4.1 Property, plant and equipment, CWIP and depreciation
Property, plant and equipment are 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. 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.
Capital work in progress is stated at cost, net of
accumulated impairment loss, if any. Capital work-
in progress comprises cost of the property, plant and
equipment (including related expenses), that are not
yet ready for their intended use at the reporting date.
Subsequent costs are included in the asset's
carrying amount or recognised as a separate asset,
as appropriate, only when 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. The carrying amount of any component
accounted for as a separate asset is derecognised
when replaced. All other repairs and maintenance are
charged to Standalone Statement of Profit and Loss
during the year in which they are incurred.
The Company depreciates property, plant and
equipment over their estimated useful lives as specified
in the Schedule II of the Companies Act, 2013 using
the straight line method. The estimated useful lives of
assets are as follows:
Precious stones and laboratory master sets are not
being depreciated.
Where parts of an item of property, plant and equipment
have different useful lives, the cost of that item is
allocated on a reasonable basis among the parts and
each part is depreciated separately. Residual values,
useful lives and the depreciation method are reviewed,
and adjusted if appropriate, at least at end of financial
year.
De-recognition: An item of property, plant and
equipment including 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 on disposal or retirement
recognised in profit or loss in the year the asset is
derecognised is the difference between the net sales
proceeds and the carrying amount of the relevant
asset.
4.2 Other intangible assets
Other intangible assets acquired separately are
measured on initial recognition at cost. Other intangible
assets with finite lives are subsequently 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 for other
intangible asset with a finite useful life are reviewed at
least at each financial year end.
The estimated useful lives of other intangible assets
are as follows:
An other 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 derecognition
of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the
asset) is included in the Standalone Statement of Profit
and Loss when the asset is derecognised.
4.3 Investment in subsidiaries
"The company has elected to recognise its investments
in subsidiaries companies at cost in accordance with
the option available in Ind AS 21, ' Separate Financial
Statements'.
The company's investments in its subsidiaries
companies is accounted at cost less impairement, if any
Impairment of investments
The Company reviews its carrying value of investments
carried at cost annually, or more frequently when there
is indication for impairment. If the recoverable amount
is less than its carrying amount, the impairment loss is
recorded in the Standalone Statement of Profit and Loss.
When an impairment loss subsequently reverses, the
carrying amount of the Investment is increased to the
revised estimate of its recoverable amount, so that the
increased carrying amount does not exceed the cost
of the Investment. A reversal of an impairment loss is
recognised immediately in the Standalone Statement
of Profit and Loss.
4.4 Foreign Currency Transactions(a) Functional and presentation currency
Items included in the standalone financial statements
are measured using the currency of the primary
economic environment in which the entity operates
('the functional currency'). The standalone financial
statements are presented in Indian rupee (Rs.), which
is the Company's functional and presentation currency.
(b) Transactions and balances
On initial recognition, all foreign currency transactions
are recorded by applying to the foreign currency
amount the exchange rate between the functional
currency and the foreign currency at the date of the
transaction. Gains/Losses arising out of fluctuation
in foreign exchange rate between the transaction date
and settlement date are recognised in the Standalone
Statement of Profit and Loss.
All monetary assets and liabilities in foreign currencies
are restated at the year end at the exchange rate
prevailing at the year end and the exchange differences
are recognised in the Standalone Statement of Profit
and Loss.
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.
4.5 Leases
The Company's lease asset classes primarily consist of
leases for land and buildings. The Company assesses
at contract inception whether a contract is, or contains,
a lease. That is, 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 lease liabilities to make lease
payments and right-of-use assets representing the
right to use the underlying assets for all leases, except
for short-term leases and leases of low-value assets.
i) Right-of-use assets
The Company recognises right-of-use assets at
the commencement date of the lease (i.e., the
date the underlying asset is available for use).
Right-of-use assets are measured at cost, less
any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of
lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments
made at or before the commencement date less
any lease incentives received. Right-of-use assets
are depreciated on a straight-line basis over the
shorter of the lease term and the estimated useful
lives of the assets as follows:
Buildings - 2 to 9 years
If ownership of the leased asset transfers to
the Company at the end of the lease term or the
cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated
useful life of the asset. In such cases, the Company
reviews the estimated residual values and expected
useful lives of assets at least annually. The right-of-
use assets are subject to impairment annually.
ii) Lease liabilities
At the commencement date of the lease, the
Company recognises lease liabilities measured at
the present value of lease payments to be made
over the lease term. The lease payments include
fixed payments (including in-substance fixed
payments) less any lease incentives receivable,
variable lease payments that depend on an index
or a rate, and amounts expected to be paid under
residual value guarantees. The lease payments
also include the exercise price of a purchase
option reasonably certain to be exercised by
the Company and payments of penalties for
terminating the lease, if the lease term reflects
the Company exercising the option to terminate.
