2. Summary of Material accounting policies
This note provides a list of the material accounting policies
adopted in the preparation of these Standalone financial
statements. These policies have been consistently applied to all
the years presented, unless otherwise stated.
2.1 Basis of preparation
a. Statement of Compliance
The Financial Statements have been prepared in
accordance with the accounting principles generally
accepted in India including Indian Accounting
Standards (Ind AS) prescribed under the section 133
of the Companies Act, 2013 read with rule 3 of the
Companies (Indian Accounting Standards) Rules, 2015
(as amended from time to time) and presentation and
disclosures requirement of Division II of Schedule III of
the Companies Act 2013, (Ind AS Compliant Schedule
III), as applicable to financial statements.
Accordingly, the Company has prepared these
Financial Statements which comprise the Balance
Sheet as at March 31, 2025, the Statement of Profit and
Loss, the Statement of Cash Flows and the Statement
of Changes in Equity for the year ended March 31,
2025, and material accounting policies and other
explanatory information (together hereinafter referred
to as “financial statements”)
b. Historical cost convention
The financial statements have been prepared on a
historical cost convention and on an accrual basis,
except for certain items that are measured at fair
value at the end of each reporting period as required
by relevant Ind AS:
• Financial assets and financial liabilities
measured at fair value (Refer accounting policy
on financial Instruments);
• Defined benefit and other long-term
employee benefits.
c. Current vs 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 satisfies any of
the following criteria:
• it is expected to be realized in, or is intended for
sale or consumption in, the Company’s normal
operating cycle,
• it is held primarily for the purpose of trading,
• it is expected to be realised within 12 months
after the reporting date, or
• it is cash or cash equivalent unless it is restricted
from being exchanged or used to settle a liability
for at least 12 months after the reporting date.
All other assets are classified as non-current.
A liability is treated as current when it satisfies any of
the following criteria:
• it is expected to be settled in the Company’s
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
• the Company does not have an unconditional
right to defer settlement of the liability for at least
12 months after the reporting date.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified
as non-current.
The operating cycle is the time between the acquisition
of assets for processing and their realisation in cash
and cash equivalents.
d. Use of estimates and judgements
The preparation of the financial statements in conformity
with Ind AS requires the management to make estimates,
judgements and assumptions. These estimates,
judgments and assumptions affect the application of
accounting policies and the reported amounts of assets
and liabilities, the disclosures of contingent assets and
liabilities at the date of the financial statements and
reported amounts of revenues and expenses during
the period. The application of accounting policies that
require critical accounting estimates involving complex
and subjective judgments and the use of assumptions
in these financial statements have been disclosed
in Note no. 2.19. Accounting estimates could change
from period to period. Actual results could differ from
those estimates. Appropriate changes in estimates are
made as management becomes aware of changes in
circumstances surrounding the estimates. Changes
in estimates are reflected in the financial statements
in the period in which changes are made and, if
material, their effects are disclosed in the notes to the
financial statements.
e. Business Combinations
Business combinations are accounted for using
the acquisition method. The cost of an acquisition
is measured as the aggregate of the consideration
transferred measured at fair value on acquisition
date. The amount of any non-controlling interests
in the acquiree for each business combination,
the Company elects whether to measure the non¬
controlling interests in the acquiree at fair value or at
the proportionate share of the acquiree’s identifiable
net assets. Acquisition-related costs as and when
incurred are expensed.
At the acquisition date, the identifiable assets
acquired, and the liabilities assumed are recognised at
their fair values on acquisition date. For this purpose,
the liabilities assumed include contingent liabilities
representing present obligation and they are measured
at fair values on acquisition date irrespective of the
fact that outflow of resources embodying economic
benefits is not probable. However, the following assets
and liabilities acquired in a business combination are
measured at the basis indicated below:
• Deferred tax assets or liabilities and potential tax
effects of temporary differences and carry forwards
of an acquiree that exist at the acquisition date or
arise because of the acquisition are accounted in
accordance with Ind AS 12-Income Tax.
