Note 2 : Material Accounting Policies
(a) Statement of Compliance :
These financial statements are the separate financial statements of the Company (also called standalone financial statements) and have been
prepared in accordance with Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with Rule 3 of the Companies
(Indian Accounting Standards), Rules, 2015 and relevant amendments and rules issued thereafter.
(b) Basis of Preparation and Presentation :
The Financial Statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair
values at the end of each reporting period.
(c) Current/Non-Current Classification :
Any asset or liability is classified as current if it satisfies any of the following conditions :
(i) the asset/liability is expected to be realised/settledin the Company's normal operating cycle;
(ii) the asset isintended for sale or consumption;
(iii) the asset/liability is held primarilyforthe purpose of trading;
(iv) the asset/liability is expected to be realised/settled withintwelve months afterthe reporting period;
(v) the asset is cash and cash equivalent or other bank balances unless it is restricted from being exchanged or used to settle a liability for at
least twelve months afterthe reporting date;
(vi) in the case of a liability, the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after
the reporting date;
(vii) All other assets and liabilities are classified as non-current.
Forthe purpose of current/non-current classification of assets and liabilities.theCompany has ascertained itsnormal operating cycle as twelve
months.
(d) Use of Estimates :
The preparation of financial statements in conformity with the recognition and measurement principles of Ind AS requires management of the
Company to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets
and liabilities, disclosures of contingent assets and contingent liabilities as at the date of financial statements and the reported amounts of
income and expenses during the period. Actual results maydifferfrom these estimates. Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are recognised inthe period inwhich the estimates are revised and in future periods which
are affected.
Key sources of estimation of uncertainty at the date of the financial statements, which may cause a material adjustment to the carrying amounts
of assets and liabilities within the next financial year, is in respect of impairment of property, plant and equipment, useful lives of property, plant
and equipment, provision, contingent liabilities.
Impairment of Property, Plant and Equipment :
Determining whether a ship is impaired requires an estimation of value in use and fair value less cost of disposal. The key estimates made in the
value in use calculation include discount rates, revenue (having regard to past trend), operating profit growth rates and deployment of vessels. The
discount rate is estimated using pre-tax rates that reflect current market assessments ofthetimevalueof money. The fairvalues are estimated
based onvaluations provided by independent valuers considering latest transactions of similarassets.
Useful lives and residual values of Property, Plant and Equipment :
Useful lives and residual values of property, plant and equipment are reviewed at each year end based on the best available information. The lives
are based on historical experience with similar assets as well as anticipation of future events. Residual value of Fleet is estimated having regard
to, inter alia, past trend of steel scrap prices.
Provisions and Contingent Liabilities :
The Company is a party to certain legal disputes, the outcomes of which cannot be assessed with a high degree of certainty. A provision is
recognised where, based on the legal views and advice, it is considered probable that an outflow of resources will be required to settle a present
obligation that can be measured reliably. Contingent liabilities are disclosed in Note 37 unless the possibility of a loss arising is considered remote.
Management appliesitsjudgementin determining whether a provision should be recorded or contingent liability should be disclosed.
(e) Property, Plant and Equipment :
Property, plant and equipment (PPE) are stated at acquisition cost less accumulated depreciation and accumulated impairment losses, if any.
Cost includes expenses related to acquisition, installation of the concerned assets and any attributable cost of bringing the asset to the condition
of its intended use.
The Company identifies and determines cost of each part of an item of property, plant and equipment separately, if the part has a cost which
is significant to the total cost of that item of property, plant and equipment and has a useful life that is materially different from that of the
remaining item. Borrowing costs attributable to the acquisition or construction of a qualifying asset are also capitalised as part of the cost of the
asset.
Capital Work-in-progress and Capital Advances :
Cost of assets not ready for intended use as on the Balance Sheet date, is shown as capital work-in-progress. Advances given towards acquisition
of fixed assets outstanding at each Balance Sheet date are disclosed as OtherNon-Current Assets.
