2. Material accounting policies followed by
company

2.1 Basis of preparation

The standalone financial statements of the Company
have been prepared in accordance with the Indian
Accounting Standards (‘Ind-AS’) specified in
the Companies (Indian Accounting Standards)
Rules, 2015 (as amended) under Section 133 of the
Companies Act 2013 (the “accounting principles
generally accepted in India”).

The accounting policies are applied consistently to
all the periods presented in the financial statements.

The standalone financial statements have been
prepared on a historical cost basis, except for the
following assets and liabilities which have been
measured at fair value:

- Derivative financial instruments are
measured at fair value.

- Certain financial assets and liabilities are
measured at fair value (refer accounting policy
regarding financial instruments).

- Defined benefit plans - plan assets are measured
at fair value. The fair value of plan assets is
deducted from present value of Defined benefit
obligation in determining deficit or surplus.

The standalone financial statements are presented
in Indian Rupees (INR), which is also the Company’s
functional currency. All amounts disclosed in the
financial statements and notes have been rounded
off to the nearest lakhs as per the requirement of
Schedule III, unless otherwise stated.

2.2 Summary of Material accounting policies

a) Current versus non- current classification

The Company presents assets and liabilities
in the balance sheet based on current/ non¬
current classification. An asset is treated as
current when it is:

• Expected to be realised or intended to sold
or consumed in normal operating cycle

• Held primarily for the purpose of trading

• Expected to be realised within twelve
months after the reporting period, or

• Cash or cash equivalent unless restricted
from being exchanged or used to settle a
liability for at least twelve months after
the reporting period.

All other assets are classified as non-current
A liability is current when:

• It is expected to be settled in normal
operating cycle

• It is held primarily for the
purpose of trading

• It is due to be settled within twelve months
after the reporting period, or

• There is no unconditional right to defer
the settlement of the liability for at least
twelve months after the reporting period

The Company classifies all other liabilities
as non-current.

Deferred tax assets and liabilities are classified
as non-current assets and liabilities.

The operating cycle is the time between
publishing of advertisement and circulation
of newspaper and its realisation in cash and
cash equivalents. The Company has identified
twelve months as its operating cycle.

b) Foreign currencies

Transactions in foreign currencies are initially
recorded by the Company at their respective
functional currency spot rates at the date the
transaction first qualifies for recognition.
However, for practical reasons, the Company
uses an average rate if the average approximates
the actual rate at the date of the transaction.

Monetary assets and liabilities denominated
in foreign currencies are translated at the
functional currency spot rates of exchange at
the reporting date.

Exchange differences arising on the settlement
of monetary items or on restatement of the
Company’s monetary items at rates different
from those at which they were initially
recorded during the period, or reported in
previous financial statements, are recognized
as income or as expenses in the period in which
they arise. They are deferred in equity if they
relate to qualifying cash flow hedges.

Non-monetary items that are measured in
terms of historical cost in a foreign currency
are translated using the exchange rates at the
dates of the initial transactions.

Exchange differences pertaining to long term
foreign currency loans obtained or re-financed
on or before March 31, 2015:

- Exchange differences on long-term
foreign currency monetary items relating
to acquisition of depreciable assets are
adjusted to the carrying cost of the assets
and depreciated over the balance life of the
assets in accordance with option available
under Ind-AS 101 (first time adoption).

Exchange differences pertaining to long term
foreign currency loans obtained or re-financed
on or after April 1, 2015:

- The exchange differences pertaining to
long term foreign currency loans obtained
or re-financed on or after April 1, 2015 is
charged off or credited to the statement of
profit & loss account under Ind-AS.

c) Fair value measurement

The Company measures financial instruments,
such as, derivatives and certain investments at
fair value at each reporting/ balance sheet date.

Fair value is the price that would be received
to sell an asset or paid to transfer a liability

in an orderly transaction between market
participants at the measurement date. The
fair value measurement is based on the
presumption that the transaction to sell the
asset or transfer the liability takes place either:

• In the principal market for the asset
or liability, or

• In the absence of a principal market, in
the most advantageous market for the
asset or liability

The principal or the most advantageous market
must be accessible by the Company.

The fair value of an asset or a liability is
measured using the assumptions that market
participants would use when pricing the asset
or liability, assuming that market participants
act in their economic best interest.

