3) Material accounting policies
A) Operating cycle
Based on the nature of business and the time between the acquisition of assets for processing and their realisation
in cash and cash equivalent, the Company has considered the operating cycle as 12 months.
B) Foreign currency transactions
Transactions in foreign currencies are translated into the functional currency of Company at the exchange rates at
the dates of the transactions or an average rate if the average rate approximates the actual rate at the date of the
transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the
exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign
currency are translated into the functional currency at the exchange rate when the fair value was determined. Non¬
monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate
at the date of the transaction. Foreign currency exchange differences are generally recognised in profit or loss.
C) Financial instruments
i) Recognition and initial measurement
Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities
are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is
initially measured at fair value plus or minus, for an item not at FVTPL, transaction costs that are directly
attributable to its acquisition or issue. A trade receivable without a significant financing component is initially
measured at the transaction price.
ii) Classification and subsequent measurement
Financial assets:
On initial recognition, a financial asset is classified as measured at
- amortised cost;
- fair value through other comprehensive income tFVOCI)
- fair value through profit and loss tFVTPL)
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the
Company changes its business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated
as at FVTPL:
a) the asset is held within a business model whose objective is to hold assets to collect contractual cash
flows; and
b) 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.
A debt investment is measured at fair value through other comprehensive income if it meets both the following
conditions and is not designated as FVTPL:
a) the asset is held within a business model whose objective is achieved by both collecting contractual cash
flows and selling financial assets; and
b) 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.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to
present subsequent changes in the investment's fair value in OCI (designated as FVOCI - equity investment).
This election is made on an investment by investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at
FVTPL. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the
requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch that would otherwise arise.
Financial assets: Business model assessment
The Company makes an assessment of the objective of the business model in which a financial asset is held at
a portfolio level because this best reflects the way the business is managed and the information is provided to
management. The information considered includes:
- the stated policies and objectives for the portfolio and the operation of those policies in practice;
- these include whether management strategy focuses on earning contractual interest, maintaining a particular
interest rate profile, matching the duration of financial assets to the duration of any related liabilities or
expected cash outflows or realising cash flows through the sale of assets;
- how the performance of the portfolio is evaluated and reported to the Company's management;
- the risk that affect the performance of the business model (and the financial assets held with in the
business model) and how those risks are managed;
- how managers of the business are compensated;
- the frequency, volume and timing of sales of financial assets in prior period, the reasons for such sales and
expectations about future sales activity.
Financial assets that are held for trading or are managed and whose performance is evaluated on fair value basis
are measured at FVTPL.
For the purposes of this assessment, principal' is defined as the fair value of the financial asset on initial
recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated
with the principal amount outstanding during a particular period of time and for other basic lending risks and
costs, as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Company
considers the contractual terms of the instrument. This includes assessing whether the financial asset contains
a contractual term that could change the timing or amount of contractual cash flows such that it would not
meet this condition. In making this assessment, the Company considers:
- contingent events that would change the amount or timing of cash flows;
- terms that may adjust the contractual coupon rate, including variable interest rate features;
- prepayment and extension features; and
- terms that limit the Company's claim to cash flows from specified assets
Financial liabilities: Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at
FVTPL if it is classified as held for trading, or it is designated as such on initial recognition. Financial liabilities at
FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in
profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest
method. Interest expense and foreign exchange gains and losses are recognised in statement of profit and loss.
Any gain or loss on derecognition is also recognised in statement of profit and loss..
Derivative financial instruments and hedge accounting
The Company uses derivative financial instruments such as foreign exchange forward contracts to hedge its
foreign currency exposure. Derivatives are initially measured at fair value. Subsequent to initial recognition,
derivatives are measured at fair value and changes therein are generally recognised in the statement of profit
and loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when
the fair value is negative. The Company has not opted for hedge accounting and all derivatives outstanding at the
end of the year has been fair valued.
iii) Derecognition
Financial assets:
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset
expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of
the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers
nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but
retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets
are not derecognised.
Financial liabilities:
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the
modified terms are substantially different. In this case, a new financial liability based on the modified terms is
recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the
new financial liability with modified terms is recognised in statement of profit or loss.
iv) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and
only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to
settle them on a net basis or to realise the asset and settle the liability simultaneously.
v) Other income
- Interest income is recognized on the basis of time, by reference to the principal outstanding and at effective
interest rate applicable on initial recognition.