• The assets or liabilities related to employee benefit
arrangements are recognised and measured in
accordance with Ind AS 19-Employee Benefits.
• Assets (or disposal groups) that are classified as
held for sale and Non-current Assets Held for
Sale and Discontinued Operations are measured
in accordance with Ind AS 105-Non-current Assets
Held for Sale and Discontinued Operations.
f. Investment in subsidiaries, joint ventures and
associates
i. The Company has accounted for its investment
in subsidiaries at cost. The company assesses
whether there is any indication that these
investments may be impaired. If any such
indication exists, the investment is considered for
impairment based on the fair value thereof.
ii. When the Company issues financial guarantees
on behalf of subsidiaries, initially it measures
the financial guarantee at their fair values and
subsequently measures at higher of:
• The amount of loss allowance determined in
accordance with impairment requirements
of Ind AS 109 and
• The amount initially recognized less, when
appropriate, the cumulative amount of
income recognized in accordance with
the principles of Ind AS 115 ‘Revenue from
Contracts with Customers’
iii. The financial statements of the Company’s
subsidiaries are prepared for the same reporting
period as the Company. (When necessary,
adjustments are made to bring the accounting
policies in line with those of the Group.)
g. Ministry of Corporate Affairs (“MCA”) notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules
as issued from time to time. For the year ended March
31, 2025, MCA has notified Ind AS - 117 Insurance
Contracts and amendments to Ind AS 116 - Leases,
relating to sale and leaseback transactions, applicable
to the Company w.e.f. April 1, 2024. The Company has
reviewed the new pronouncements and based on its
evaluation has determined that it does not have any
significant impact in its financial statements.
2.2 Property, plant and equipment
An item of property, plant and equipment (PPE) that qualifies
as an asset is measured on initial recognition at cost.
Following initial recognition, all items of property, plant and
equipment are carried at cost less accumulated depreciation
and accumulated impairment losses, if any. Cost includes
expenditure that is directly attributable to the acquisition or
construction of the items. Subsequent costs are added to
existing item’s carrying amount or recognised as a separate
item, 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.
All other subsequent costs related to an item are charged to
the statement of profit and loss during the reporting period in
which they are incurred. In case of commissioned assets where
final payment to the contractors is pending, capitalisation is
made on provisional basis subject to necessary adjustment
in cost and depreciation in the year of settlement.
An item of property, plant and equipment is derecognized
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any
gain or loss arising on the disposal or retirement of an item of
property, plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of the
asset and is recognized in Statement of Profit and Loss.
a. Commissioning
Gas distribution systems are treated as commissioned
when supply of gas reaches to the individual points
and ready for intended use.
b. Capital work-in-progress (CWIP)
Capital Work-in-Progress includes, material, labour
and other directly attributable costs incurred on
assets, which are yet to be commissioned. Capital
Inventory is included in Capital work-in-progress and
comprises stock of capital items and construction
materials at Company’s stores and with contractors.
The Company has provisioning policy for slow and
non-moving CWIP (Refer note 2.19).
c. Depreciation methods, estimated useful lives and
residual value
Depreciation is calculated using the straight-line
method to allocate cost of the asset, net of estimated
residual value, over their estimated useful lives. The
useful lives and residual values are as prescribed
under schedule II to Companies Act, 2013, except
in respect of, following category of property plant
and equipment where useful life estimated as
per management estimate is based on technical
advice, taking into account the nature of the asset,
replacements generally required from the point of
view of operational effectiveness:
The residual values and useful lives of the assets are
reviewed, and adjusted if appropriate, at the end of
each reporting period.
Depreciation on the property, plant and eq uipment
added / disposed off / discarded during the year is
provided on pro-rata basis with reference to the time
of addition/disposal/discarding.
Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These
are included in the statement of profit and loss under
Other Expenses.
d. On transition to Ind AS, the company had elected to
continue with the carrying value of all its property,
plant and equipment and intangible assets recognised
as at April 01, 2015 measured as per previous GAAP
and use that carrying value as deemed cost of
property, plant and equipment and intangible assets.