A fair value measurement of a non-financial
asset takes into account a market participant’s
ability to generate economic benefits by using
the asset in its highest and best use or by selling
it to another market participant that would use
the asset in its highest and best use.

The Company uses valuation techniques that
are appropriate in the circumstances and for
which sufficient data are available to measure
fair value, maximising the use of relevant
observable inputs and minimising the use of
unobservable inputs.

All assets and liabilities for which fair value
is measured or disclosed in the financial
statements are categorised within the fair value
hierarchy, described as follows, based on the
lowest level input that is significant to the fair
value measurement as a whole:

• Level 1 — Quoted (unadjusted) market
prices in active markets for identical
assets or liabilities

• Level 2 — Valuation techniques for which
inputs are inputs other than quoted

prices included within Level 1 that are
observable for the asset or liability, either
directly or indirectly'

• Level 3 — Valuation techniques for which
inputs are unobservable inputs for the
asset or liability

For assets and liabilities that are recognised in
the financial statements on a recurring basis,
the Company determines whether transfers
have occurred between levels in the hierarchy
by re-assessing categorisation (based on the
lowest level input that is significant to the fair
value measurement as a whole) at the end of
each reporting period.

For the purpose of fair value disclosures, the
Company has determined classes of assets
and liabilities on the basis of the nature,
characteristics and risks of the asset or liability
and the level of the fair value hierarchy as
explained above.

This Note summarises accounting policy for
fair value. Other fair value related disclosures
are given in the relevant notes :

• Disclosures for valuation methods,

significant estimates and

assumptions (Note 40)

• Quantitative disclosures of fair value

measurement hierarchy (Note 40)

• Investments at Fair Value through profit
and loss (Note 6B)

• Investment properties (Note 4)

• Financial instruments (including those

carried at amortised cost) (Note 6D)

d) Revenue recognition and other income

Revenue from contracts with customers is
recognised when control over services are
transferred to the customer at an amount
that reflects the consideration to which the
Company expects to be entitled in exchange for
those services.

Revenue towards satisfaction of a performance
obligation is measured at the amount of
transaction price (net of variable consideration)
allocated to that performance obligation. The
transaction price of goods sold and services
rendered is net of variable consideration on
account of various discounts and schemes
offered by the Company as part of the contract.

If the consideration in a contract includes a
variable amount, the Company estimates the
amount of consideration to which it will be
entitled in exchange for transferring the goods
to the customer. The variable consideration
is estimated at contract inception and
constrained until it is highly probable that a
significant revenue reversal in the amount
of cumulative revenue recognised will not
occur when the associated uncertainty with
the variable consideration is subsequently
resolved. The Company applies the most
likely amount method or the expected value
method to estimate the variable consideration
in the contract. The selected method that best
predicts the amount of variable consideration
is primarily driven by the number of volume
thresholds contained in the contract. The
most likely amount is used for those contracts
with a single volume threshold, while the
expected value method is used for those
with more than one volume threshold. The
Company then applies the requirements on
constraining estimates in order to determine
the amount of variable consideration that
can be included in the transaction price and
recognised as revenue.

The Company applies the practical expedient
to not to disclose the amount of the remaining
performance obligations for contracts with
original expected duration of less than one year.

For contracts with a significant financing
component, an entity adjusts the promised
consideration to reflect the time value of
money. As such, the transaction price for these
contracts is discounted, using the interest rate
implicit in the contract (i.e., the interest rate

that discounts the cash selling price of the
equipment to the amount paid in advance). This
rate is commensurate with the rate that would
be reflected in a separate financing transaction
between the Company and the customer at
contract inception. The Company applies the
practical expedient for short-term advances
received from customers. That is, the promised
amount of consideration is not adjusted for the
effects of a significant financing component
if the period between the transfer of the
promised good or service and the payment is
one year or less.

Revenue excludes taxes collected from
customers. The Company has concluded
that it is the principal in all of its revenue
arrangements since it is the primary obligor in
all the revenue arrangements as it has pricing
latitude and is also exposed to inventory
and credit risks.

Goods and Service Tax (GST) is not received
by the Company on its own account. Rather,
it is tax collected on behalf of the government.
Accordingly, it is excluded from revenue.

