2. Summary of material accounting policies
2.1 Fair value measurement
Fair value is the price at the measurement date at which an asset can
be sold or paid to transfer a liability, in an orderly transaction between
market participants. The Company's accounting policies require,
measurement of certain financial/ non-financial assets and liabilities
at fair values (either on a recurring or non-recurring basis). Also, the
fair values of financial instruments measured at amortised cost are
required to be disclosed in the standalone financial statements.
The Company is required to classify the fair valuation method of the
financial/ non-financial assets and liabilities, either measured or
disclosed at fair value in the standalone financial statements, using
a three-level fair value hierarchy (which reflects the significance of
inputs used in the measurement). Accordingly, 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.
The three levels of the fair value hierarchy are described below:
Level 1: Quoted (unadjusted) prices for identical assets or liabilities
in active markets
Level 2: Significant inputs to the fair value measurement are directly
or indirectly observable
Level 3: Significant inputs to the fair value measurement
are unobservable
2.2 Current versus non-current classification
The Company presents assets and liabilities in the balance sheet
based on current / non-current classification.
Deferred tax assets and liabilities are classified as non-current
assets and liabilities.
An asset is classified as current when it is expected to be realised or
intended to be 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 assets.
A liability is classified as 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. All
other liabilities are classified as non-current liabilities.
The operating cycle is the time between the acquisition of assets for
processing and their realisation in cash and cash equivalents. The
Company has identified twelve months as its operating cycle.
2.3 Property, plant and equipment ('PPE')
An item is recognised as an asset, if and only if, it is probable that
the future economic benefits associated with the item will flow to
the Company and its cost can be measured reliably. PPE are initially
recognised at cost. The initial cost of PPE comprises purchase price
(including non-refundable duties and taxes but excluding any trade
discounts and rebates), borrowing costs if capitalization criteria are
met and directly attributable cost of bringing the asset to its working
condition for the intended use. Following initial recognition, PPE
are carried at cost less accumulated depreciation and accumulated
impairment losses, if any.
Subsequent costs are included in the asset's carrying amount
or recognised as separate assets, as appropriate, only when it
is probable that the future economic benefits associated with
expenditure will flow to the Company and the cost of the item can
be measured reliably. When significant parts of property, plant and
equipment are required to be replaced at intervals, the Company
recognises such components separately and depreciates them based
on their specific useful lives. All other repairs and maintenance are
charged to Statement of Profit and Loss at the time of occurrence.
Gains or losses arising from de-recognition of PPE are measured as
the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit
and loss when the asset is derecognized.
Depreciation on property, plant and equipment is calculated on a
written down value method using the rates arrived at based on the
useful lives estimated by the management which are in line with the
useful lives prescribed in Schedule II of the Companies Act, 2013.
The Company has used the following useful lives to provide
depreciation on its PPE.
The useful lives, residual values and depreciation method of
PPE are reviewed, and adjusted appropriately, at-least as at each
reporting date so as to ensure that the method depreciation are
consistent with the expected pattern of economic benefits from
these assets. The effects of any change in the estimated useful
lives, residual values and / or depreciation method are accounted
prospectively, and accordingly the depreciation is calculated over
the PPE's remaining revised useful life. The cost and the accumulated
depreciation for PPE sold, scrapped, retired or otherwise disposed
off are derecognised from the balance sheet and the resulting gains
/ (losses) are included in the statement of profit and loss within
other expenses / other income.
2.4 Intangible assets
Identifiable intangible assets are recognised when the Company
controls the asset, it is probable that future economic benefits
attributed to the asset will flow to the Company and the cost of the
asset can be measured reliably.
Intangible assets are measured on initial recognition at cost.
Following initial recognition, intangible assets are carried at cost
less accumulated amortization and accumulated impairment
losses, if any.
Intangible assets are amortized on a straight-line basis over the
estimated useful economic life. The Company amortizes intangible
assets (Technology related costs and software) over the best
estimate of its useful life which is 3-5 years.
The Company has recognised certain intangible assets along with
intangible assets on acquisition of entity (Refer Note 46). The table
below shows the lives of intangibles recognised:
The costs related to planning and post implementation phases
of development are expensed as incurred. Expenditure on
research activities are recognized in the Statement of Profit and
Loss as incurred.
Development activities relate to production of new or substantially
improved products and processes. Development expenditure
incurred on an individual project is recognized as an intangible
asset when the Company can demonstrate all the following:
- The technical feasibility of completing the intangible asset so
that it will be available for use or sale.