- Dividend income from investments is recognized when the right to receive has been established.
- Rental income arising from operating leases is accounted on straight-line basis over the lease term.
- Income from sale of scrap is accounted for on realization, if any.
D) Property, plant and equipment (other than oil and gas assets)
i) Recognition and initial measurement
Buildings held for use in the production and supply of goods or services, or for administrative purposes are
stated in the balance sheet at cost less accumulated depreciation and the accumulated impairment losses.
Freehold land is carried at historical cost less accumulated impairment loss, if any. All other items of property,
plant and equipment are stated at historical cost / deemed cost less accumulated depreciation and accumulated
impairment loss, if any.
The cost of an item of property, plant and equipment including capital work-in-progress shall be recognised as an
asset if, and only if it is probable that future economic benefits associated with the item will flow to the
Company and the cost of the item can be measured reliably.
Items of property, plant and equipment (including capital work-in-progress are measured at cost, (which includes
capitalised borrowing costs, if any) less accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non¬
refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of
bringing the item to its working condition for its intended use and the initial estimate of the costs of dismantling
and removing the item and restoring the site on which it is located, the obligation for which an entity incurs
either when the item is acquired or as a consequence of having used the item during a particular period for
purposes other than to produce inventories during that period.
The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct
labour, any other costs directly attributable to bringing the item to working condition for its intended use.
Advances paid towards the acquisition of property plant and equipment outstanding at each balance sheet date
are disclosed as Capital advances under long term loan and advances and cost of fixed assets not ready for their
intended use are carried at cost comprising direct cost, related incidental expenses and attributable interest
and are disclosed under Capital work in progress.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted
for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in statement of profit and
loss.
ii) Transition to Ind AS
The cost of property, plant and equipment at 1 April 2016, the Company's date of transition to Ind AS, was
determined with reference to its carrying value recognised as per the previous GAAP (deemed cost), as at the
date of transition to Ind AS.
iii) 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 item can be measured reliably.
iv) Depreciation
Depreciation is calculated on cost of items of property, plant and equipment less their estimated residual values
over their estimated useful lives using the written down value method, and is recognised in the statement of
profit and loss. The estimated useful lives of items of property, plant and equipment for the current and comparative
periods are as follows:
Leasehold improvements are amortized on a straight line basis over the useful life of the asset or the lease
period whichever is lower.
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted
prospectively, if appropriate. Based on technical evaluation and consequent advice, the management believes
that its estimates of useful lives as given above best represent the period over which management expects to
use these assets.
Depreciation on additions (disposals) is provided on a pro-rata basis i.e. from (up to) the date on which asset is
ready for use (disposed of).
E) Oil and gas assets
Oil and gas assets are stated at historical cost less accumulated depletion and impairment. These are accounted in
respect of an area / field having proved oil and gas reserves, when the wells in the area / field are ready to commence
commercial production. The Company follows the "Successful Efforts Method" of accounting for oil and gas assets as set
out by the Guidance Note issued by the ICAI on "Accounting for Oil and Gas Producing Activities". The Company classifies
Oil and Gas assets as tangible and intangible based on the nature of the expense. Costs in the nature of development
drilling costs, piping & pumps and producing wells are classified as tangible assets, where as costs pertaining to
acquired rights to explore, cost of surveys, studies (where capitalised) are capitalised an intangible assets.
i) Pre-acquisition cost
Expenditure incurred prior to obtaining the right(s) to explore, develop and produce oil and gas is expensed as
and when incurred.
ii) Acquisition cost
Acquisition cost of an oil and gas asset represents costs incurred to acquire interests and is accounted for as
follows:
Exploration and development stage:
Acquisition costs relating to projects under exploration or development are initially recognised as either Capital
work in progress - Exploration Expenditure / Development Expenditure or as Intangible assets under development,
respectively based on their nature. Such costs are capitalised and transferred to Oil and Gas Assets (Tangible /
Intangible) when a well is ready to commence commercial production. In the case of abandonment or relinquishment
of Exploration expenditure, such costs are written off.
Production stage:
Acquisition costs of producing oil and gas assets are capitalised as proved property acquisition costs under Oil and
Gas Assets and are amortised using the unit of production method over the proved reserves of the underlying
assets.
iii) Capital work in progress - Exploration and Development expenditure
All costs relating to exploration and development are initially capitalised as CWIP and are transferred to oil and
gas assets upon completion.
iv) Production cost
Production costs include pre-wellhead and post-well-head expenses, including depreciation and applicable operating
costs of support equipment and facilities.