Contract asset represents the Company’s right
to consideration in exchange for services that
the Company has transferred to a customer
when that right is conditioned on something
other than the passage of time.

When there is unconditional right to receive
cash, and only passage of time is required
to do invoicing, the same is presented as
Unbilled receivable.

A contract liability is recognised if a payment
is received or a payment is due (whichever is
earlier) from a customer before the Company
transfers the related goods or services and the
Company is under an obligation to provide
only the goods or services under the contract.
Contract liabilities are recognised as revenue
when the Company performs under the
contract (i.e., transfers control of the related
goods or services to the customer).

The specific recognition criteria
described below must also be met before
revenue is recognised:

Print Revenue:

• Advertisements

Revenue is recognized as and when
advertisement is published/ displayed and
when it is “probable” that the Company
will collect the consideration it is entitled
to in exchange for the services it transfers
to the customer.

• Sale of Newspaper & Publications,
Waste Papers and Scrap

Revenue from the sale of newspaper &
publications are recognised when the
newspaper and publications are delivered
to the distributor. Revenue from the sale of
waste papers/scrap is recognised when the
control is transferred to the buyer, usually
on delivery of the waste papers/scrap.

• Printing Job Work

Revenue from printing job work
is recognised by reference to stage
of completion of job work as per
terms of agreement.

• Forfeiture of security deposits:

Forfeiture of security deposits arises on
account of the Company’s main operating
activity. The same is presented as part of
“Other Operating Revenue”.

• Event related

Event/Conference revenue is recognized
on the completion of event activity and
sum received in advance, if any, for event
is recognized as advance from customers.

Radio Revenue:

• Airtime Revenue

Revenue from radio broadcasting
categorised in Free Commercial Time
(FCT) and Non Free Commercial Time

(Non FCT) is recognized on the airing of
client's commercials.

Digital Revenue:

• Revenue from online advertising

Revenue from digital platforms by display
of internet advertisements are typically
contracted for a period ranging between
zero to twelve months.

Revenue in this respect is recognized as
and when advertisement is displayed.
Unearned revenues are reported on the
balance sheet as contract liability.

• Shine.com Subscription Revenue

Revenue from subscription of package
is recognized over the period of the
subscription usually ranging between one
to twelve months. This is in accordance
with the established principles of
accrual accounting. Unearned revenues
are reported on the balance sheet as
contract liability.

• Revenue from Shine Learning Services

Revenue from Resume or course service
is recognised over the time as and
when the Company satisfies identified
performance obligations by rendering
service to a customer.

• Revenue from SMS pushes/e-mails

Revenue is recognised after the delivery of
SMS pushes/e-mails.

Interest income

For all debt instruments measured either at
amortised cost or at fair value through other
comprehensive income, interest income is
recorded using the effective interest rate
(ElR). EIR is the rate that exactly discounts
the estimated future cash receipts over the
expected life of the financial instrument or
a shorter period, where appropriate, to the
gross carrying amount of the financial asset.

When calculating the effective interest rate, the
Company estimates the expected cash flows
by considering all the contractual terms of the
financial instrument (for example, prepayment,
extension, call and similar options) but does
not consider the expected credit losses. Interest
income is included in other income in the
statement of profit and loss.

Dividends

Revenue is recognised when the Company’s
right to receive the payment is established,
which is generally when shareholders
approve the dividend.

e) Government grants

Government grants are recognised where
there is reasonable assurance that the grant
will be received and all attached conditions
will be complied with. When the grant relates
to an expense item, it is recognised as income
on a systematic basis over the periods that
the related costs, for which it is intended to
compensate, are expensed.

When the Company receives grants relating to
the purchase of property, plant and equipment,
the asset and the grant is recorded at fair
value and are released to the statement of
Profit and Loss over the expected useful lives
of related assets. Grant income is disclosed as
‘Other income’.

f) Taxes

Current income tax

Tax expense is the aggregate amount included
in the determination of profit or loss for the
period in respect of current tax an d deferred tax.

Current income tax is measured at the amount
expected to be paid to the tax authorities in
accordance with the Income Tax Act, 1961.

Current income tax assets and liabilities
are measured at the amount expected to
be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to

compute the amount are those that are enacted
or substantively enacted, at the reporting date.