- Its intention to complete the asset and its ability and intention
to use or sell the asset.
- How the asset will generate future economic benefits.
- The availability of adequate resources to complete the
development and to use or sell the asset.
- The ability to measure reliably the expenditure attributable to
the intangible asset during development.
The amortization period and the amortization method are reviewed at
least at each financial year end. If the expected useful life of the asset
is significantly different from previous estimates, the amortization
period is changed accordingly. If there has been a significant change
in the expected pattern of economic benefits from the asset, the
amortization method is changed to reflect the changed pattern. Such
changes are accounted prospectively in accordance with Ind AS 8 -
Accounting Policies, Changes in Accounting Estimates and Errors.
Gains or losses arising from de-recognition of an intangible asset
are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognized in the
statement of profit and loss when the asset is derecognized.
2.5 Impairment of non-financial assets
Assets that are subject to depreciation and amortization are reviewed
for impairment, whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable or
when annual impairment testing for an asset is required. Such
circumstances include, though are not limited to, significant or
sustained decline in revenues or earnings and material adverse
changes in the economic environment.
An impairment loss is recognized whenever the carrying amount of
an asset or its cash-generating unit exceeds its recoverable amount.
The recoverable amount of an asset is the greater of its fair value,
less costs to sell and value in use. To calculate value in use, the
estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market rates and
the risks specific to the asset. For an asset that does not generate
largely independent cash inflows, the recoverable amount is
determined for the cash-generating unit to which the asset belongs.
Fair value less costs to sell is the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction
between market participants, less the costs of disposal.
Goodwill is tested for impairment annually at year end and when
circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable
amount of CGU to which the goodwill relates. When the recoverable
amount of the CGU is less than it's carrying amount, an impairment
loss is recognised.
2.6 Leases
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.
Where the Company is the lessee
The Company applies a single recognition and measurement
approach for all leases, except for short-term leases and leases of
low-value assets. The Company recognizes lease liabilities to make
lease payments and right-of-use assets representing the right to
use the underlying assets.
A. Right-of-use assets
The Company recognizes 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 accumulated
impairment losses, and adjusted for any remeasurement of lease
liabilities. The cost of right-of-use assets includes the amount of
lease liabilities recognized, 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 lease term.
The right-of-use assets are also subject to impairment. Refer
to the accounting policies in section 2.8 Impairment of non¬
financial assets.
B. Lease Liabilities
At the commencement date of the lease, the Company recognizes
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 recognized 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.
C. Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition
exemption to its short-term leases of machinery and equipment
(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). It also applies the lease of low-value assets recognition
exemption to leases of office equipment that are considered to
be low value. Lease payments on short-term leases and leases
of low-value assets are recognized as expense on a straight-line
basis over the lease term.
Where the Company is the lessor
Leases in which the Company does not transfer substantially all the
risks and rewards incidental to ownership of an asset are classified
as operating leases. Rental income arising is accounted for on a
straight-line basis over the lease terms. Initial direct costs incurred
in negotiating and arranging an operating lease are added to the
carrying amount of the leased asset and recognized over the lease
term on the same basis as rental income. Contingent rents are
recognized as revenue in the period in which they are earned.
2.7 Borrowing cost
Borrowing costs 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 as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
of funds. Borrowing cost also includes exchange differences to the
extent regarded as an adjustment to the borrowing costs.
2.8 Financial instruments
A financial instrument is any contract that gives rise to a financial
asset of one entity and a financial liability or equity instrument of
another entity.
(i) Financial assets
Initial recognition and measurement
All financial assets are recognized initially at fair value.
Transaction costs that are directly attributable to the
acquisition of financial assets (other than financial assets
at fair value through profit or loss) are added to the fair
value measured on initial recognition of financial assets.
Purchase and sale of financial assets are accounted for at
settlement date.
Subsequent measurement
The Company determines the classification of its financial
instruments at initial recognition. Financial assets are
classified, at initial recognition, as subsequently measured
at amortised cost, fair value through other comprehensive
income (OCI), and fair value through profit or loss.
Financial assets at amortized cost
A financial instrument is measured at the amortized cost if
both the following conditions are met:
a) The asset is held within a business model whose
objective is to hold assets for collecting contractual
cash flows, and
b) Contractual terms of the asset give rise on specified
dates to cash flows that are solely payments of principal
and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are
subsequently measured at amortized cost using the effective
interest rate (EIR) method. Amortized cost is calculated by
taking into account any discount or premium on acquisition
and fees or costs that are an integral part of the EIR. The EIR
amortization is included in other income in the statement
of profit and loss. The losses arising from impairment are
recognized in the statement of profit and loss. This category
includes cash and bank balances, loans, unbilled revenue,
trade and other receivables.