Depreciation on Property, Plant and Equipment :
(i) Depreciation is recognised on Straight Line Method basis so as to write off the original cost of the asset less its estimated residual value over
the estimated useful life. The estimated useful life of the assets is as under:
(ii) Estimated useful life of the Fleet and Ownership Flats and Buildings is considered from the year of built. Estimated useful life in case of all
otherassets is considered from the date of acquisition bythe Company.
(iii) The estimated useful lives and residual values are reviewed at the end of each reporting period based on the conditions of the vessels,
market conditions and other regulatory requirements, with the effect of any changes in estimate being accounted for on a prospective basis.
Derecognition :
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 inthe Statement of Profit and Loss.
(f) Intangible Assets :
Intangible assets are stated at acquisition cost less accumulated amortisation and accumulated impairment losses, if any. An intangible asset is
derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses on derecognition measured at
difference between net disposal proceeds and the carrying amount of the asset, are recognised inthe Statement of Profit and Loss.
Amortisation :
Intangible assets with finite lives are amortised on a Straight Line basis over the estimated useful economic life. The amortisation expense on
intangible assets with finite lives is recognised in the Statement of Profit and Loss. The estimated useful life of intangible assets is mentioned
below :
The amortisation period and the amortisation method for anintangible asset with finite useful life are reviewed at the end of each financial year.
If any ofthese expectations differfrom previous estimates, such change is accounted forasa changeinan accounting estimate.
(g) Asset classified as held for sale :
An item of Property, plant and equipment is classified as asset held for sale at the time when the Management is committed to sell/dispose off the
asset as per Memorandum of Agreement entered into with the customer and the asset is expected to be sold/disposed off within one year from
the date of classification.
Assets classified as held for sale are measured atthe lower of theircarrying amount and fairvalue less costs to sell.
(h) Impairment :
The carrying amounts of the Company's property, plant and equipment and intangible assets are reviewed at the end of each reporting period to
determine whetherthere is anyindication of impairment. If any suchindication exists, the asset's recoverable amounts are estimated in orderto
determine the extent of impairment loss, if any. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating
unit (CGU) exceeds its recoverable amount. The impairment loss, if any, is recognised in the Statement of Profit and Loss in the period in which
impairment takes place.
Assessment of recoverable amount of the vessels is based on higher of fairvalue less cost to sell and its value in use calculations, with each vessel
being regarded as one cash generating unit. Value in use is the present value of estimated future cashflows expected to arise from the continuing
use of a vessel and from its disposal at the end of its useful life. For calculating present value, future cash flows are discounted using a pre-tax
discount rate that reflects current market rates and the risk specific to the vessel. Fairvalue less cost to sell is the best estimate of the amount
obtainable from the sale of a vessel in an arm's length transaction between knowledgeable, willing parties, less the cost of disposal based on
independent third-party brokervaluations.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount,
however subject to the increased carrying amount not exceeding the carrying amount that would have been determined (net of amortisation or
depreciation) had no impairment loss been recognised forthe asset in prior accounting periods.
(i) Investments in Subsidiaries :
Non-current Investments in equity shares in subsidiaries are carried at cost less accumulated impairment losses, if any. Where an indication of
impairment exists, the carrying amount of the investment is assessed and written down to its recoverable amount. On disposal of investments in
subsidiaries, the difference between net disposal proceeds and the carrying amounts are recognised in the Statement of Profit and Loss.
Non-current Investments in preference shares of subsidiaryis measured at amortised cost as it is held within a business model whose objective
is to hold this investment in order to collect the contractual cash flows and the contractual cashflows are solely payment of principal and interest
on the principal amount outstanding.
(j) Inventories :
Inventories of fuel oil (includes returnable fuel oil from charterer as per terms of the time charter agreement), stores and spares at warehouse are
carried at lower of cost and net realisable value. Stores and spares delivered on board the vessels are charged to Statement of Profit and Loss.