Current income tax relating to items recognised
outside profit or loss is recognised outside
profit or loss (either in other comprehensive
income or in equity). Current tax items are
recognised in correlation to the underlying
transaction either in OCI or directly in equity.
Management periodically evaluates positions
taken in the tax returns with respect to
situations in which applicable tax regulations
are subject to interpretation and establishes
provisions where appropriate.

Appendix C to Ind AS 12, Income Taxes dealing
with accounting for uncertainty over income
tax treatments does not have any material
impact on financial statements of the Company.

Deferred tax

Deferred tax is provided considering
temporary differences between the tax bases
of assets and liabilities and their carrying
amounts for financial reporting purposes at the
reporting date.

Deferred tax liabilities are recognised for all
taxable temporary differences except :

• When the deferred tax liability arises
from the initial recognition of goodwill or
an asset or liability in a transaction that
is not a business combination and, at the
time of the transaction, affects neither the
accounting profit nor taxable profit or loss

• In respect of taxable temporary
differences associated with investments
in subsidiaries and associates, when the
timing of the reversal of the temporary
differences can be controlled and it is
probable that the temporary differences
will not reverse in the foreseeable future

Deferred tax assets are recognised for all
deductible temporary differences, the carry
forward of unused tax credits and any unused

tax losses. Deferred tax assets are recognised to
the extent that it is probable with convincing
evidence that taxable profit will be available
against which the deductible temporary
differences, and the carry forward of unused
tax credits and unused tax losses can be
utilised, except:

• When the deferred tax asset relating
to the deductible temporary difference
arises from the initial recognition of an
asset or liability in a transaction that is
not a business combination and, at the
time of the transaction, affects neither the
accounting profit nor taxable profit or loss

• In respect of deductible temporary
differences associated with investments in
subsidiaries and associates, deferred tax
assets are recognised only to the extent that
it is probable that the temporary differences
will reverse in the foreseeable future and
taxable profit will be available against which
the temporary differences can be utilised

The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced
to the extent that it is no longer probable that
sufficient taxable profit will be available to
allow all or part of the deferred tax asset to
be utilised. Unrecognised deferred tax assets
are re-assessed at each reporting date and are
recognised to the extent that it has become
probable that future taxable profits will allow
the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured
at the tax rates that are expected to apply in the
year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at
the reporting date.

Deferred tax relating to items recognised
outside profit or loss is recognised outside
profit or loss. Deferred tax items are recognised
in correlation to the underlying transaction
either in OCI or directly in equity.

Deferred tax assets and deferred tax liabilities
are offset if and only if it has a legally enfo rceable
right to set off current tax assets and current
tax liabilities and the deferred tax assets and
deferred tax liabilities relate to income taxes
levied by the same taxation authority on either
the same taxable entity or different taxable
entities which intend either to settle current
tax liabilities and assets on a net basis, or
to realise the assets and settle the liabilities
simultaneously, in each future period in which
significant amounts of deferred tax liabilities or
assets are expected to be settled or recovered.

GST/ value added taxes paid on acquisition
of assets or on incurring expenses

Expenses and assets are recognised net of the
amount of GST/ value added taxes paid, except:

• When the tax incurred on a purchase of
assets or services is not recoverable from
the taxation authority, in which case, the
tax paid is recognised as part of the cost
of acquisition of the asset or as part of the
expense item, as applicable

• When receivables and payables are stated
with the amount of tax included

The net amount of tax recoverable from,
or payable to, the taxation authority is
included as part of receivables or payables in
the balance sheet.

g) Non- current assets held for sale

Non-current assets (or disposal groups) are
classified as held for sale if their carrying
amount will be recovered principally through
a sale transaction rather than through
continuing use and a sale is considered highly
probable. They are measured at the lower of
their carrying amount and fair value less costs
to sell, except for assets such as deferred tax
assets, assets arising from employee benefits,
financial assets and contractual rights under
insurance contracts, which are specifically
exempt from this requirement.

Property, plant and equipment and intangible
are not depreciated, or amortised assets once
classified as held for sale.

Assets and liabilities classified as held for sale
are presented separately from other items in
the balance sheet.

h) Property, plant and equipment

The Company has applied for one time
transition option of considering the carrying
cost of Property, Plant & Equipment on the
transition date i.e. April 1, 2015 as the deemed
cost under Ind-AS.