Depletion to oil and gas assets
All expenditures carried within each field are amortised from the commencement of production using the unit of
production (UOP) method. Under this method, amortisation is determined by multiplying the depletion base
(Gross block of the field less Accumulated depreciation of the block) with the ratio of oil and gas production
during the period to the estimated quantities of depletable reserves at the end of the period, adjusted for
production during the period. Amortisation is generally performed on a field-by-field basis or over a group of
fields that are dependent on common infrastructure.
Depletable reserves comprise proved reserves for acquisition costs and proved developed reserves for successful
exploratory wells, development wells, processing facilities, distribution assets, estimated future abandonment
costs, and other related costs. These assets are depleted within each cost centre accordingly. Reserves used
for this purpose are considered on a working interest basis and are reassessed at least annually. The impact of
changes in reserve estimates is accounted for prospectively.
F) Site restoration
Provision for decommissioning costs are recognized as and when the Company has a legal or constructive obligation
to plug and abandon a well, dismantle and remove plant and equipment to restore the site on which it is located. The
estimated liability towards the costs relating to dismantling, abandoning and restoring well sites and allied facilities
are recognized in respective assets when the well is completed, and the plant and equipment are installed.
The amount recognized is the present value of the estimated future expenditure determined using existing technology
at current prices and escalated using appropriate inflation rate till the expected date of decommissioning and discounted
up to the reporting date using the appropriate risk-free interest rate.
The corresponding amount is also capitalized to the cost of the producing property ti.e. Property, plant and equipment
- Oil and gas assets) and is depleted on unit of production method. Any change in the estimated liability and related
assumptions are dealt with prospectively and is also adjusted to the carrying value of the producing property ti.e.
Property, plant and equipment - Oil and gas assets).
Any change in the present value of the estimated decommissioning expenditure other than the periodic unwinding of
discount is adjusted to the decommissioning provision and the carrying value of the asset. In case reversal of provision
exceeds the carrying amount of the related asset, the excess amount is recognized in the statement of profit and
loss. The unwinding of discount on provision is charged in the statement of profit and loss as finance cost.
Provision for decommissioning cost in respect of assets under joint operations is considered as per the participating
interest of the Company in the block / field.
G) Investment property
i) Recognision and initial measurement
Investment property is property held either to earn rental income or for capital appreciation or for both, but not
for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative
purposes. Upon initial recognition, an investment property is measured at cost, including related transaction
costs. Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation
and accumulated impairment losses, if any.
Investment property is derecognised either when it has been disposed of or when it is permanently withdrawn
from use and no future economic benefit is expected from its disposal. Any gain or loss on disposal of investment
property (calculated as the difference between the net proceeds from disposal and the carrying amount of the
item) is recognised in profit or loss.
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 Group and the cost of the item can be measured reliably.
iii) Depreciation
Depreciation is recognized using the written down value method, so as to write off the cost of the investment
property less their residual values over their useful lives specified in Schedule II to the Companies Act, 2013, or in
the case of assets where the useful lives are determined by technical evaluation, over the useful lives so determined.
Depreciation method, useful life and the residual values are reviewed at each financial year end to reflect the
expected pattern of consumption of the future benefits embodied in the investment property and the value thereon.
The effect of any change in the estimates of useful lives / residual value is accounted on a prospective basis.
iv) Reclassification from / to investment property
Transfers to tor from) investment property are made only when there is a change in use. Transfers between
investment property, owner-occupied property and inventories do not change the carrying amount of the property
transferred and they do not change the cost of that property for measurement or disclosure purposes.
v) Fair value disclosure
The fair values of investment property is disclosed in the notes. Fair values is determined by an independent
valuer who holds a recognised and relevant professional qualification and has recent experience in the location
and category of the investment property being valued.
H) Intangible assets - Exploration and Evaluation
Exploration and evaluation expenditure incurred prior to obtaining the mining right or the legal right to explore is
expensed as incurred.
Exploration and evaluation expenditure incurred after obtaining the mining right or the legal right to explore is capitalised
as exploration and evaluation assets (intangible assets) and stated at cost less impairment, if any. Exploration and
evaluation intangible assets are transferred to the appropriate category of property, plant and equipment when
technical feasibility and commercial viability have been determined. Exploration intangible assets under development
are assessed for impairment, and any impairment loss is recognised prior to such reclassification.