Cost is ascertained on first-in-first-out basis. Net realisable value represents the estimated selling price for inventories less all costs necessary
tomakethesaleor expected amount to be realised from use as estimated bythe management, asapplicable.
(k) Borrowing Costs :
Borrowing costs include interest, ancillary cost incurred in connection with the arrangement of borrowings and exchange differences arising from
foreign currency borrowings availed on or after April 01, 2016, to the extent they are regarded as an adjustment to the interest cost. Borrowing
costs that are directly attributable to the acquisition/construction of the qualifying assets are capitalised as part of the cost of the asset, upto the
date of acquisition/completion of construction. Other borrowing costs are recognisedin profit and loss in the period in which they areincurred.
(l) Revenue Recognition :
Revenue is recognised upon transfer of control of promised services to customers at an amount that reflects the consideration which the
Company expects to receive in exchange forthose services.
The Company earns revenue from time and voyage charter.
Time Charter hire earnings are accrued on time proportion basis except where the charter party agreements have not been renewed/finalised, in
which case it is recognised on provisional basis.
Revenue from voyage charters is recognised as income, by reference to the voyage progress on load-to-discharge basis, which has been assessed
by management to be an appropriate measure of progress towards complete satisfaction of the performance obligations overtime underlnd AS
115. Judgement is involved in estimating days to reach the load port and discharge port destinations impacting the calculation of income to be
accrued for incomplete voyage. Management uses its judgement in estimating the total number of days of a voyage based on historical trends, the
operating capability of the vessel (speed andfuel consumption) and the distance of the trade route.
Demurrage revenue is recognised as the performance obligations underthe contract is satisfied.
Pool revenue is recognised as the performance obligation is satisfied overtime in accordance with the pooling agreement. Training fees included
inother operating income are accounted on accrual basis.
Revenue is measured based on the consideration to which the Company expects to be entitled in contract with customer. The consideration is
determined based on the price specified in the contract, net of address commission. Revenue excludes any taxes or duties collected on behalf of
the Government which are levied on sales such as Goods and Services tax.
There is no significant financing component inanytransaction.
(m) Expenses :
(i) Fuel oil is charged tothe Statement of Profit and Loss on consumption basis.
(ii) Stores and spares delivered on board the ships are charged tothe Statement of Profit and Loss.
(iii) Expenses on account of general average claims/damages to ships are charged tothe Statement of Profit and Loss in the yearin which they
are incurred. Claims against the underwriters are accounted for on acceptance of average adjustment bythe adjustors.
(n) Leases :
Company as a Lessee
The Company's lease asset classes primarily consist of leases for office premises, warehouse and equipment rental. The Company assesses
whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control
the use of an identified asset for a period in exchange for consideration. To assess whether a contract conveys the right to control the use of an
identified asset, the Company assesses whether: (1) the contract involves the use of an identified asset (2) the Company has substantially all of
the economic benefits from use of the asset through the period of the lease and (3)the Company has the right to direct the use of the asset.
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 overthe term of the lease.
Certain lease arrangements include the options to extend orterminate the lease before the end of the lease term. ROU assets and lease liabilities
includes these options when it is reasonably certainthat they will be exercised.
The right-of-use 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.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over useful life of the underlying asset.
The lease liability is initially measured at amortised cost at the present value of the future lease payments. The lease payments are discounted
using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of
the leases. Lease liabilities are remeasured with a corresponding adjustment to the related right-of-use assets if the Company changes its
assessment of either exercising an extension oratermination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash
flows.
Company as a Lessor
Leases can be classified as finance or operating leases. In making the assessment, certain indicators, such as whetherthe substantial risks and
rewards of ownership of the underlying asset continue with the Company, and whetherthe contract is for a major part of the economic life of the
asset, are considered.
Based on the aforementioned assessment, the time charter contracts for vessels of the Company contain operating lease component for the
purpose of Ind AS 116, 'Leases'- ReferNote 34.
o) Employee Benefits :
(i) Short-Term Employee Benefits :
All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits
such as salaries, performance incentives, etc., are recognised as an expense at the undiscounted amount in the Statement of Profit and
Loss of the yearinwhich the employee renders the related service.