Variable lease payments that do not depend on an
index or a rate are recognised as expenses (unless
they are incurred to produce inventories) in the
period in which the event or condition that triggers
the payment occurs.
In calculating the present value of lease payments,
the Company uses its incremental borrowing rate
at the lease commencement date because the
interest rate implicit in the lease is not readily
determinable. After the commencement date, the
amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount
of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change
in the lease payments (e.g., changes to future
payments resulting from a change in an index
or rate used to determine such lease payments)
or a change in the assessment of an option to
purchase the underlying asset.
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease
recognition exemption to its short-term leases (i.e.,
those leases that have a lease term of 12 months
or less from the commencement date and do not
contain a purchase option). Lease payments on
short-term leases are recognised as expense on a
straight-line basis over the lease term.
Lease payments and receipts under operating
leases are recognised as an expense and income
respectively, on a straight line basis in the
statement of profit and loss over the lease term
except where the lease payments are structured
to increase in line with expected general inflation.
4.6 Impairment of assets
As at the end of each financial year, the carrying amounts
of PPE, Intangible assets and Right-of-use assets are
reviewed to determine whether there is any indication
that those assets have suffered an impairment loss.
If such indication exists, PPE, Intangible assets and
Right-of-use assets are tested for impairment so as to
determine the impairment loss, if any.
Impairment loss is recognised when the carrying
amount of an asset exceeds its recoverable amount.
Recoverable amount is determined:
(i) i n the case of an individual asset, at the higher of
the fair value less costs of disposal and the value-
in-use; and
(ii) in the case of a cash generating unit (the smallest
identifiable group of assets that generates
independent cash flows), at the higher of the cash
generating unit's fair value less costs of disposal
and the value-in-use.
(The amount of value-in-use is determined as the
present value of estimated future cash flows from the
continuing use of an asset, which may vary based on
the future performance of the Company and from its
disposal at the end of its useful life. For this purpose,
the discount rate (post-tax) is determined based on
the weighted average cost of capital of the company
suitably adjusted for risks specified to the estimated
cash flows of the asset).
i f recoverable amount of an asset (or cash generating
unit) is estimated to be less than its carrying amount,
such deficit is recognised immediately in the Statement
of Profit and Loss as impairment loss and the carrying
amount of the asset (or cash generating unit) is reduced
to its recoverable amount.
When an impairment loss recognised earlier is subject
to full or partial reversal, the carrying amount of the
asset (or cash generating unit), is increased to the
revised estimate of its recoverable amount, such that
the increased carrying amount does not exceed the
carrying amount that would have been determined
had no impairment loss is recognised for the asset
(or cash generating unit) in prior years. A reversal of
an impairment loss is recognised immediately in the
Statement of Profit and Loss.
4.7 Security Deposits
Security deposits are initially recognised at fair value
and subsequently measured at amortised cost. Any
difference between the initial fair value and the nominal
amount is included as a component of operating lease
income and recognised on a straight-line basis over the
lease term.
4.8 Revenuea) Revenue from grading and certification services
The Company recognises revenue from grading and
certification of diamonds, coloured stones and jewelry
which is measured at a point in time upon satisfaction of
the performance obligation, when the report/certificate
in relation to completion of such activities is generated
and is ready to be issued to the customer. There are no
significant activities undertaken between the time that
the report is generated and the time that the customer
obtains the report. Revenue is measured based on the
transaction price, which is the consideration, adjusted
for discounts or rebates, if any, as specified in the
contract with the customer. Revenue is recognised
exclusive of taxes.
b) Revenue from educational courses
Revenue from providing gemological education on
sorting and grading of gems, diamond and jewelry
is recognised over a period of time as and when the
educational course is completed.
c) Revenue from sale of traded goods
Revenue from the sale of traded goods is recognised
at the point in time when control of the goods is
transferred to the customer.
4.9 Other Incomea) Interest income
i nterest income is accounted for on an accrual basis
using the effective interest method by applying the
rate that exactly discounts the estimated future cash
receipts through the expected life of the financial
instrument or a shorter period, when appropriate, to the
net carrying amount of the financial asset.