Construction in progress is stated at cost, net
of accumulated impairment losses, if any.
Plant and equipment is stated at cost, net of
accumulated depreciation and accumulated
impairment losses, if any. Such cost includes
the cost of replacing part of the plant and
equipment and borrowing costs for long¬
term construction projects if the recognition
criteria are met.

Cost comprises the purchase price, borrowing
costs if capitalization criteria are met and any
directly attributable cost of bringing the asset
to its working condition for the intended use.
Any trade discounts and rebates are deducted
in arriving at the purchase price.

Recognition:

The cost of an item of property, plant and
equipment shall be recognised as an asset
if, and only if:

(a) it is probable that future economic
benefits associated with the item will flow
to the entity; and

(b) the cost of the item can be
measured reliably.

All other expenses on existing assets, including
day- to- day repair and maintenance expenditure
and cost of replacing parts, are charged to the
statement of profit and loss for the period
during which such expenses are incurred.

When significant parts of plant and equipment
are required to be replaced at intervals, the
Company depreciates them separately based
on their specific useful lives. Likewise, when
a major inspection is performed, its cost is
recognised in the carrying amount of the
plant and equipment as a replacement if the
recognition criteria are satisfied. All other
repair and maintenance costs are recognised in
profit or loss as incurred.

Value for individual assets acquired from
'The Hindustan Times Limited' (the holding
company) in an earlier year is allocated based
on the valuation carried out by independent
expert at the time of acquisition. Other assets
are stated at cost less accumulated depreciation
and accumulated impairment losses, if any.

The Company identifies and determines cost
of asset significant to the total cost of the asset
having useful life that is materially different
from that of the remaining life.

Depreciation is calculated on a straight-line
basis over the estimated useful lives of the
assets as follows:

Leasehold improvements are depreciated over
the shorter of their useful life or the lease
term, unless the entity expects to use the assets
beyond the lease term.

The Company, based on technical assessment
made by the management depreciates certain
assets over estimated useful lives which are

different from the useful life prescribed in
Schedule ll to the Companies Act, 2013. The
management has estimated, supported by
technical assessment, the useful lives of certain
plant and machinery as 16 to 21.1 years. These
useful lives are higher than those indicated
in Schedule II. The management believes that
these estimated useful lives are realistic and
reflect fair approximation of the period over
which the assets are likely to be used.

Property, Plant and Equipment which
are added/disposed off during the year,
depreciation is provided on pro-rata basis with
reference to the month of addition/deletion.

An item of property, plant and equipment
and any significant part initially recognised
is derecognised upon disposal or when no
future economic benefits are expected from
its use or disposal. Any gain or loss arising on
de-recognition of the asset (calculated as the
difference between the net disposal proceeds
and the carrying amount of the asset) is
included in the income statement when the
asset is derecognised.

Expenditure directly attributable to
construction activity is capitalized. Other
indirect costs incurred during the construction
periods which are not directly attributable to
construction activity are charged to Statement
of Profit and Loss. Reinvested income earned
during the construction period is adjusted
against the total of indirect expenditure.

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.

i) Investment properties

Investment properties are properties (land
and buildings) that are held for long-term
rental yields and/or for capital appreciation.
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.

The Company depreciates building component
of investment property over 30 years from the
date property is ready for possession.

Though the Company measures investment
property using cost based measurement, the
fair value of investment property is disclosed
in the notes. Fair values are determined based
on an annual evaluation performed by an
accredited external independent valuer.

On transition to Ind-AS, the Company has
elected to continue with the carrying value of
all of its Investment properties recognised as at
April 1, 2015 measured as per the Indian GAAP
and use that carrying value as the deemed cost
of the Investment Properties.

Investment properties are derecognised either
when they have been disposed of 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 profit or loss in the
period of de-recognition.

Investment properties that meet the criteria to
be classified as held for sale are measured and
presented in accordance with Ind AS 105.

j) Intangible assets

Intangible assets acquired separately are
measured on initial recognition at cost. The
cost of intangible assets acquired in a business
combination is their fair value at the date of
acquisition. Following initial recognition,
intangible assets are carried at cost less any
accumulated amortisation and accumulated
impairment losses. Internally generated
intangibles, excluding capitalised development
costs, are not capitalised and the related
expenditure is reflected in profit or loss in the
period in which the expenditure is incurred.