2.2.1 Goodwill and Other Intangible assets
Goodwill acquired in a business combination is initially
measured at cost, being the excess of the consideration
transferred over the net identifiable assets acquired
and liabilities assumed, in accordance with Ind AS 103
Intangible assets acquired separately are measured
on initial recognition at cost. Intangible assets arising
on acquisition of business are measured at fair value
as at date of acquisition.
2.3 Impairment of assets
The carrying values of assets/cash generating units at
each balance sheet date are reviewed for impairment. The
cash generating unit is the group of asset that generates
identified independent Cash Flows. If any indication of
impairment exists, the recoverable amount of such assets
is estimated and impairment is recognised, if the carrying
amount of these assets exceeds their recoverable amount.
The recoverable amount is the greater of the fair value
less costs of disposal and their value in use. Value in use
is arrived at by discounting the future cash flows to their
present value based on an appropriate discount factor.
When there is indication that an impairment loss recognised
for an asset in earlier accounting periods no longer exists
or may have decreased, such reversal of impairment loss is
recognised in the Statement of Profit and Loss.
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.
2.4 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.
The Company as a lessee
The Company’s lease asset classes primarily consist of
leases for land and buildings, motor vehicles, plant and
equipment and computers. The Company assesses whether
a contract contains a lease, at inception of a contract. To
assess whether a contract conveys the right to control the
use of an identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset (ii) the
Company has substantially all the economic benefits from
use of the asset throughout the period of the lease and (iii)
the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company
recognizes a right-of-use asset (“ROU”) and a corresponding
lease liability for all lease arrangements in which it is a
lessee, except for leases with a term of twelve months or
less (short-term leases) and low value leases. For these
short-term and low value leases, the Company recognizes
the lease payments as an operating expense on a straight¬
line basis over the term of the lease.
Certain lease arrangements include the options to extend or
terminate the lease before the end of the lease term. ROU
assets and lease liabilities includes these options when it is
reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the
commencement date of the lease. They are subsequently
measured at cost less accumulated depreciation and
impairment losses.
Right-of-use assets are depreciated from the commencement
date on a straight-line basis over the shorter of the lease
term and useful life of the underlying asset. Right of use
assets are evaluated for recoverability whenever events
or changes in circumstances indicate that their carrying
amounts may not be recoverable.
For the purpose of impairment testing, the recoverable
amount (i.e. the higher of the fair value less cost to sell
and the value-in-use) is determined on an individual asset
basis unless the asset does not generate cash flows that
are largely independent of those from other assets. In such
cases, the recoverable amount is determined for the Cash
Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost
at the present value of the future lease payments. The
lease payments are discounted using the interest rate
implicit in the lease or, if not readily determinable, using
the incremental borrowing rates. Lease liabilities are
remeasured with a corresponding adjustment to the related
right of use asset if the Company changes its assessment if
whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments have
been classified as financing cash flows.
2.5 Investments and other financial assets
a. Classification
The Company classifies its financial assets in the
following measurement categories:
• those to be measured subsequently at fair value
(either through other comprehensive income, or
through profit or loss), and
• those measured at amortised cost.
The classification depends on the Company’s
business model for managing the financial assets and
the contractual terms of the cash flows.
For assets measured at fair value, gains and losses
will either be recorded in profit or loss or other
comprehensive income. For investments in debt and
equity instruments, this will depend on the business
model in which the investment is held.
The Company reclassifies its investments when and
only when its business model for managing those
assets changes.
Assets that are held for collection of contractual
cash flows where those cash flows represent sole
payment of principal and interest are measured at
amortised cost.
Investments in mutual funds are primarily held for the
Company's cash requirements and can be readily
convertible in cash. These investments are initially
recognised at fair value and carried at fair value
through profit or loss (FVTPL).
A financial asset is classified as FVTOCI only if it
meets both the of the following conditions and is not
recognized at FVTPL:
• The asset is held within a business model
whose objective is achieved by both
collecting contractual cash flows and selling
financial assets; and
• The contractual terms of the financial asset give
rise on specified dates to cash flows that are
solely payments of principal and interest on the
principal amount outstanding.