4.10 Contract BalancesContract assets and contract liabilities
A contract asset is the right to consideration in
exchange for goods or services transferred to the
customer when that right is conditioned on something
other than the passage of time, for example, billings
require certification by the customer. Upon receipt
of such certification from a customer, the amount
recognised as contract assets is reclassified to trade
receivables. Contract assets are subject to impairment
assessment on the same basis as financial assets that
are within the scope of Ind AS 109.
A contract liability is the obligation to transfer goods
or services to a customer for which the Company has
received consideration (or an amount of consideration
is due) from the customer. 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).
4.11 Fair Value Measurement
The Company measures financial instruments at fair
value at each balance sheet date.
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between 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
• i n 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 at the measurement
date.
The fair value of an asset or a liability is measured
using the assumptions that market participants would
use when pricing the asset or liability, assuming that
market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes
into account a market participant's ability to generate
economic benefits by using asset in its highest and
best use or by selling it to another market participant
that would use 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 standalone 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 the lowest level
input that is significant to the fair value measurement
is directly or indirectly observable
Level 3 — Valuation techniques for which the lowest level
input that is significant to the fair value measurement
is unobservable
For assets and liabilities that are recognised in the
standalone financial statements at fair value 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.
4.12 Financial instruments - initial recognition and
subsequent measurement
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
Initial recognition and measurement
Financial assets are classified at initial recognition,
and subsequently measured at amortised cost,
fair value through other comprehensive income,
or fair value through profit or loss.
The classification of financial assets at initial
recognition depends on the financial asset's
contractual cash flow characteristics and the
Company's business model for managing them.
With the exception of trade receivables that do
not contain a significant financing component or
for which the Company has applied the practical
expedient, the Company initially measures a
financial asset at its fair value plus, in the case of
a financial asset not at fair value through profit
or loss, transaction costs. As the Company's
rent and other trade receivables do not contain a
significant financing component or for which the
Company has applied the practical expedient, they
are measured at the transaction price determined
under Ind AS 115.
In order for a financial asset to be classified
and measured at amortised cost or fair value
through other comprehensive income (OCI), it
needs to give rise to cash flows that are 'solely
payments of principal and interest (SPPI)' on the
principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an
instrument level. Financial assets with cash flows
that are not SPPI are classified and measured at
fair value through profit or loss, irrespective of the
business model.
The Company's business model for managing
financial assets refers to how it manages its
financial assets in order to generate cash flows.
The business model determines whether cash
flows will result from collecting contractual
cash flows, selling the financial assets, or both.
Financial assets classified and measured at
amortised cost are held within a business model
with the objective to hold financial assets in
order to collect contractual cash flows, while
financial assets classified and measured at fair
value through other comprehensive income are
held within a business model with the objective
of both holding to collect contractual cash flows
and selling. Financial assets which are not held
within the aforementioned business models are
classified and measured at fair value through
profit or loss.
Subsequent measurement
Financial assets measured at amortised cost
The Company measures financial assets at amortised
cost if both of the following conditions are met:
• The financial asset is held within a business
model with the objective to hold financial
assets in order to collect contractual cash
flows; and
• The contractual terms of the financial asset
give rise on specified dates to cash flows that
are solely payments of principal and interest
on the principal amount outstanding.
Financial assets at amortised cost are
subsequently measured using the effective
interest (EIR) method and are subject to
impairment. Gains and losses are recognised
in profit or loss when the asset is derecognised,
modified or impaired.
The Company's financial assets at amortised cost
includes trade receivables, loans to related parties,
security deposit and financial assets included in
other receivables.
Financial assets designated at fair value through
OCI (equity investments)
Upon initial recognition, the Company can elect
to classify irrevocably its equity investments
as equity instruments designated at fair value
through OCI when they meet the definition of
equity under Ind AS 32 Financial Instruments:
Presentation and are not held for trading. The
classification is determined on an instrument-by¬
instrument basis.
Gains and losses on these financial assets are
never recycled in profit or loss. Dividends are
recognised as other income in profit or loss when
the right of payment has been established, it is
probable that the economic benefits associated
with the dividend will flow to the Company and
the amount of the dividend can be measured
reliably, except when the Company benefits from
such proceeds as a recovery of part of the cost of
the financial asset, in which case, such gains are
recorded in other comprehensive income. Equity
investments designated at fair value through
other comprehensive income are not subject to
impairment assessment.
