2.1 Summary of Significant Accounting Policies
a) 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.
Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not
recorded at fair value through profit or loss, transaction costs that are attributable to the
acquisition of the financial asset. Purchases or sales of financial assets that require delivery of
assets within a time frame established by regulation or convention in the market place (e.g.,
regular way trades) are recognised on the trade date, i.e., the date that the Company commits to
purchase or sell the asset. Trade receivables are recognised initially at the amount of consideration
that is unconditional unless they contain significant financing components, in which case they are
recognised at fair value. The Company's trade receivables do not contain any significant financing
component and hence are measured at the transaction price measured under Ind AS 115
“Revenue from Contracts with Customers".
Subsequent Measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
• Debt instruments at amortised cost;
• Debt instruments at FVTOCI;
• Debt instruments, derivatives and equitv instruments at FVTPL; and
• Equity instruments measured at FVTOCI.
Debt instruments at amortised cost
A "debt instrument" is measured at the amortised 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 amortised cost
using the effective interest rate method and are subject to impairment. 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. Interest income from these financial assets is
included in finance income using the effective interest rate method. Any gain or loss arising on
derecognition is recognised directly in statement of profit and loss and presented in other income.
The losses arising from impairment are recognised in the statement of profit and loss. This
category generally applies to trade and other receivables.
Debt instrument at FVTOCI
A "debt instrument" is classified as at the FVTOCI 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 SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each
reporting date at fair value. Fair value movements are recognised in the OCI. However, the
Company recognises interest income, impairment losses and reversals and foreign exchange gain
or loss in the statement of profit and loss. On derecognition of the asset, cumulative gain or loss
previously recognised in OCI is reclassified to the statement of profit and loss. Interest earned
while holding a FVTOCI debt instrument is reported as interest income using the effective interest
rate method.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the
criteria for categorisation as at amortised cost or as FVTOCI, is classified as at FVTPL. In addition,
the Company may elect to designate a debt instrument, which otherwise meets amortised cost or
FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or
eliminates a measurement or recognition inconsistency (referred to as an "accounting
mismatch").
Debt instruments included within the FVTPL category are measured at fair value with all changes
recognised in the statement of profit and loss.
Equity investments
All equity investments within the scope of Ind AS 109 are measured at fair value. Equity
instruments which are held for trading and contingent consideration recognised by an acquirer
in a business combination to which Ind AS 103 applies are classified as at FVTPL. For all other
equity instruments, the Company may make an irrevocable election to present in OCI subsequent
changes in the fair value. The Company makes such election on an instrument-by-instrument
basis. The classification is made upon 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 recognised in the OCI. There is no recycling of the
amounts from OCI to the statement of profit and loss, even on sale of investment.
However, on sale the Company may transfer the cumulative gain or loss within equity. Equity
investments designated as FVTOCI are not subject to impairment assessment.
Equity instruments included within the FVTPL category are measured at fair value with all
changes recognised in the statement of profit and loss.
Investments in subsidiaries and joint venture:
Investments in subsidiaries and joint venture are carried at cost less accumulated impairment
losses, if any. Where an indication of impairment exists, the carrying amount of the investment is
assessed and written down immediately to its recoverable amount. On disposal of investments in
subsidiaries and joint venture, the difference between net disposal proceeds and the carrying
amounts are recognised in the statement of profit and loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognised (i.e. removed from the Company's balance sheet)
when:
• the rights to receive cash flow's from the asset have expired; or
• Both (1) 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" arrangements and (2) 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.
When the Company has transferred its rights to receive cash flows from an asset or has entered
into a pass-through arrangement, it evaluates if and to w'hat extent it has retained the risks and
rew ards of ownership. When it has neither transferred nor retained substantially all of the risks
and rewards of the asset, nor transferred control of the asset, the Company continues to recognise
the transferred asset to the extent of the Company's continuing involvement. In that case, the
Company also recognises an associated liability. The transferred asset and the associated liability
are measured on a basis that reflects the rights and obligations that the Company has retained.
Impairment of trade receivables and other financial assets
In accordance with Ind AS 109, the Company applies the expected credit loss ("ECL") model for
measurement and recognition of impairment loss on trade receivables or any contractual right to
receive cash or another financial asset. For this purpose, the Company follows a "simplified
approach" for recognition of impairment loss allowance on the trade receivable balances. The
application of this simplified approach does not require the Company to track changes in credit
risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting
date, right from its initial recognition. As a practical expedient, the Company uses a provision
matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision
matrix is based on its historically observed default rates over the expected life of the trade
receivables and is adjusted for forward-looking estimates. At every reporting date, the historical
observed default rates are updated and changes in the forward-looking estimates are analysed.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at FVTPL, loans and
borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge,
as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans
and borrowings and payables, net of directly attributable transaction costs. The Company's
financial liabilities include trade and other payables, loans and borrowings including bank
overdrafts and derivative financial instruments.
