are capitalised on the fifteenth day of that month,
whereas, if they are ready to use in the second half
of a month, they are capitalised on the last day of
that month
(c) Advances paid towards acquisition of property, plant
& equipment are disclosed as Capital Advances
under Loans and Advances.
(d) Depreciation on following assets is provided to the extent
of depreciable amount on Straight Line Method over the
useful life of the assets as prescribed in schedule II to
the Companies Act, 2013 except in respect of following
Fixed Assets where the assessed useful life is different
than that prescribed in Schedule II.
2 (A) Material Accounting Policies
2.1. Property, Plant & Equipment
(a) Property, plant and equipment, including Capital work
in progress are stated at cost, net of recoverable
taxes, trade discount and rebates less accumulated
depreciation and impairment losses, if any. Such cost
includes purchase price, borrowing cost, any cost directly
attributable to bring the assets to its working condition
for its intended use apportioned based on predetermined
ratio, net changes on foreign exchange contracts and
arrangements arising from exchange rate variations
attributable to the assets and the initial estimate of
the costs of dismantling and removing the item and
restoring the site on which it is located. On transition to
IND AS, the Company had elected to continue with the
previous GAAP carrying values as deemed cost for all
items of property, plant and equipment.
(b) The tangible assets at the cellular sites, which are
ready to use in the first fifteen days of a month
The management believes that the useful lives as
given above represent the period over which these
assets are expected to be used.
(e) The towers have been depreciated on straight line
method at the rate of 2.72% per annum based on
useful life of 35 years in terms of specific approval
received from the Ministry of Corporate Affairs,
Government of India vide Order no.45/2/2010-
CL-III dated May 26, 2010 issued under Section
205(2)(d) of the Companies Act, 1956.The approval
continues to be valid vide letter no.51/9/2014-CL-
III dated September 19, 2014 received from Ministry
of Corporate Affairs, Government of India.
(f) Further, in respect of Fixed Assets whose actual cost
does not exceed ' 5,000, depreciation is provided at
100% in the year of addition
(g) The leasehold improvements have been depreciated
over the lease period.
(h) The revised carrying amount of the assets identified
as impaired have been depreciated over residual
useful life of the respective assets
(i) The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.
(j) Gains or losses arising from disposal (dismantling/
sale/retirement/loss due to theft by unknown
miscreants) of tangible assets are measured as the
difference 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
disposed. Insurance Claims for loss of material are
accounted upon receipt of the same.
2.2. Investment Properties
Property that is held for long-term rental yields or for
capital appreciation or both, and that is not occupied by the
Company, is classified as investment property. Investment
properties are measured initially at cost, including
transaction costs. Subsequent to initial recognition,
investment properties are stated at cost less accumulated
depreciation and accumulated impairment loss, if any.
Depreciation on investment properties is provided using
straight line method over the estimated useful lives as
specified in Schedule II to the Companies Act, 2013.
Residual values, useful lives and method of depreciation of
investment properties are reviewed at each financial year
end and impact of change, if any is adjusted prospectively.
The effects of any revision are included in the statement
of profit and loss when the changes arise.
Though the Company measures investment properties
using cost-based measurement, the fair value of
investment property is disclosed in the notes.
Investment properties are derecognised 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 recognised
in statement of profit and loss in the year of de-recognition.
2.3. Intangible Assets
I ntangible Assets are stated at cost of acquisition net of
recoverable taxes less accumulated amortisation and
impairment loss, if any. The cost comprises purchase price,
borrowing cost, and any cost directly attributable to bringing
the asset to its working condition for the intended use. On
transition to IND AS, the Company had elected to continue
with the previous GAAP carrying values as deemed cost.
Gains or losses arising from derecognition of an intangible
asset are measured as the difference 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.
The Company amortises intangible assets using the
straight-line method based on useful lives estimated by
the management as mentioned below:
Computer Software 3 years
2.4. Impairment of Non-Financial Assets including
Investment property
At each balance sheet date, the Company assesses whether
there is any indication that any property, plant & equipment
and intangible asset may be impaired. 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).