Financial assets at Fair Value through Other Comprehensive
Income ('FVTOCI')
A financial instrument is classified and measured at fair value
through OCI if both of the following criteria are met:
a) The objective of the business model is achieved both
by collecting contractual cash flows and selling the
financial assets, and
b) The asset's contractual cash flows represent solely
payments of principal and interest.
Financial instruments included within the OCI category
are measured initially as well as at each reporting date at
fair value. Fair value movements are recognized in OCI. On
derecognition of the asset, cumulative gain or loss previously
recognized in OCI is reclassified from OCI to statement of
profit and loss.
Financial assets at Fair Value through Profit and Loss
('FVTPL')
Any financial instrument, which does not meet the criteria
for categorization at amortized cost or at fair value through
other comprehensive income, is classified at fair value
through profit and loss. Financial instruments included in
the fair value through profit and loss category are measured
at fair value with all changes recognized in the statement of
profit and loss.
Equity investments
All equity investments in scope of Ind AS 109 are measured
at fair value. Equity instruments which are held for trading
are classified as at FVTPL. For all other equity instruments,
the Company may make an irrevocable election to present in
other comprehensive income subsequent changes in the fair
value. The Company makes such election on an instrument-
by-instrument basis. The classification is made on initial
recognition and is irrevocable.
If the Company decides to classify an equity instrument as at
FVTOCI, then all fair value changes on the instrument, excluding
dividends, are recognized in the OCI. There is no recycling of
the amounts from OCI to P&L, even on sale of investment.
Equity instruments included within the FVTPL category are
measured at fair value with all changes recognized in the
statement of profit & loss.
Derecognition of financial assets
A financial asset is primarily derecognized 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.
Impairment of financial assets
The Company recognizes loss allowances using the expected
credit loss (ECL) model for the financial assets which are not
fair valued through profit and loss. Lifetime ECL allowance is
recognized for trade receivables with no significant financing
component. For all other financial assets, expected credit
losses are measured at an amount equal to the 12-month ECL,
unless there has been a significant increase in credit risk from
initial recognition in which case they are measured at lifetime
ECL. The amount of expected credit losses (or reversal) that is
required to adjust the loss allowance at the reporting date is
recognized in the statement of profit and loss.
The Company follows simplified approach for recognition
of impairment loss allowance on trade receivables. The
application of simplified approach does not require the
Company to track changes in credit risk. Rather, it recognizes
impairment loss allowance based on lifetime ECLs at each
reporting date, right from its initial recognition.
ii) Financial liabilities
Initial recognition and measurement
All financial liabilities are recognized initially at fair value.
The Company's financial liabilities include trade payables and
other payables.
Subsequent measurement
After initial recognition, financial liabilities are subsequently
measured at amortized cost using the effective interest rate
(EIR) method. Gains and losses are recognized in the statement
of profit and loss when the liabilities are derecognized as well
as through the EIR amortization process.
Amortized cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that are
an integral part of the EIR. The EIR amortization is included as
finance costs in the statement of profit and loss.
Financial liabilities at amortised cost (Loans and
borrowings)
After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised cost
using the EIR method. Gains and losses are recognised in
profit or loss when the liabilities are derecognised as well
as through the EIR amortisation process. Amortised cost is
calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the
EIR. The EIR amortisation is included as finance costs in the
statement of profit and loss.
This category generally applies to borrowings. For more
information Refer Note 18.
Derecognition
A financial liability is derecognized when the obligation under
the liability is discharged or cancelled or expires.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net
amount is reported in the balance sheet if there is a currently
enforceable legal right to offset the recognised amounts and
there is an intention to settle on a net basis, to realise the
assets and settle the liabilities simultaneously.
2.9 Revenue from contract with customers
Revenue from contracts with customers is recognised when control
of the goods or 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 goods or services.
Revenue is recognized to the extent that it is probable that economic
benefits will flow to the Company and revenue can be reliably
measured. Revenue is measured at the fair value of consideration
received or receivable, taking into account contractually defined
terms of payment and excluding taxes and duty.
The Company assesses its revenue arrangement against specific
criteria in order to determine if it is acting as principal or agent.
The Company has concluded that it is acting as agent in case of
sale of airline tickets, Train Tickets and Bus Tickets as the supplier
is primarily responsible for providing the underlying travel services
and the Company does not control the service provided by the
supplier to the traveller. Traveller is also referred as end user.