Value for individual software license acquired
from the holding company in an earlier year
is allocated based on the valuation carried
out by an independent expert at the time
of acquisition.

On transition to Ind-AS, the Company has
elected to continue with the carrying value of
all of its Intangible assets recognised as at April
1, 2015 measured as per the Indian GAAP and
use that carrying value as the deemed cost of
the Intangible assets.

The useful lives of intangible assets are assessed
as either finite or indefinite.

Intangible assets with finite lives are amortised
over the useful economic life and assessed for
impairment whenever there is an indication
that the intangible asset may be impaired.
The amortisation period and the amortisation
method for an intangible asset with a finite
useful life are reviewed at least at the end
of each reporting period. Changes in the
expected useful life or the expected pattern
of consumption of future economic benefits
embodied in the asset are considered to
modify the amortisation period or method,
as appropriate, and are treated as changes in
accounting estimates.

The amortisation expense on intangible assets
with finite lives is recognised in the statement
of profit and loss.

Intangible assets with indefinite useful
lives are not amortised, but are tested for
impairment annually, either individually or at
the cash-generating unit level. The assessment
of indefinite life is reviewed annually to
determine whether the indefinite life continues
to be supportable. If not, the change in useful
life from indefinite to finite is made on a
prospective basis.

An intangible asset is derecognised upon
disposal (i.e., at the date the recipient obtains
control) or when no future economic benefits

are expected from its use or disposal. Any gain
or loss arising upon de-recognition of the asset
(calculated as the difference between the net
disposal proceeds and the carrying amount
of the asset) is included in the statement of
profit or loss.

Intangible assets with finite lives are amortized
on straight line basis using the estimated useful
life as follows:

k) Borrowing costs

Borrowing cost includes interest, amortization
of ancillary costs incurred in connection with
the arrangement of borrowings and exchange
differences arising from foreign currency
borrowings to the extent they are regarded as
an adjustment to the interest cost.

Borrowing costs, if any, directly attributable
to the acquisition, construction or production
of an asset that necessarily takes a substantial
period of time to get ready for its intended
use or sale are capitalized, if any. All other
borrowing costs are expensed in the period in
which they occur.

l) Leases

A contract is, or contains, a lease if the contract
conveys the right to control the use of an
identified asset for a period of time in exchange
for consideration.

Company as a lessee

The Company recognises right-of-use asset
representing its right to use the underlying
asset for the lease term at the lease
commencement date. The cost of the right-of-
use asset measured at inception shall comprise
of the amount of the initial measurement of the

lease liability adjusted for any lease payments
made at or before the commencement date less
any lease incentives received, plus any initial
direct costs incurred and an estimate of costs
to be incurred by the lessee in dismantling and
removing the underlying asset or restoring
the underlying asset or site on which it is
located. The right-of-use assets is subsequently
measured at cost less any accumulated
depreciation, accumulated impairment losses,
if any and adjusted for any remeasurement
of the lease liability. The right-of-use assets
is depreciated using the straight-line method
from the commencement date over the shorter
of lease term or useful life of right-of-use asset.
The estimated useful lives of right-of-use assets
are determined on the same basis as those of
property, plant and equipment. Right-of-use
assets are tested for impairment whenever
there is any indication that their carrying
amounts may not be recoverable. Impairment
loss, if any, is recognised in the statement of
profit and loss.

The Company measures the lease liability at
the present value of the lease payments that
are not paid at the commencement date of
the lease. The lease payments are discounted
using the interest rate implicit in the lease,
if that rate can be readily determined. If
that rate cannot be readily determined,
the Company uses incremental borrowing
rate. The lease payments shall include fixed
payments, variable lease payments, residual
value guarantees, exercise price of a purchase
option where the Company is reasonably
certain to exercise that option and payments of
penalties for terminating the lease, if the lease
term reflects the lessee exercising an option to
terminate the lease. After the commencement
date, the amount of lease liabilities is increased
to reflect the accretion of interest and reduced
for the lease payments made. The lease liability
is subsequently remeasured by increasing the
carrying amount to reflect interest on the lease
liability, reducing the carrying amount to reflect
the lease payments made and remeasuring the

carrying amount to reflect any reassessment
or lease modifications or to reflect revised in¬
substance fixed lease payments. The Company
recognises the amount of the re-measurement
of lease liability due to modification as an
adjustment to the right-of-use asset and
statement of profit and loss depending upon
the nature of modification. Where the carrying
amount of the right-of-use asset is reduced to
zero and there is a further reduction in the
measurement of the lease liability, the Company
recognises any remaining amount of the re¬
measurement in statement of profit and loss.