For the purpose of impairment testing, the recoverable
amount is determined on an individual asset basis unless
the asset does not generate cash flows that are largely
independent of those from other assets. In such cases, the
recoverable amount is determined for the Cash Generating
Units (CGUs) to which the asset belongs.
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.
If the recoverable amount of an asset (or CGU) is
estimated to be less than its carrying amount, the carrying
amount of the asset (or CGU) is reduced to its recoverable
amount. An impairment loss is recognised immediately
in the Statement of profit and loss. The impairment loss
recognised in prior accounting period is reversed if there
has been a change in the estimate of recoverable amount.
2.5. Inventories
Inventories are valued at cost or net realisable value,
whichever is lower. The valuation is determined based
on recent prices and includes cost of purchase and other
expenses incurred in bringing inventories to their present
location and condition as applicable. Net realisable value
is the estimated selling price in the ordinary course of
business, less estimated costs of completion and the
estimated costs necessary to make the sale.
2.6. Cash and cash equivalent
Cash and cash equivalent in the balance sheet comprise
cash at banks, on hand, cheques in hand, funds in transit
and short-term deposits with an original maturity of three
months or less, which are subject to an insignificant risk
of changes in value.
2.7. 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.
I) Financial assets
A. Initial recognition and measurement
All financial assets are initially recognised at fair
value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets, which
are not at fair value through profit or loss are adjusted
to the fair value on initial recognition; however, trade
receivables that do not contain a significant financing
component are measured at transaction price.
Purchase and sale of financial asset are recognised
using trade date accounting i.e., the date that the
Company commits to purchase or sell the asset.
B. Subsequent measurement
i) Financial Assets carried at amortised cost (AC)
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
the contractual cash flows and the contractual terms
of the financial asset give rise on the specified dates
to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method. 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 in finance income in the profit or loss. The
losses arising from impairment are recognised in
the profit or loss. This category applies to Trade and
other receivables, Security deposits, Other advance,
Unbilled Income, Interest Receivable etc.
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 assets give rise on specified dates to
cash flows that are solely payments of principal and
interest on the principal amount outstanding.
iii) Financial Assets at Fair Value through profit or
loss (FVTPL)
A financial asset which is not classified in any of the
above categories is subsequently fair valued through
profit or loss.
C. Equity investments
All equity investments other than investment in
Subsidiary and Associate are measured at fair value,
with value changes recognised in Statement of Profit
and loss except for those equity investments for
which the Company has elected to present the value
changes in 'other comprehensive income'
The Company makes such election on an
instrument-by-instrument basis. The classification
is made on initial recognition and is irrevocable.
D. Investment in subsidiaries and associates
The Company accounts for its investments in subsidiaries
and associates at cost in financial statements
E. Derecognition
A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e., removed from
the Company's balance sheet) when:
• The rights to receive cash flows from the asset
have expired, or
• The Company has transferred its rights to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without material delay to a third party under
a 'pass-through' arrangementand 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.
F. Impairment of financial assets
I n accordance with IND AS 109, the Company uses
'Expected Credit Loss' (ECL) policy for evaluating
impairment of financial assets other than those
measured at fair value through profit and loss (FVTPL).
Expected credit losses are measured through a loss
allowance at an amount equal to:
a) The 12-months expected credit losses
(expected credit losses that result from those
default events on the financial instrument
that are possible within 12 months after the
reporting date); or
b) Full lifetime expected credit losses (expected
credit losses that result from all possible default
events over the life of the financial instrument)
For trade receivables Company applies 'simplified
approach' which requires expected lifetime losses
to be recognised from initial recognition of the
receivables. The Company uses historical default rates
to determine impairment loss on the portfolio of trade
receivables. At every reporting date these historical
default rates are reviewed and changes in the forward
looking estimates are analyzed. The Company fully
provides for receivables outstanding for over 6 months
unless collection is assured. In certain cases, it also
makes provisions for receivables outstanding for less
than 6 months based on its estimates.