Income from services
A. Ticketing revenue
Convenience fees from reservation of rail tickets, airlines
tickets and bus tickets are recognized on earned basis, as the
Company does not assume any performance obligation post
the confirmation of the issuance of the ticket to the customer.
Commission income earned from air ticketing and bus
ticketing services is recognized on a net basis as an agent
on the date of completion of performance obligation by the
Company which is date of issuance of ticket in case of sale of
airline/bus tickets.
Revenue from the free cancellations option given to the
traveller is recognized on actual cancellations. Amounts
paid to the traveller as benefit are included under customer
refunds in other expenses.
The Company has measured the revenue in respect of its
performance obligation of a contract at its standalone selling
price. The price that is regularly charged for an item when sold
separately is the best evidence of its standalone selling price.
The specific recognition criteria described below is also
considered before revenue is recognised.
Cost incurred on ticketing revenue from third party is recorded
as distribution cost/Partner support cost.
Income from hotel reservations including commission earned
is recognized on a net basis as an agent on the date of check¬
out as the Company does not assume any performance
obligation post the check out by the customer.
B. Advertisement Services
The revenue from the advertising services rendered is
recognized when the services have been rendered, the price is
fixed or determinable and collectability is reasonably assured.
Advertisement Revenue - Display advertising revenue is
recognized rateably over the advertising period or upon
delivery of advertising impressions, depending on the terms
of the advertising contract.
Further advertisement revenue is also derived primarily
from click-through fees charged to travel partners for
traveller leads sent to the travel partner's website. In certain
contracts revenue is recognized on actual bookings made on
travel partner's website by the traveller for leads referred
by the Company.
C. Technical and other support fee
(i) API Services
The Company has entered contracts with on-line
platform companies, where, the Company provides
back-end support with regard to real-time updates
on travel information. These contracts are short¬
term contracts and the revenue is recognised, as
and when, the services are provided by the Company
as per the terms and conditions stipulated in the
agreements entered.
(ii) Revenue from Maintenance and software
development
Revenue is primarily derived from software
development and related services. Arrangements
with customers for software development and related
services are on a fixed price basis.
The Company recognises revenue from contracts with
customers, when it satisfies a performance obligation by
transferring promised goods or services to a customer.
The revenue is recognised to the extent of transaction
price allocated to the performance obligation satisfied.
Performance obligation is satisfied over time, when
the transfer of control of asset (good or service) to
a customer is done over time and in other cases,
performance obligation is satisfied at a point in time.
The transaction price is allocated to each performance
obligation based on relative stand-alone selling prices,
in case, contract contains more than one distinct
good or service.
Transaction price is the amount of consideration to
which the Company expects to be entitled in exchange
for transferring goods or service to a customer
excluding amounts collected on behalf of a third party.
Variable consideration is estimated using the expected
value method or most likely amount as appropriate in
a given circumstance. Payment terms agreed with a
customer are as per business practice and there is no
financing component involved in the transaction price.
For performance obligation satisfied over time,
revenue is recognised as performance under the
arrangements using percentage of completion based
on costs incurred relative to total expected costs. The
differences between the timing of revenue recognised
(based on costs incurred) and customer billings (based
on contractual terms) results in changes to revenue in
excess of billing or billing in excess of revenue.
(iii) Income from facilation
Revenue earned for facilitating website access to travel
insurance companies are being recognized as the
services are being performed.
Income from technical support fee is recognized on an
accrual basis as services are rendered as per the terms
specified in the service contracts.
Revenue is recognized net of allowances for
cancellations, refunds during the period and taxes.
Revenue is allocated between the loyalty program and the
other components of the sale. The amount allocated to the
loyalty program is deferred and is recognized as revenue
when the Company fulfills its obligations to supply the
products/services under the terms of the program.
The Company also incurs customer inducement
and acquisition costs for acquiring customers and
promoting transactions across various booking
platforms such as upfront cash incentives which were
incurred are recorded as a reduction from revenue.
Interest Income
For all debt instruments measured at amortized cost, interest
income is recorded using the effective interest rate (EIR). Other
interest income is recognized on a time proportion basis taking into
account the amount outstanding and the interest rate applicable
Contract balances
Contract assets
A contract asset is the right to consideration in exchange for goods
or services transferred to the customer. If the Company performs
by transferring goods or services to a customer before the customer
pays consideration or before payment is due, a contract asset is
recognised for the earned consideration that is conditional.