The Company has elected not to apply the
requirements of Ind AS 116 to short-term leases
of all assets that have a lease term of 12 months
or less and leases fo r which the un derlying asset
is of low value. The lease payments associated
with these leases are recognised as an expense
on a straight-line basis over the lease term.

As a practical expedient a lessee (the company)
has elected, by class of underlying asset, not to
separate lease components from any associated
non-lease components. A lessee (the company)
accounts for the lease component and the
associated non-lease components as a single
lease component.

Sale and leaseback

A sale and leaseback transaction is where
the Company sells an asset and immediately
reacquires the use of the asset by entering
into a lease with the buyer. A sale occurs
when control of the underlying asset passes
to the buyer. A lease liability is recognised,
the associated property, plant and equipment
asset is derecognised, and a right of use
asset is recognised at the proportion of the
carrying value relating to the right retained.
Any gain or loss arising relates to the rights
transferred to the buyer.

Company as a lessor

At the inception of the lease the Company
classifies each of its leases as either an

The comparison of cost and net realisable value
is made on an item-by-item basis.

n) Impairment of non-financial assets

For assets with definite useful life, the company
assesses, at each reporting date, whether there
is an indication that an asset may be impaired.
If any indication exists, or when annual
impairment testing for an asset is required,
the Company estimates the asset’s recoverable
amount. An asset’s recoverable amount is
the higher of an asset’s or cash-generating
unit’s (CGU) fair value less costs of disposal
and its value in use. Recoverable amount is
determined for an individual asset, unless the
asset does not generate cash inflows that are
largely independent of those from other assets
or groups of assets. When the carrying amount
of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is
written down to its recoverable amount.

In assessing value in use, the estimated future
cash flows are discounted to their present
value using a pre-tax discount rate that reflects
current market assessments of the time
value of money and the risks specific to the
asset. In determining fair value less costs of
disposal, recent market transactions are taken
into account. If no such transactions can be
identified, an appropriate valuation model is
used. These calculations are corroborated by
valuation multiples, quoted share prices for
publicly traded Company’s or other available
fair value indicators.

The Company bases its impairment calculation
on detailed budgets and forecast calculations,
which are prepared separately for each of the
Company’s CGUs to which the individual assets
are allocated. These budgets and forecast
calculations generally cover a period of five
years. For longer periods, a long-term growth
rate is calculated and applied to project future
cash flows after the fifth year. To estimate cash
flow projections beyond periods covered by the
most recent budgets/forecasts, the Company

extrapolates cash flow projections in the
budget using a steady or declining growth rate
for subsequent years, unless an increasing rate
can be justified. In any case, this growth rate
does not exceed the long-term average growth
rate for the products, industries, or country or
countries in which the entity operates, or for
the market in which the asset is used.

Impairment losses of continuing operations,
including impairment on inventories, are
recognised in the statement of profit and loss.

An assessment is made at each reporting date
to determine whether there is an indication
that previously recognised impairment losses
no longer exist or have decreased. If such
indication exists, the Company estimates
the asset's or CGU's recoverable amount. A
previously recognised impairment loss is
reversed only if there has been a change in
the assumptions used to determine the asset's
recoverable amount since the last impairment
loss was recognised. The reversal is limited
so that the carrying amount of the asset
does not exceed its recoverable amount, nor
exceed the carrying amount that would have
been determined, net of depreciation, had no
impairment loss been recognised for the asset
in prior years. Such reversal is recognised in
the statement of profit or loss unless the asset
is carried at a revalued amount, in which case,
the reversal is treated as a revaluation increase.

Intangible assets with indefinite useful
lives are tested for impairment annually at
the CGU level, as appropriate, and when
circumstances indicate that the carrying value
may be impaired.