Subsequent Measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at FVTPL
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at FVTPL. Financial liabilities are classified as held for
trading if they are incurred for the purpose of repurchasing in the near term. This category also
includes derivative financial instruments entered into by the Company that are not designated as
hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded
derivatives are also classified as held for trading unless they are designated as effective hedging
instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
Financial liabilities designated upon initial recognition at FVTPL are designated as such at the
initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities
designated as FVTPL, fair value gains or losses attributable to changes in own credit risk are
recognised in OCI. These gains or losses are not subsequently transferred to the statement of profit
and loss.
However, the Company may transfer the cumulative gain or loss within equity. All other changes
in fair value of such liability are recognised in the statement of profit and loss. The Company has
not designated any financial liability as FVTPL.
Loans and Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised in the statement of profit and loss
over the period of the borrowings using the effective interest method. After initial recognition,
interest-bearing loans and borrowings are subsequently measured at amortised cost using the
effective interest rate method. Gains and losses are recognised in the statement of profit and loss
when the liabilities are derecognised as well as through the effective interest rate 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 effective interest rate. The effective
interest rate amortisation is included as finance costs in the statement of profit and loss.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or
cancelled or expires. When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as the derecognition of the original liability
and the recognition of a new liability. The difference in the respective carrying amounts is
recognised in the statement of profit and loss.
Derivative financial instruments
The Company uses derivative financial instruments such as foreign exchange forward contracts,
option contracts and swap contracts to mitigate its risk of changes in foreign currency exchange
rates. The Company also uses non-derivative financial instruments as part of its foreign currency
exposure risk mitigation strategy. Derivatives are classified as financial assets when the fair value
is positive and as financial liabilities when the fair value is negative.
Hedges of highly probable forecasted transactions
The Company classifies its derivative financial instruments that hedge foreign currency risk
associated with highly probable forecasted transactions as cash flow hedges and measures them
at fair value. The effective portion of such cash flow hedges is recorded in the Company's hedging
reserve as a component of equity and re-classified to the statement of profit and loss as part of the
hedged item in the period corresponding to the occurrence of the forecasted transactions. The
ineffective portion of such cash flow hedges is recorded in the statement of profit and loss as
finance costs immediately. The Company also designates certain non-derivative financial
liabilities, such as foreign currency borrowings from banks, as hedging instruments for hedge of
foreign currency risk associated with highly probable forecasted transactions. Accordingly, the
Company applies cash flow hedge accounting to such relationships. Remeasurement gain or loss
on such non-derivative financial liabilities is recorded in the Company's hedging reserve as a
component of equity and reclassified to the statement of profit and loss as part of the hedged item
in the period corresponding to the occurrence of the forecasted transactions.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold,
terminated or exercised, then hedge accounting is discontinued prospectively. The cumulative
gain or loss previously recognised in OCI, remains there until the forecasted transaction occurs.
If the forecasted transaction is no longer expected to occur, then the balance in OCI is recognised
immediately in the statement of profit and loss.
Hedges of recognised Assets and Liabilities
Changes in the fair value of derivative contracts that economically hedge monetary assets and
liabilities in foreign currencies, and for which no hedge accounting is applied, are recognised in
the statement of profit and loss. The changes in fair value of such derivative contracts, as well as
the foreign exchange gains and losses relating to the monetary items, are recognised in the
statement of profit and loss. If the hedged item is derecognised, the unamortised fair value is
recognised immediately in the statement of profit and loss.
Hedges of changes in the interest rates
Consistent with its risk management policy, the Company uses interest rate swaps to mitigate the
risk of changes in interest rates. The Company does not use them for trading or speculative
purposes.
Cash and Cash equivalents
Cash and cash equivalents consist of cash on hand, demand deposits and short-term, highly liquid
investments that are readily convertible into known amounts of cash and which are subject to
insignificant risk of changes in value. For this purpose, “short-term" means investments having
original maturities of three months or less from the date of investment. Bank overdrafts that are
repayable on demand form an integral part of the Company's cash management and are included
as a component of cash and cash equivalents for the purpose of the statement of cash flows,
b) Business combinations and goodwill
Business combinations are accounted for using the acquisition method regardless of whether
equity instruments or other assets are acquired. The acquisition date is the date on which control
is transferred to the acquirer. Judgement is applied in determining the acquisition date and
determining whether control is transferred from one party to another. Control exists when the
Company is exposed to, or has rights to variable returns from its involvement with the entity and
has the ability to affect those returns through power over the entity. In assessing control, potential
voting rights are considered only if the rights are substantive.