(ii) Post-EmploymentBenefits:
Liability is provided for retirement benefits of Provident Fund, Superannuation, Gratuity, Post Retirement Medical Benefit Scheme and
Compensated Absencesin respect of all eligible employees and for pension benefit to eligible Whole-time Directors of the Company.
(a) DefinedContributionPlan
Employee benefits in the form of Superannuation Fund and other Seamen's Welfare Contributions are considered as defined
contribution plans and the contributions are charged to the Statement of Profit and Loss of the period when the contributions to the
respective funds are due.
(b) DefinedBenefitPlan
Retirement benefitsinthe form of Provident Fund administered bythe Company, Gratuity, Post Retirement Medical Benefit Scheme in
respect of all eligible employees and Pension plan for eligible Whole-time Directors are considered as defined benefit obligations and
are provided for on the basis of actuarial valuations, using the projected unit credit method, as at the date of the Balance Sheet.
(iii) Other Long-Term Benefits :
Long-term compensated absences are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the
date of the Balance Sheet.
Actuarial gain/loss, comprising of experience adjustments and the effects of changes in actuarial assumptions is recognised in the
Statement of Other Comprehensive Income except for Long-term compensated absences where the same is immediately recognised in the
Statement of Profit and Loss.
(p) Foreign Exchange Transactions :
(i) Items included inthe financial statements of the Company are measured using the currency of the primary economic environmentinwhich
the entity operates ('the functional currency'). The financial statements are presented in 'Indian Rupees'(INR), which is also the Company's
functional currency.
(ii) The transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rate of exchange that
approximates the actual rate at the date of transaction. Non-monetary items, which are measured in terms of historical costs denominated
in a foreign currency are reported using the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in
foreign currency, remaining unsettled at the year end are translated at closing rates. The difference in translation of long-term monetary
assets acquired and liabilities incurred prior to April 01, 2016 and gains and losses on foreign currency transactions relating to acquisition
of depreciable capital assets are added to or deducted from the cost of the asset and depreciated over the balance life of the asset; and in
other cases, accumulated in a Foreign Currency Monetary Item Translation Difference Account and amortised over the balance period of
such long-term asset/liability, by recognition as income orexpense but not beyond March 31, 2020. The difference in translation of all other
monetary assets and liabilities and realised gains and losses on other foreign currency transactions are recognised in the Statement of
Profit and Loss.
(q) Financial Instruments :
Initial Recognition :
Financial assets and financial liabilities are recognised when a Company becomes a partyto the contractual provisions ofthe instruments.
Financial assets and financial liabilities are initially measured at fair value, except for trade receivables which are initially measured at transaction
price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial
assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets orfinancial liabilities
at fairvalue through profit or loss are recognised immediately in the Statement of Profit and Loss.
Subsequent measurement :
Financial Assets :
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value through profit or loss (FVTPL)
or fair value through other comprehensive income (FVTOCI), depending on the classification of the financial assets. The purchase and sale of
financial assets are accounted for attrade date.
Cash and Cash Equivalents :
Cash and cash equivalents include cash in hand, demand deposits with banks, other short-term highly liquid financial instruments which are
readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three
months orless.
Fixed deposit having residual maturity upto twelve months from the reporting period is considered as part of bank balances other than cash
and cash equivalent. Fixed deposit with residual maturity more than twelve months from reporting period is classified under other non-current
assets.
Debt Instruments :
Debt instruments are initially measured at amortised cost, fair value through other comprehensive income (FVTOCI) or fair value through profit
or loss (FVTPL) till derecognition on the basis of (i) the entity's business model for managing the financial assets and (ii) the contractual cash flow
characteristics of the financial asset.