Exploration expenditure includes all direct and allocable indirect expenditure associated with identifying specific mineral
resources. This includes depreciation and applicable operating costs of related support equipment and facilities, as
well as other exploration-related costs, such as:
• Acquisition costs - costs associated with acquisition of licences and rights to explore, including related professional
fees.
• General exploration costs - costs of surveys and studies, rights of access to properties to conduct such studies
te.g., costs incurred for environmental clearance, defence clearance, etc.), and salaries and other expenses of
geologists, geophysical crews, and other personnel involved in such activities.
• Exploration drilling costs - costs of drilling and equipping exploration and appraisal wells.
Exploration expenditure incurred in the process of determining oil and gas exploration targets is capitalised within
Exploration and Evaluation Assets (intangible assets) and is subsequently allocated to drilling activities. Exploration
drilling costs are initially capitalised on a well-by-well basis until the success or otherwise of the well has been
established. The success or failure of each exploration effort is evaluated on a well-by-well basis. Drilling costs are
written off upon completion of a well unless the results indicate the existence of hydrocarbon reserves and there is
a reasonable prospect that such reserves are commercially viable.
Following appraisal of successful exploration wells, where commercial reserves are established and technical feasibility
of extraction is demonstrated, the related capitalised exploration costs are transferred to a single field cost centre
within property, plant and equipment, i.e., development/producing assets toil and gas properties), after impairment
testing. Where exploration drilling results indicate the presence of hydrocarbons that are ultimately not considered
commercially viable, all related costs are written off to the statement of profit and loss.
Expenditure incurred on the acquisition of a licence interest is initially capitalised on a licence-by-licence basis. Such
costs are held, without depletion, within exploration and evaluation assets until the exploration phase of the licence
area is completed or commercial reserves are discovered.
Net proceeds from any disposal of an exploration asset are initially adjusted against the previously capitalised costs,
and any resulting surplus or deficit is recognised in the statement of profit and loss.
I Intangible assets - other than exploration
i) Recognision and initial measurement
Intangible assets with finite useful lives are carried at cost less accumulated amortisation and impairment
losses, if any. The cost of an intangible asset comprises its purchase price, including any import duties and
other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable
expenditure on making the asset ready for its intended use and net of any trade discounts and rebates.
The intangible assets are amortised over the irrespective individual estimated useful lives on a straight-line
basis, commencing from the date the asset is available to the Company for its use. The amortisation period are
reviewed at the end of each financial year and the amortisation method is revised to reflect the changed
pattern. Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or
changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment
losses.
ii) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill
and brands, is recognised in statement of profit and loss as incurred.
iii) Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values over
their estimated useful lives using the straight-line method, and is included in depreciation and amortisation in
statement of profit and loss.
J) Inventories
Finished goods: Closing stock of crude oil and condensate in saleable condition is valued at the estimated net realizable
value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs
of completion and selling expenses.
Stores and spares: Cost includes cost of purchase and other costs incurred in bringing the inventories to their
present location and condition. Cost is determined on weighted average cost basis.
K) Impairment
i) Impairment of financial assets
The Company recognises loss allowances for expected credit losses on financial assets measured at amortised
cost
At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit
impaired. A financial asset is 'credit impaired' when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit impaired includes the following observable data:
- significant financial difficulty of the borrower or issuer;
- a breach of contract such as a default or past dues;
- the restructuring of a loan or advance by the Company on terms that the Company would not consider
otherwise;
- it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
- the disappearance of an active market for a security because of financial difficulties.
Loss allowances for trade receivables are always measured at an amount equal to lifetime expected credit
losses.
Lifetime expected credit losses are the expected credit losses that result from all possible default events over
the expected life of a financial instrument.
12-month expected credit losses are the portion of expected credit losses that result from default events that
are possible within 12 months after the reporting date tor a shorter period if the expected life of the instrument
is less than 12 months).
In all cases, the maximum period considered when estimating expected credit losses is the maximum contractual
period over which the Company is exposed to credit risk.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition
and when estimating expected credit losses, the Company considers reasonable and supportable information
that is relevant and available without undue cost or effort. This includes both quantitative and qualitative
information and analysis, based on the Company's historical experience and informed credit assessment and
including forward looking information.