Financial Asset included within the FVTOCI category
are measured initially as well as at each reporting date
at fair value. Fair value movements are recognized in
the other comprehensive income (OCI). However, the
Company recognizes interest income, impairment
losses & reversals in the Statement of Profit and Loss,
if any. On derecognition of the asset, cumulative gain
or loss previously recognised in OCI is reclassified
from the equity to Statement of Profit and Loss.
b. Initial recognition and measurement
All financial assets are recognised initially at fair
value. Transaction costs that are directly attributable
to the acquisition or issue of financial asset (other
than financial asset at fair value through Profit or
Loss) are added to or deducted from the fair value
of the financial assets, as appropriate on initial
recognition. Transaction costs directly attributable to
the acquisition of financial assets at fair value through
the Statement of Profit and Loss are recognised
immediately in Statement of Profit and Loss.
c. Subsequent measurement
All recognised financial assets are subsequently
measured in their entirety at either amortized cost or
‘fair value through profit or loss’ or ‘fair value through
other comprehensive income’, depending on the
classification of the financial asset.
d. Impairment of financial assets
The company assesses on a forward looking basis the
expected credit losses (ECL) associated with its assets
carried at amortised cost. The impairment methodology
applied depends on whether there has been a
significant increase in credit risk. For trade receivables,
except for specifically identified cases, the Company
follows a simplified approach where provision is made
as per the ageing buckets which are designed based
on historical facts and patterns. For refundable security
deposits and reinstatement charges recoverable with
government authorities, the company recognises
impairment loss allowance based on lifetime ECLs at
each reporting date, right from its initial recognition.
Lifetime ECL are the expected credit losses resulting
from all possible default events over the expected life of
a financial instrument. ECL is the difference between all
contractual cash flows that are due to the Company in
accordance with the contract and all the cash flows that
the company expects to receive (i.e., all cash shortfalls),
discounted at the original Effective Interest Rate (EIR).
ECL impairment loss allowance (or reversal)
recognized during the period is recognized as income/
expense in the statement of profit and loss (P&L). This
amount is reflected under the head ‘other expenses’
in the P&L. The balance sheet presentation for various
financial instruments is described below:
Financial assets measured as at amortised cost: ECL
is presented as an allowance, i.e., as an integral part
of the measurement of those assets in the balance
sheet. The allowance reduces the net carrying amount.
Until the asset meets write-off criteria, the Company
does not reduce impairment allowance from the gross
carrying amount.
For assessing increase in credit risk and impairment
loss, the Company combines financial instruments on
the basis of shared credit risk characteristics with the
objective of facilitating an analysis that is designed
to enable significant increases in credit risk to be
identified on a timely basis.
e. De-recognition of financial assets
A financial asset is de-recognised only when
• The Company has transferred the rights to
receive cash flows from the financial asset or
• retains the contractual rights to receive the
cash flows of the financial asset, but assumes a
contractual obligation to pay the cash flows to
one or more recipients.
Where the Company has transferred an asset, the
Company evaluates whether it has transferred
substantially all risks and rewards of ownership of the
financial asset. In such cases, the financial asset is de¬
recognised. Where the Company has not transferred
substantially all risks and rewards of ownership of the
financial asset, the financial asset is not de-recognised.
Where the Company has neither transferred a financial
asset nor retains substantially all risks and rewards of
ownership of the financial asset, the financial asset is
de-recognised if the Company has not retained control
of the financial asset. Where the Company retains
control of the financial asset, the asset is continued to
be recognised to the extent of continuing involvement
in the financial asset.
2.5.1 Cash and cash equivalents
For the purpose of presentation in the statement
of cash flows, Cash and cash equivalents includes
cash on hand, cash in transit and short term deposits
with original maturities of three months or less that
are readily convertible to known amounts of cash
and which are subject to an insignificant risk of
changes in value.