Trade Receivables
A receivable represents the Company's right to an amount of
consideration that is unconditional (i.e., only the passage of
time is required before payment of the consideration is due).
Refer to accounting policies of financial assets in section (2.8)
Financial instruments.
Contract liabilities
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. If a customer
pays consideration before the Company transfers goods or services
to the customer, a contract liability is recognised when the payment
is made or the payment is due (whichever is earlier). Contract
liabilities are recognised as revenue when the Company performs
under the contract.
Refund liabilities
A refund liability is recognised for the obligation to refund some or
all of the consideration received from the traveller. The Company's
refund liabilities arise from traveller' right of return. The Company
updates its estimates of refund liabilities (and the corresponding
change in the transaction price) at the end of each reporting period.
2.10 Foreign currencies
The standalone financial statements are presented in Indian
Rupees which is the functional and presentational currency of the
Company. For each entity the Company determines the functional
currency and items included in the financial statements of each
entity are measured using that functional currency. The Company
uses the direct method of consolidation and on disposal of a foreign
operation the gain or loss that is reclassified to profit or loss reflects
the amount that arises from using this method.
Transactions and balances
Transactions in foreign currencies are initially recorded by the
Company's entities 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 settlement or translation of
monetary items are recognised in profit or loss with the exception
of the following:
• Exchange differences arising on monetary items that forms
part of a reporting entity's net investment in a foreign
operation are recognised in profit or loss in the separate
financial statements of the reporting entity or the individual
financial statements of the foreign operation, as appropriate.
In the financial statements that include the foreign operation
and the reporting entity (e.g., consolidated financial
statements when the foreign operation is a subsidiary), such
exchange differences are recognised initially in OCI. These
exchange differences are reclassified from equity to profit or
loss on disposal of the net investment.
• Exchange differences arising on monetary items that are
designated as part of the hedge of the Company's net
investment of a foreign operation. These are recognised in
OCI until the net investment is disposed of, at which time, the
cumulative amount is reclassified to profit or loss.
• Tax charges and credits attributable to exchange differences
on those monetary items are also recorded in OCI.
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. Non-monetary items measured at
fair value in a foreign currency are translated using the exchange
rates at the date when the fair value is determined. The gain or
loss arising on translation of non-monetary items measured at fair
value is treated in line with the recognition of the gain or loss on the
change in fair value of the item (i.e., translation differences on items
whose fair value gain or loss is recognised in OCI or profit or loss are
also recognised in OCI or profit or loss, respectively).
2.11 Employee benefits (Retirement & Other Employee benefits)
Retirement benefit in the form of Provident Fund is a defined
contribution scheme and the Company has no obligation, other
than the contribution payable to the provident fund. The Company
recognizes contribution payable to the provident fund scheme as an
expenditure, when an employee renders the related service. If the
contribution payable to the scheme for service received before the
balance sheet date exceeds the contribution already paid, the deficit
payable to the scheme is recognized as a liability after deducting the
contribution already paid.
The Company operates defined benefit plan for its employees,
viz., gratuity. The costs of providing benefits under the plan are
determined on the basis of actuarial valuation at each year-end.
Actuarial valuation is carried out for using the projected unit credit
method. In accordance with the local laws and regulations, all the
employees in India are entitled for the Gratuity plan. The said plan
requires a lump-sum payment to eligible employees (meeting the
required vesting service condition) at retirement or termination
of employment, based on a pre-defined formula. The obligation
towards the said benefits is recognised in the balance sheet, at the
present value of the defined benefit obligations less the fair value of
plan assets (being the funded portion). The present value of the said
obligation is determined by discounting the estimated future cash
outflows, using interest rates of government bonds. The interest
income / (expense) are calculated by applying the above-mentioned
discount rate to the plan assets and defined benefit obligations
liability. The net interest income / (expense) on the net defined
benefit liability is recognised in the statement of profit and loss.
However, the related re-measurements of the net defined benefit
liability are recognised directly in the other comprehensive income in
the period in which they arise. The said re-measurements comprise
of actuarial gains and losses (arising from experience adjustments
and changes in actuarial assumptions), the return on plan assets
(excluding interest). Re-measurements are not re-classified to the
statement of profit and loss in any of the subsequent periods.
Accumulated leave, which is expected to be utilized within the next
12 months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional
amount that it expects to pay as a result of the unused entitlement
that has accumulated at the reporting date.