The Company assumes that the credit risk on a financial asset has increased significantly if it is past due.
The Company considers a financial asset to be in default when:
- the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company
to actions such as realising security tif any is held); or
- the financial asset is past due.
Measurement of expected credit losses
Expected credit losses are a probability weighted estimate of credit losses. Credit losses are measured as the
present value of all cash shortfalls ti.e. the difference between the cash flows due to the Company in accordance
with the contract and the cash flows that the Company expects to receive).
Presentation of allowance for expected credit losses in the balance sheet
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount
of the assets.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there
is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor
does not have assets or sources of income that could generate sufficient cash flows to repay the amounts
subject to the write off. However, financial assets that are written off could still be subject to enforcement
activities in order to comply with the Company's procedures for recovery of amounts due.
ii) Impairment of non-financial assets
At each reporting date, the Company reviews its non-financial assetstother than inventories, contract assets,
and deferred tax assets) to determine whether there is any indication of impairment. If any such indication
exists, then the asset's recoverable amount is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows of other assets or Cash Generating
Units t"CGUs").
The recoverable amount of an individual asset or CGU is the greater of its value in use and its fair value less
costs of disposal. Value in use is based on the estimated future cash flows, 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 or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any
goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro
rata basis.
In respect of other assets for which impairment loss has been recognised in prior periods, the Company reviews
at each reporting date whether there is any indication that the loss has decreased or no longer exists. An
impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount. Such a reversal is made only to the extent that the asset's carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss
had been recognised.
L) Employee benefits
i) Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within
12 months after the end of the period in which the employees render the related service are recognised in
respect of employees' services up to the end of the reporting and are measured at the amounts expected to be
paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the
balance sheet.
ii) Defined contribution plans
A defined contribution plan is a post-employment benefit plan where the Company's legal or constructive obligation
is limited to the amount that it contributes to a separate legal entity. The Company makes specified monthly
contributions towards Government administered provident fund scheme. Obligations for contributions to defined
contribution plan are expensed as an employee benefits expense in the statement of profit and loss in period in
which the related service is provided by the employee.
iii) Defined benefit plans
A defined benefits plan is a post-employment benefit plan other than a defined contribution plan. The Company's
net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount
of future benefit that employees have earned in the current and prior periods, discounting that amount and
deducting the fair value of any plan assets.
The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit
credit method. When the calculation results in a potential asset for the Company, the recognised asset is
limited to the present value of economic benefits available in the form of any future refunds from the plan or
reductions in future contributions to the plan ('the asset ceiling'). In order to calculate the present value of
economic benefits, consideration is given to any minimum funding requirements.
Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan
assets (excluding interest) and the effect of the asset ceiling tif any, excluding interest), are recognised in OCI.
The Company determines the net interest expense / (income) on the net defined benefit liability / (asset) for the
period by applying the discount rate used to measure the defined benefit obligation at the beginning of the
annual period to the then-net defined benefit liability / (asset), taking into account any changes in the net defined
benefit liability / (asset) during the period as a result of contributions and benefit payments. Net interest
expense and other expenses related to defined benefit plans are recognised in statement of profit and loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates
to past service ('past service cost' or 'past service gain') or the gain or loss on curtailment is recognised
immediately in statement of profit and loss. The Company recognises gains and losses on the settlement of a
defined benefit plan when the settlement occurs.
iv) Compensated absences
Accumulated absences expected to be carried forward beyond twelve months is treated as long-term employee
benefit for measurement purposes. The Company's net obligation in respect of other long-term employee benefit
of accumulating compensated absences is the amount of future benefit that employees have accumulated at
the end of the year. That benefit is discounted to determine its present value. The obligation is measured
annually by a qualified actuary using the projected unit credit method. Remeasurements are recognised in profit
or loss in the period in which they arise.
The obligations are presented as current liabilities in the balance sheet if the Company does not have an
unconditional right to defer the settlement for at least twelve months after the reporting date.
v) Other long term employee benefits
The Company's net obligation in respect of long term employee benefits other than post-employment benefits is
the amount of future benefit that employees have earned in return for their service in the current and prior
periods; the benefit is discounted to determine its present value. The obligation is measured on the basis of an
independent actuarial valuation using projected unit cost method. Remeasurements gain or losses are recognised
in statement of profit and loss in the period which they arise.
|