2.6 Financial Liabilities
a. Classification as debt or equity
Debt and equity instruments issued by Company 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.
b. Measurement
Financial liabilities are initially recorded at fair value
and are subsequently measured at amortised cost
using effective interest method or at FVTPL
c. Financial liabilities subsequently measured at
amortised cost
Financial liabilities that are not held-for-trading and
are not designated as at FVTPL are measured at
amortised cost at the end of subsequent accounting
periods. The carrying amounts of financial liabilities
that are subsequently measured at amortised cost are
determined based on the effective interest method.
Interest expense that is not capitalised as part of costs
of an asset is included in the 'Finance Cost' line item.
The effective interest method is a method of
calculating the amortised cost of a financial liability
and of allocating interest expense over the relevant
period. The effective interest rate is the rate that
exactly discounts estimated future cash payments
(including all fees and points paid or received that
form an integral part of the effective interest rate,
transaction costs and other premiums or discounts)
through the expected life of the financial liability, or
(where appropriate) a shorter period, to the gross
carrying amount on initial recognition.
d. De-recognition of financial liabilities
The Company derecognises financial liabilities
when, and only when, the Company's obligations are
discharged, cancelled or have expired. An exchange
between with a lender of debt instruments with
substantially different terms is accounted for as an
extinguishment of the original financial liability and
the recognition of a new financial liability. Similarly,
a substantial modification of the terms of an existing
financial liability (whether or not attributable to the
financial difficulty of the debtor) is accounted for as
an extinguishment of the original financial liability
and the recognition of a new financial liability. The
difference between the carrying amount of the
financial liability de-recognised and the consideration
paid and payable is recognised in profit or loss.
e. Security Deposit
Securities deposits from customers of natural gas,
refundable on termination / alteration of the gas sales
agreement are considered as current liabilities, as
every customer has a right to request for termination of
supply and the Company does not have a contractual
right to delay payment for more than 12 months.
f. Trade and other payables
These amounts represent liabilities for goods and
services received by the Company prior to the end of
reporting period which are unpaid. Trade and other
payables are presented as current liabilities unless
payment is not due within 12 months after the reporting
period. They are recognised initially at their fair value
and subsequently measured at amortised cost.
2.7 Fair Value Measurements
The Company measures financial instruments such as
derivatives 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:
(a) In the principal market for the asset or liability, or
(b) 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 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the
company can access at the measurement date;
• Level 2 inputs are inputs other than quoted prices
included within level 1 that are observable for the
asset or liability, either directly or indirectly; and
• Level 3- Level 3 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 transfer have occurred between
levels in the hierarchy by re-assessing categorization
(based on the lowest level of input that is significant to the
fair value measurement as a whole) at the end of each
reporting period.
Fair value for measurement and/or disclosure purposes in
this financial information is determined on such a basis,
except for share-based payment transactions that are
within the scope of Ind AS 102, leasing transactions that are
within the scope of Ind AS 17, and measurements that have
some similarities to fair value but are not fair value, such as
net realisable value in Ind AS 2 or value in use in Ind AS 36.
2.8 Offsetting financial instruments
Financial assets and liabilities are offset and the net
amount is reported in the balance sheet where there is a
legally enforceable right to offset the recognised amounts
and there is an intention to settle on a net basis or realise
the asset and settle the liability simultaneously.
2.9 Inventories
Stock of gas is valued at lower of cost computed on First In
First Out (FIFO) basis and estimated net realisable value.
Net realisable value is the estimated selling price in the
ordinary course ofbusiness, less estimated costs of completion
and the estimated costs necessary to make the sale.
Inventories other than stock of gas are valued at cost,
which is determined on weighted average net off provision
for cost of obsolescence / slow moving inventory and other
anticipated losses, wherever considered necessary.
Cost of inventories includes all other costs incurred in bringing
the inventories to their present location and condition.