Financial assets measured at fair value through
profit or loss (FVTPL)
Financial assets at fair value through profit or loss
include financial assets held for trading, financial
assets designated upon initial recognition at fair
value through profit or loss, or financial assets
mandatorily required to be measured at fair value.
Financial assets are classified as held for trading
if they are acquired for the purpose of selling or
repurchasing in the near term. Financial assets
with cash flows that are not solely payments of
principal and interest are classified and measured
at fair value through profit or loss, irrespective of
the business model. Notwithstanding the criteria
for debt instruments to be classified at amortised
cost or at fair value through OCI, as described
above, debt instruments may be designated at fair
value through profit or loss on initial recognition
if doing so eliminates, or significantly reduces, an
accounting mismatch.
Financial assets at fair value through profit or loss
are carried in the financial statement at fair value
with net changes in fair value recognised in profit
or loss.
This category includes equity investments which
the Company had not irrevocably elected to
classify at fair value through other comprehensive
income. Dividends on equity investments
classified as financial assets at fair value profit
or loss are also recognised as other income in
profit or loss when the right of payment has been
established, it is probable that the economic
benefits associated with the dividend will flow to
the Company and the amount of the dividend can
be measured reliably.
Derecognition
A financial asset (or, where applicable, a part of
a financial asset or part of a Company of similar
financial assets) is primarily derecognised (i.e.,
removed from the Company's statement of
financial position) 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'
arrangement; and either (a) the Company
has transferred substantially all the risks and
rewards of the asset, or (b) the Company has
neither transferred nor retained substantially
all the risks and rewards of the asset, but has
transferred control of the asset.
Impairment of financial assets
General approach
ECLs are recognised in two stages. For credit
exposures for which there has not been a
significant increase in credit risk since initial
recognition, ECLs are provided for credit losses
that result from default events that are possible
within the next 12 months (a 12-month ECL). For
those credit exposures for which there has been
a significant increase in credit risk since initial
recognition, a loss allowance is required for credit
losses expected over the remaining life of the
exposure, irrespective of the timing of the default
(a lifetime ECL).
At each reporting date, the Company assesses
whether the credit risk on a financial instrument
has increased significantly since initial recognition.
When making the assessment, the Company
compares the risk of a default occurring on the
financial instrument as at the reporting date with
the risk of a default occurring on the financial
instrument as at the date of initial recognition
and considers reasonable and supportable
information that is available without undue cost
or effort, including historical and forward looking
information.
Simplified approach
For trade receivables and contract assets, that
do not contain a significant financing component,
the Company applies a simplified approach in
calculating ECLs. Therefore, the Company does
not track changes in credit risk, but instead
recognises a loss allowance based on lifetime
ECLs at each reporting date (i.e., a loss allowance
for credit losses expected over the remaining
life of the exposure, irrespective of the timing
of the default). The Company has established
a provision matrix that is based on its historical
credit loss experience, adjusted for forward¬
looking factors specific to the debtors and the
economic environment.
ii) Financial Liabilities
Initial recognition and measurement
The Company recognises a financial liability
when it first becomes a party to the contractual
rights and obligations in the contract. All financial
liabilities are initially recognised at fair value,
minus (in the case of a financial liability that is
not at FVTPL) transaction costs that are directly
attributable to issuing the financial liability.
Subsequent measurement
Financial liabilities measured at amortised cost
Financial liabilities are measured at amortised
cost, using the effective interest method unless
the Company opted to measure a liability at
FVTPL. Financial liabilities included in trade and
other payables, borrowings and other financial
liabilities. 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 effective interest rate. The effective
interest rate amortisation is included in finance
costs in profit or loss.
Financial assets measured at fair value through
profit or loss (FVTPL)
Financial liabilities at FVTPL are measured at fair
value and net gains and losses, including any
interest expense, are recognised in profit or loss.
Derecognition
A financial liability is derecognised when the
obligation under the liability is discharged,
cancelled or expires.
iii) Classification as debt or equity
Debt and equity instruments are classified as either
financial liabilities or as equity in accordance with
the substance of the contractual arrangements
and the definitions of a financial liability and an
equity instrument.
iv) Offsetting of financial instruments
Financial assets and financial liabilities are offset
and the net amount is reported in the statement of
financial position 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.
4.13 Employee benefits(i) Short-term employee benefits
Employee benefits payable wholly within twelve
months of receiving employee services are
classified as short-term employee benefits. These
benefits include salaries and wages, bonus and
ex-gratia. The undiscounted amount of short¬
term employee benefits to be paid in exchange for
employee services is recognised as an expense as
the related service is rendered by employees.