The Company treats accumulated leave expected to be carried
forward beyond twelve months, as long-term employee benefit
for measurement purposes. Such long-term compensated
absences are provided for based on the actuarial valuation using
the projected unit credit method at the year-end. Actuarial gains/
losses are immediately taken to the statement of profit and loss and
are not deferred.
The Company presents the leave as a current liability in the balance
sheet, to the extent it does not have an unconditional right to
defer its settlement for 12 months after the reporting date. Where
Company has the unconditional legal and contractual right to
defer the settlement for a period beyond 12 months, the same is
presented as non-current liability.
2.12 Share-based payments
Employees (including senior executives) of the Company receive
remuneration in the form of share-based payment transactions,
whereby employees render services as consideration for equity
instruments (equity-settled transactions).
The cost of equity-settled transactions is determined by the fair
value at the date when the grant is made using an appropriate
valuation model. Further details are given in Note 41.
That cost is recognised, together with a corresponding increase in
share-based payment (SBP) reserves in equity, over the period in
which the performance and/or service conditions are fulfilled in
employee benefits expense. The cumulative expense recognised for
equity-settled transactions at each reporting date until the vesting
date reflects the extent to which the vesting period has expired and
the Company's best estimate of the number of equity instruments
that will ultimately vest. The expense or credit in the statement of
profit and loss for a period represents the movement in cumulative
expense recognised as at the beginning and end of that period and
is recognised in employee benefits expense.
Service and non-market performance conditions are not taken into
account when determining the grant date fair value of awards, but
the likelihood of the conditions being met is assessed as part of the
Company's best estimate of the number of equity instruments that
will ultimately vest. Market performance conditions are reflected
within the grant date fair value. Any other conditions attached
to an award, but without an associated service requirement, are
considered to be non-vesting conditions. Non-vesting conditions
are reflected in the fair value of an award and lead to an immediate
expensing of an award unless there are also service and/or
performance conditions.
No expense is recognised for awards that do not ultimately vest
because non-market performance and/or service conditions have
not been met. Where awards include a market or non-vesting
condition, the transactions are treated as vested irrespective of
whether the market or non-vesting condition is satisfied, provided
that all other performance and/or service conditions are satisfied.
When the terms of an equity-settled award are modified, the
minimum expense recognised is the grant date fair value of the
unmodified award, provided the original vesting terms of the
award are met. An additional expense, measured as at the date
of modification, is recognised for any modification that increases
the total fair value of the share-based payment transaction, or is
otherwise beneficial to the employee. Where an award is cancelled
by the entity or by the counterparty, any remaining element of
the fair value of the award is expensed immediately through
profit or loss.
The dilutive effect of outstanding options is reflected as additional
share dilution in the computation of diluted earnings per share.
2.13 Income taxes
The income tax expense comprises of current and deferred income
tax. Income tax is recognised in the statement of profit and loss,
except to the extent that it relates to items recognised in the other
comprehensive income or directly in equity, in which case the
related income tax is also recognised accordingly.
a. Current tax
The current tax is calculated on the basis of the tax rates, laws
and regulations, which have been enacted or substantively
enacted as at the reporting date. The payment made in
excess / (shortfall) of the Company's income tax obligation
for the year are recognised in the balance sheet as current
income tax assets / liabilities. Any interest, related to accrued
liabilities for potential tax assessments are not included in
Income tax charge or (credit), but are rather recognised
within finance costs.
Current income tax assets and liabilities are off-set against
each other and the resultant net amount is presented in the
balance sheet, if and only when, (a) the Company currently
has a legally enforceable right to set-off the current income
tax assets and liabilities, and (b) when it relates to income tax
levied by the same taxation authority and where there is an
intention to settle the current income tax balances on net basis.
b. Deferred tax
Deferred tax is recognised, using the liability method, on
temporary differences arising between the tax bases of assets
and liabilities and their carrying values in the standalone
financial statements.
Deferred tax assets are recognised only to the extent that it
is probable that future taxable profit will be available against
which the temporary differences can be utilised.
The unrecognised deferred tax assets / carrying amount of
deferred tax assets are reviewed at each reporting date for
recoverability and adjusted appropriately.
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.
2.14 Earnings per share
Basic earnings per share are calculated by dividing the net profit
or loss attributable to equity shareholders by the weighted average
number of equity shares outstanding during the period. The
weighted average number of equity shares outstanding during the
period is adjusted for events such as bonus issue, bonus element in
a rights issue, share split, and reverse share split (consolidation of
shares) that have changed the number of equity shares outstanding,
without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the period
are adjusted for the effects of all dilutive potential equity shares.
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