(i) Measured at Amortised Cost :
Financial assets that are held within a business model whose objective is to hold financial assets in orderto collect contractual cash flows
that are solely payments of principal and interest, are subsequently measured at amortised cost using the effective interest rate (EIR)
method less impairment, if any. The amortisation using EIR and loss arising from impairment, if any, is recognised in the Statement of Profit
and Loss.
Under the effective interest method, the future cash receipts are exactly discounted to the initial recognition value using the effective
interest rate. The cumulative amortisation using the effective interest method of the difference between the initial recognition amount
and the maturity amount is added to the initial recognition value (net of principal repayments, if any) of the financial asset over the relevant
period of the financial asset to arrive at the amortised cost at each reporting date. The corresponding effect of the amortisation under
effective interest method is recognised as interest income over the relevant period of the financial asset. The same is recognised in the
Statement of Profit and Loss.
(ii) Measured at Fair value through Other Comprehensive Income (FVTOCI) :
Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual
cash flows that are solely payments of principal and interest 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, are subsequently measured at fair value through
other comprehensive income. Fair value movements are recognised in the other comprehensive income (OCI). Interest income measured
using the EIR method and impairment losses, if any are recognised in the Statement of Profit and Loss. On derecognition, cumulative gain or
loss previously recognised inOCI is reclassified to profit or loss.
Further, the Company, through an irrevocable election at initial recognition, has measured certain investments in equity instruments at
FVTOCI. The Company has made such election on an instrument by instrument basis. These equity instruments are neither held for trading
nor are contingent consideration recognised under a business combination. Pursuant to such irrevocable election, subsequent changes in
the fair value of such equity instruments are recognised in OCI. However, the Company recognises dividend income from such instruments
in the Statement of Profit and Loss.
On derecognition of such financial assets, cumulative gain or loss previously recognised in OCI is not reclassified from the equity to
Statement of Profit and Loss. However, theCompany maytransfer such cumulative gainorlossinto retained earnings withinequity.
(iii) Measured at Fair value through Profit or Loss (FVTPL):
A financial asset not classified at either amortised cost or FVTOCI, is classified as FVTPL. Such financial assets are measured at fairvalue
with all changes in fairvalue, including interest income and dividend income if any, recognisedinthe Statement of Profit and Loss.
Impairment of Financial Assets :
Expected credit losses (ECL) are recognised for all financial assets subsequent to initial recognition other than financials assets in FVTPL
category. The Company's trade receivables do not contain significant financing component and loss allowance on trade receivables is measured
at an amount equal to lifetime expected losses i.e. expected cash shortfall. The impairment losses and reversals are recognised in the Statement
of Profit and Loss.
In case of other assets, the Company determines if there has been a significant increase in credit risk of the financial asset since initial recognition.
If the credit risk of such assets has not increased significantly, an amount equal to 12-month ECLis measured and recognised as loss allowance.
However, if credit risk has increased significantly, an amount equal to lifetime ECL is measured and recognised as loss allowance.
ECLimpairment loss allowance recognised during the period is recognised in the Statement of Profit and Loss.
Derecognition of Financial Assets :
The Company derecognises a financial asset when the contractual rights to the cashflows 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. On derecognition of a financial asset, (except as
mentioned above for financial assets measured at FVTOCI), the difference between the carrying amount and the consideration received is
recognised inthe Statement of Profit and Loss.
Financial liabilities and Equity Instruments :
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 equityinstrument.
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 bytheCompanyare recognised at the proceeds received, net of direct issue costs.
Financial Liabilities :
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
Financial liabilities are classified as at FVTPLwhenthe financial liability is held fortrading oritis designated as at FVTPL.
For financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to
changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of changes in the
liability's credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. The remaining amount
of change in the fair value of liability is recognised in profit or loss. Changes in fair value attributable to a financial liability's credit risk that are
recognised in other comprehensive income are not subsequently reclassified to profit or loss; instead, they are transferred to retained earnings
upon derecognition ofthe financial liability.
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent
accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the
effectiveinterest method.
Derecognition of Financial Liabilities :
The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or have expired.