2.10 Revenue from contracts 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.
The disclosures of significant accounting judgements,
estimates and assumptions relating to revenue from
contracts with customers are provided in Note 2.19
The Company earns revenues primarily from sale of natural
gas. Revenue is recognised on supply of gas to customers
by metered/assessed measurements. The Company
has concluded that it is the principal in all its revenue
arrangements since it is the primary obligor in all the
revenue arrangements as it has the pricing latitude and is
also exposed to credit risk.
However, sales tax/ value added tax (VAT) / Goods and
Service Tax (GST) is not received by the Company on its
own account. Rather, it is tax collected on value added to
the commodity by the seller on behalf of the government.
Accordingly, it is excluded from revenue.
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 service rendered is net
of variable consideration on account of trade allowances,
rebates, value added tax, goods and service tax (GST) and
inclusive of excise duty.
Compensation receivable from customers with respect
to shortfall in minimum guaranteed Off take of gas is
recognised on contractual basis. Delayed payment
charges are recognised on receipt basis in view of
uncertainty of collection.
2.11 Interest and Dividend income
Interest income from a financial asset is recognised when
it is probable that the economic benefit will flow to the
Company and the amount of income can be measured
reliably. Interest income is accrued on time basis, by
reference to the principal outstanding and at the effective
interest rate applicable.
Dividend income from investments is recognised when the
right to receive dividend has been established.
2.12 Foreign currencies
Foreign currency transactions are translated into the
functional currency using the exchange rates at the dates
of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and
from the translation of monetary assets and liabilities
denominated in foreign currencies at year end exchange
rates are recognised in the statement of profit and loss. At the
end of each reporting period, monetary assets and liabilities
denominated in foreign currencies are translated at the
functional currency spot rates prevailing at the reporting date.
Foreign exchange differences regarded as an adjustment to
borrowing costs are presented in the statement of profit and
loss, within finance costs. All other foreign exchange gains
and losses are presented in the statement of profit and loss
on a net basis within other gains/(losses).
2.13 Income tax
The tax currently payable is based on taxable profit for
the year. Taxable profit differs from "profit before tax” as
reported in the statement of profit and loss because of items
of income or expense that are taxable or deductible in other
years and items that are never taxable or deductible. The
Company's current tax is calculated using tax rates that
have been enacted or substantively enacted by the end of
the reporting period. Income tax assets and liabilities are
measured at the amount expected to be recovered from or
paid to the taxation authorities.
Current Tax
The current income tax charge is calculated on the basis of
the tax laws enacted or substantively enacted at the end
of the reporting period. Management periodically evaluates
positions taken in tax returns with respect to situations in
which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
Deferred Tax
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in
the financial statements. Deferred income tax is determined
using tax rates (and laws) that have been enacted or
substantively enacted by the end of the reporting period
and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax
liability is settled.
Deferred tax assets are recognised for all deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is
a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the
same taxation authority. Current tax assets and tax liabilities
are offset where the company has a legally enforceable
right to offset and intends either to settle on a net basis, or
to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in Statement of
Profit and Loss, except to the extent that it relates to items
recognised in other comprehensive income or directly
in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
Uncertain tax positions
The management periodically evaluates positions taken in
the tax returns with respect to situations in which applicable
tax regulations are subject to interpretation and considers
whether it is probable that a taxation authority will accept
an uncertain tax treatment. The Company reflects the effect
of uncertainty for each uncertain tax treatment by using
one of two methods, the expected value method (the sum
of the probability - weighted amounts in a range of possible
outcomes) or the most likely amount (single most likely
amount method in a range of possible outcomes), depending
on which is expected to better predict the resolution of the
uncertainty. The Company applies consistent judgements
and estimates if an uncertain tax treatment affects both the
current and the deferred tax.
2.14 Borrowing costs
General and specific borrowing costs that are directly
attributable to the acquisition, construction or production
of a qualifying asset are capitalised during the period of
time that is required to complete and prepare the asset for
its intended use or sale. Qualifying assets are assets that
necessarily take a substantial period of time to get ready
for their intended use or sale.
Investment income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for
capitalisation.
All other borrowing costs are expensed in the period in
which they are incurred.
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