(ii) Long-term employment benefits(A) Defined contribution plan
The Company's contribution to provident
fund and employee state insurance scheme
are considered as defined contribution plan
and are recognised as an expense in the
Statement of Profit and Loss based on the
amount of contribution required to be made
as and when services are rendered by the
employees. The Company has no further
obligations under these plans beyond its
monthly contributions.
(B) Defined benefit plan
The Company's gratuity benefit scheme
is a defined benefit plan and it is funded.
The Company's net obligation in respect
of gratuity benefit scheme is calculated by
estimating the amount of future benefit that
employees have earned in return for their
service in the current and prior periods; that
benefit is discounted to determine its present
value, and the fair value of any plan assets is
deducted.
The present value of the obligation under
such defined benefit plan is determined
based on actuarial valuation at the balance
sheet date by an independent actuary using
the Projected Unit Credit Method, which
recognises each period of service as giving
rise to additional unit of employee benefit
entitlement and measures. The obligation
is measured at the present value of the
estimated future cash flows. The discount
rates used for determining the present
value of the obligation under defined benefit
plan, are based on the market yields on
Government securities as at the balance
sheet date. Actuarial gains and losses are
recognised in the Other comprehensive
income.
(C) Compensated absences
Compensated absences which are not
expected to occur within twelve months
after the end of the year in which the
employee renders the related services are
recognized as a liability at the present value
of the other long-term employment benefits
which is determined at each balance sheet
date based on an actuarial valuation by an
independent actuary using the Projected Unit
Credit Method. Actuarial gains and losses
are recognized in full in statement of profit
and loss during the year in which they occur.
(iii) Share Based Payments
Equity-settled transactions
Equity-settled share-based payments to
employees are measured by reference to the fair
value of the equity instruments at the grant date.
The fair value determined at the grant date of the
equitysettled share-based payments, is charged to
statement of profit and loss on a systematic basis
over the vesting period of the option, based on the
Company's estimate of equity instruments that
will eventually vest, with a corresponding increase
in other equity. At the end of each reporting period,
the Company revises its estimate of the number
of equity instruments expected to vest. The
impact of the revision of the original estimates, if
any, is recognised in the Statement of Profit and
Loss such that the cumulative expense reflects
the revised estimate, with a corresponding
adjustment to share based payment reserve.
4.14 Taxes
Income tax expenses comprises of current tax
expenses and deferred tax charge / credit.
Current income tax
Current income tax assets and liabilities are measured
at the amount expected to be recovered from or paid
to 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 where the
Company operates and generates taxable income.
Current income tax relating to items recognised directly
in other comprehensive income or equity is recognised
in other comprehensive income or in equity and not in
the statement of profit or loss. Management periodically
evaluates positions taken in tax returns with respect
to situations in which applicable tax regulations are
subject to interpretation and establishes provisions
where appropriate.
Deferred tax
Deferred tax is provided using the liability method on
temporary differences between the tax bases of assets
and liabilities and their carrying amounts for financial
reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable
temporary differences, except:
(i) 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 and
does not give rise to equal taxable and deductible
temporary differences;
(ii) In respect of taxable temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures, when
the timing of the reversal of the temporary
differences can be controlled and it is probable
that the temporary differences will not reverse in
the foreseeable future.
Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax
assets are recognised to the extent that it is probable
that taxable profit will be available against which
the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses
can be utilised, except:
(i) 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 and
does not give rise to equal taxable and deductible
temporary differences;
(ii) In respect of deductible temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures, 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 assets and deferred tax liabilities are offset
if and only if the Company has a legally enforceable 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.
4.15 Cash and Cash Equivalents
Cash and cash equivalent in the balance sheet comprise
cash at banks, on hand and short-term deposits with
an original maturity of three months or less, that are
readily convertible to a known amount of cash and
subject to an insignificant risk of changes in value.
4.16 Cash dividend
The Company recognises a liability to make cash
distributions to equity holders when the distribution
is authorised and the distribution is no longer at the
discretion of the Company. As per the corporate laws
in India, a distribution is authorised when it is approved
by the shareholders. A corresponding amount is
recognised directly in equity.
4.17 Inventories
Inventories are carried at the lower of the cost and
net realisable value after providing for obsolescence
and other losses where considered necessary. Cost of
Inventories comprises all cost of purchase and other
cost incurred in bringing inventories to their present
location and condition. Cost is determined on fi rst-in-
first-out basis.
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.
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