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 derecognised and the consideration paid and payable is recognised inthe Statement of Profit and Loss.
Offsetting Financial Instruments :
Financial assets and liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset
the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally
enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default,
insolvencyorbankruptcy of the Companyorthe counterparty.
Derivative Financial Instruments :
The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks,
including foreign exchange forward contracts, interest rate swaps, currency swaps, commodity swaps etc. Further details of derivative financial
instruments are disclosed in Note 38.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their
fairvalue at the end of each reporting period. The resulting gainor loss is recognisedinthe Statement of Profit and Lossimmediatelyunless the
derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the Statement of Profit and Loss
depends on the nature of the hedging relationship and the nature of the hedged item. The gains or losses on derivative contracts related to the
acquisition of depreciable capital assets are added to or deducted from the cost ofthe assets and not recognised inthe Statement of Profit and
Loss.
Embedded Derivatives :
Derivatives embedded in non-derivative host contracts that are not financial instruments within the scope of Ind AS 109 are treated as separate
derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at
FVTPL.
Hedge Accounting :
The Company designates certain hedging instruments, which include derivatives and non-derivatives in respect of foreign currency risk, as either
fairvalue hedges or cash flow hedges.
At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item, along
with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge
andonanongoing basis, the Company documents whetherthe hedging instrument is highly effectiveinoffsetting changesinfairvaluesor cash
flows of the hedged item attributable to the hedged risk. Note 38 sets out details of the fair values of the derivative instruments used for hedging
purposes.
Fair Value Hedges :
Changesinfairvalue of the designated portion of derivatives that qualify as fairvalue hedges are recognised inthe Statement of Profit and Loss
immediately, together with any changes in the fairvalue of the hedged asset or liability that are attributable to the hedged risk. The change in the
fairvalue of the designated portion of hedging instrument and the change in the hedged item attributable to the hedged risk are recognised in the
Statement of Profit and Lossinthe line item relating to the hedged item.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies
for hedge accounting. The fair value adjustment to the carrying amount of the hedged item arising from the hedged risk is amortised to the
Statement of Profit and Loss from that date.
Cash Flow Hedges :
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in Other
Comprehensive Income and accumulated underthe heading of Cash Flow Hedging Reserve. The gain or loss relating to the ineffective portion is
recognised immediatelyinthe Statement of Profit and Loss.
Amounts previously recognised inOther Comprehensive Income and accumulatedin equity (relating to effective portion as described abovelare
reclassified to the Statement of Profit and Loss in the periods when the hedged item affects profit or loss, in the same line as the recognised
hedged item. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, such
gains and losses are transferred from equity (but not as a reclassification adjustment) and included in the initial measurement of the cost of the
non-financial asset or non-financial liability.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for
hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated in equity at that time remains in equity and is
recognised when the forecast transaction is ultimately recognised inthe Statement of Profit and Loss. When a forecasttransaction is no longer
expected to occur, the gain or loss accumulatedin equity is recognised immediatelyinthe Statement of Profit and Loss.
(r) Taxation :
Tax expense for the year comprises current and deferred tax. The tax currently payable is based on taxable profit for the year. The Company's
liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting
period. Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid/recovered for
uncertain tax positions.
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. In contrast, deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against
which the deductible temporary differences can be utilised.
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 when the liability is settled or the asset is
realised based on the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. 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 cover or settle the carrying value of its assets and liabilities.
Current and deferred tax are recognised as an expense or income in the Statement of Profit and Loss, except when they relate to items credited
or debited eitherinother comprehensiveincome or directly in equity, in which case thetaxisalso recognised inother comprehensive income or
directly in equity respectively.
Deferred tax assets and liabilities are offset to the extent that they relate to taxes levied by the same tax authority and there are legally enforceable
rights to set off current tax assets and current tax liabilities within that jurisdiction. Deferred tax assets include Minimum Alternate Tax (MAT)
paid in accordance with the tax laws which is likely to give future economic benefits in the form of availability of set off against future income tax
liability.
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