For other assets, the Company uses 12 month ECL to
provide for impairment loss where there is no significant
increase in credit risk. If there is significant increase
in credit risk full lifetime ECL is used to recognising
impairment loss allowance based on 12-month ECL.
II. Financial liabilities
A. Initial recognition and measurement
Financial liabilities are classified, at initial recognition,
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.
The Company's financial liabilities include trade and
other payables, loans and borrowings including bank
overdrafts, deposits received from customers etc
B. Subsequent measurement
The measurement of financial liabilities depends on
their classification, as described below:
a) Financial liabilities at fair value through
profit or loss
Financial liabilities at fair value through profit or
loss include financial liabilities held for trading
and financial liabilities designated upon initial
recognition as such. Financial liabilities are
classified as held for trading if they are incurred
for the purpose of repurchasing in the near term.
This category also includes derivative financial
instruments entered into by the Company that
are not designated as hedging instruments
in hedge relationships as defined by IND AS
109. Separated embedded derivatives are also
classified as held for trading unless they are
designated as effective hedging instruments.
Gains or losses on liabilities held for trading are
recognised in the profit or loss.
Financial liabilities designated upon initial
recognition at fair value through profit or loss
are designated as such at the initial date of
recognition, and only if the criteria in IND AS 109
are satisfied. For liabilities designated as FVTPL,
fair value gains/ losses attributable to changes
in own credit risk is recognized in OCI. These
gains/ losses are not subsequently transferred
to P&L. However, the Company may transfer
the cumulative gain or loss within equity. All
other changes in fair value of such liabilities are
recognised in the statement of profit and loss.
b) Loans and borrowings, deposits
After initial recognition, interest-bearing loans
and borrowings are subsequently measured
at amortised cost using the EIR method. Gains
and losses are recognised in profit or loss when
the liabilities are derecognised or through the
EIR amortisation process.
After initial recognition, part of interest free
deposits received from customers initially recorded
as deposit is subsequently measured as amortised
cost and the other part recorded as advance
revenue is amortised on a straight-line basis
Amortised cost is calculated by taking
into account any discount or premium on
acquisition/redemption 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.
c) Financial guarantee contracts
Financial guarantee contracts issued by the
Company are those contracts that require a
payment to be made to reimburse the holder
for a loss it incurs because the specified
debtor fails to make a payment when due in
accordance with the terms of a debt instrument.
Financial guarantee contracts are recognised
initially as a liability 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 loss allowance determined as per impairment
requirements of IND AS 109 and the amount
recognised less cumulative amortisation.
d) Derecognition
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 the 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 and loss.
III. Embedded derivatives
An embedded derivative is a component of a hybrid
(combined) contract that also includes a non¬
derivative host contract - with the effect that some
of the cash flows of the combined instrument vary
in a way similar to a stand-alone derivative. An
embedded derivative causes some or all of the cash
flows that otherwise would be required by the contract
to be modified according to a specified interest rate,
financial instrument price, commodity price, foreign
exchange rate, index of prices or rates, credit rating or
credit index, or other variable, provided in the case of a
non-financial variable that the variable is not specific
to a party to the contract. Reassessment only occurs
if there is either a change in the terms of the contract
that significantly modifies the cash flows that would
otherwise be required or a reclassification of a financial
asset out of the fair value through profit or loss.
If the hybrid contract contains a host that is a financial
asset within the scope of IND AS 109, the Company
does not separate embedded derivatives. Rather, it
applies the classification requirements contained in
IND AS 109 to the entire hybrid contract. Derivatives
embedded in all other host contracts are accounted
for as separate derivatives and recorded at fair value
if their economic characteristics and risks are not
closely related to those of the host contracts and the
host contracts are not held for trading or designated
at fair value though profit or loss. These embedded
derivatives are measured at fair value with changes
in fair value recognised in profit or loss, unless
designated as effective hedging instruments.
IV. 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. Such changes are
evident to external parties. 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.
V. Offsetting of financial instruments
Financial assets and financial liabilities are offset
and the net amount is reported in the 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.
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