to
its operations. If the Company reclassifies financial
assets, it applies the reclassification prospectively
from the reclassification date which is the first day
of the immediately next reporting period following
the change in business model. The Company does
not restate any previously recognised gains, losses
(including impairment gains or losses) or interest.
Financial guarantee contracts
A financial guarantee contract is a promise by one
party (the guarantor) to another (the holder) to make
payments if a specified debtor fails to meet their
financial obligations as per the terms of contracts.
Financial guarantee contracts are recognized as a
financial liability at the time the guarantee is issued
at fair value, adjusted for transaction costs that are
directly attributable to the issuance of the guarantee.
Subsequently, the liability is measured at the higher of
the amount of expected loss allowance determined
as per impairment requirements of Ind AS 109 and the
amount recognised less cumulative amortization.
Offsetting of financial instruments
Financial assets and financial liabilities are offset
and the net amount is reported in the consolidated
balance sheet if there is a currently enforceable legal
right to offset the recognised amounts and there is an
intention to settle on a net basis, to realise the assets
and settle the liabilities simultaneously.
Derecognition of financial instrument
A financial asset is primarily derecognised when:
- the rights to receive the 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 right to
receive the cash flows from an asset or has entered
into a pass-through arrangement, it evaluates if and
to what extent it has retained the risks and rewards
of ownership. When it has neither transferred nor
retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, the
Company continues to recognise the transferred
asset to the extent of the Company's continuing
involvement. In that case, the Company also
recognises an associated liability. The transferred
asset and the associated liability are measured on a
basis that reflects the rights and obligations that the
Company has retained.
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced
by another from the same lender on substantially
different terms, or the terms of an existing liability
are substantially modified, such an exchange or
modification is treated as derecognition of the
original liability and the recognition of a new liability.
The difference in the respective carrying amounts is
recognised in the statement of profit or loss.
3.14 Borrowing costs
Borrowing costs are interest and other costs incurred
in connection with borrowings of funds. Borrowing
costs directly attributable to acquisition/ construction
of qualifying assets are capitalised until the time
all substantial activities necessary to prepare the
qualifying assets for their intended use are complete.
A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended
use/ sale. All other borrowing costs not eligible
for inventorisation/ capitalisation are charged to
statement of profit and loss.
In case of extended periods during which activities
necessary for bringing the asset ready for its intended
use are not undertaken, the company suspends the
capitalisation of borrowing cost to the asset.
3.15 Cash and cash equivalents
Cash and cash equivalents in the balance sheet
comprise cheques in hand and cash at bank and
in hand and short-term deposits with an original
maturity of three months or less. For the purposes of
the cash flow statement, cash and cash equivalents
include cash on hand, in banks and demand deposits
with banks, net of outstanding book overdrafts that
are repayable on demand are considered part of the
Company’s cash management system.
3.16 Cash flow statements
Cash flows are reported using the indirect method,
whereby profit for the year is adjusted for the effects
of transactions of a non-cash nature, any deferrals or
accruals of past or future operating cash receipts or
payments and item of income or expenses associated
with investing or financing cash flows. The cash flows
from operating, investing and financing activities of
the Company are segregated.
3.17 Foreign currency
i. Functional currency
The Company’s standalone financial statements
are presented in Indian Rupees, which is also the
company’s functional currency.
ii. Transactions and balances
Transactions in foreign currencies are initially
recorded by the Company at their respective
functional currency spot rates on the date the
transaction first qualifies for recognition.
Monetary assets and liabilities denominated
in foreign currencies are translated at the
functional currency spot rates of exchange at
the reporting date.
Exchange differences arising on settlement or
translation of monetary items are recognised
in profit or loss with the exception of exchange
differences arising on monetary items that
are designated as part of the hedge of
the Company’s net investment of a foreign
operation. These are recognised in OCI until the
net investment is disposed of, at which time,
the cumulative amount is reclassified to profit
or loss. Tax charges and credits attributable to
exchange differences on those monetary items
are also recorded in OCI.
Non-monetary items that are measured in
terms of historical cost in a foreign currency are
translated using the exchange rates at the dates
of the initial transactions. Non-monetary items
measured at fair value in a foreign currency
are translated using the exchange rates at
the date when the fair value is determined.
The gain or loss arising on translation of non¬
monetary items measured at fair value is treated
in line with recognition of the gain or loss on the
change in fair value of the item (i.e. translation
differences on items whose fair value gain or
loss is recognised in OCI or profit or loss are also
recognised in OCI or profit or loss, respectively).
3.18 Income taxes
Current income tax
Current income tax assets and liabilities are
measured at the amount expected to be recovered
from or paid to the taxation authorities. Current
income tax is measured at the amount expected to
be paid to the tax authorities in accordance with the
Income Tax Act, 1961.
Current income tax relating to items recognised
outside profit or loss is recognised outside profit or loss
(either in other comprehensive income or in equity).
Current tax items are recognised in correlation to
the underlying transaction either in OCI or directly
in equity. Management periodically evaluates
positions taken in the tax returns with respect to
situation in which applicable tax regulations are
subject to interpretation and establishes provisions
where appropriate.
Deferred tax
Deferred tax is provided using the liability method
on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for
financial reporting purposes as the reporting date.
Deferred tax liabilities are recognised for all taxable
temporary differences, except:
- In respect of taxable temporary differences
associated with investments in subsidiaries,
associates and interest in joint ventures, when
the timing of the reversal of the temporary
differences can be controlled and it is probable
that the temporary differences will not reverse in
the foreseeable future.
Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax
assets are recognised to the extent that it is probable
that taxable profit will be available against which
the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses
can be utilised, except:
- When the deferred tax asset relating to the
deductible temporary difference arises from
the initial recognition of an asset or liability in a
transaction that is not a business combination
and, at the time of the transaction, affects
neither the accounting profit nor taxable
profit or loss.
- In respect of deductible temporary differences
associated with investments in subsidiaries,
associates and interest in joint ventures, deferred
tax assets are recognized only to the extent that
is probable that the temporary differences will
reverse in the foreseeable future and taxable
profit will be available against which the
temporary differences can be utilized.
The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced to
the extent that is no longer probable that sufficient
taxable profit will be available to allow all or part of
the deferred tax asset to be utilised. Unrecognised
deferred tax assets are re-assessed at each reporting
date and are recognised to the extent that it has
become probable that future taxable profits will
allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the year when
the asset is realized or the liability is settled, based on
tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Deferred tax relating to items recognised outside
profit or loss is recognised outside profit or loss
(either in the OCI or in the equity). Deferred tax
items are recognised in correlation to the underlying
transaction either in OCI or directly in equity.
3.19 Exceptional items
An item of income or expense which by its size, type
or incidence requires disclosure in order to improve an
understanding of the performance of the Company is
treated as an exceptional item and disclosed as such
in the financial statements.
3.20 Earnings per share
Basic earnings per share are calculated by dividing
the net profit or loss for the year attributable to equity
shareholders by the weighted average number of
equity shares outstanding during the year. Partly
paid equity shares are treated as a fraction of an
equity share to the extent that they were entitled to
participate in dividends relative to a fully paid equity
share during the reporting period. The weighted
average number of equity shares outstanding during
the year is adjusted for events of bonus issue; bonus
element in a rights issue to existing shareholders;
share split; and reverse share split.
For the purpose of calculating diluted earnings per
share, the net profit or loss for the year attributable
to equity shareholders and the weighted average
number of shares outstanding during the year
are adjusted for the effects of all potentially
dilutive securities.
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