The Company determines that it has acquired a business when the acquired set of activities and
assets include an input and a substantive process that together significantly contribute to the
ability to create outputs. The acquired process is considered substantive if it is critical to the ability
to continue producing outputs, and the inputs acquired include an organized workforce with the
necessary skills, knowledge, or experience to perform that process or it significantly contributes
to the ability to continue producing outputs and is considered unique or scarce or cannot be
replaced without significant cost, eff ort, or delay in the ability to continue producing outputs.
The consideration transferred for the acquisition of a subsidiary is comprised of:
• fair values of the assets transferred;
• liabilities incurred to the former owners of the acquired business;
• equity interests issued by the Company;
• fair value of any asset or liability resulting from a contingent consideration arrangement; and
• fair value of any pre-existing equity interest in the subsidiary.
At the acquisition date, the identifiable assets acquired and liabilities and contingent liabilities
assumed are, with limited exceptions, measured initially at their fair values.
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 are expensed as incurred. If the business combination is achieved in
stages, the acquisition date carrying value of the acquirer's previously held equity interest in the
acquiree is re-measured to fair value at the acquisition date. Any gains or losses arising from such
re-measurement are recognised in the statement of profit and loss.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future
are discounted to their present value as at the date of exchange. The discount rate used is the
entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained
from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Contingent
consideration classified as equity is not re-measured and its subsequent settlement is accounted
for within equity. Amounts classified as a financial liability' are subsequently re-measured to fair
value, with changes in fair value recognised in the statement of profit and loss.
Goodwill is initially measured at cost, being the excess of the aggregate of:
• the consideration transferred;
• the amount of any non-controlling interest in the acquired entity; and
• the acquisition-date fair value of any previous equity interest in the acquired entity.
over the fair value of the net identifiable assets acquired. If the fair value of the net assets acquired
is in excess of the aggregate consideration transferred, the Company re-assesses whether it has
correctly identified all of the assets acquired and all of the liabilities assumed and reviews the
procedures used to measure the amounts to be recognised at the acquisition date. If the
reassessment still results in an excess of the fair value of net assets acquired over the aggregate
consideration transferred, then the gain is recognised in OCI and accumulated in equity' as capital
reserve. However, if there is no clear evidence of bargain purchase, the entity recognises the gain
directly in equity as capital reserve, without routing the same through OCI.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group's cash-generating units that are expected to benefit
from the combination, irrespective of whether other assets or liabilities of the acquiree are
assigned to those units,
c) Property, plant and equipment
Recognition and Measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and
accumulated impairment losses, if any. Cost includes expenditures that are directly attributable
to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and
other costs directly attributable to bringing the asset to a working condition for its intended use.
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
capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in
which 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.
When parts of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items (major components) of property, plant and equipment. Capital
work in progress is stated at cost, net of accumulated impairment loss, if any. An item of property,
plant and equipment and any significant part initially recognised is derecognised upon disposal
or when no future economic benefits are expected from its use or disposal. Gains and losses upon
disposal of an item of property, plant and equipment are determined by comparing the proceeds
from disposal with the carrying amount of property, plant and equipment and are recognised net
within "Other income/ Selling and other expense" in the statement of profit and loss.
The cost of replacing part of an item of property, plant and equipment is recognised in the
carrying amount of the item if it is probable that the future economic benefits embodied within
the part will fl ow to the Company and its cost can be measured reliably. The costs of repairs and
maintenance are recognised in the statement of profit and loss as incurred.
Items of property, plant and equipment acquired through exchange of non-monetary assets are
measured at fair value, unless the exchange transaction lacks commercial substance or the fair
value of either the asset received or asset given up is not reliably measurable, in which case the
asset exchanged is recorded at the carrying amount of the asset given up.
Depreciation
Depreciation is recognised in the statement of profit and loss on a straight line basis over the
estimated useful lives of property, plant and equipment. Land is not depreciated but subject to
impairment. Depreciation methods, useful lives and residual values are reviewed at each
reporting date and any changes are considered prospectively.
The Estimated useful lives are as follows:
Schedule II to the Companies Act, 2013 ("Schedule") prescribes the useful lives for various classes
of tangible assets. For certain class of assets, based on the technical evaluation and assessment,
the Company believes that the useful lives adopted by it best represent the period over which an
asset is expected to be available for use. Accordingly, for these assets, the useful lives estimated
by the Company are different from those prescribed in the Schedule,
d) Intangible Assets
Intangible assets other than acquired in a business combination are measured at cost at the date
of acquisition. Following initial recognition, intangible assets are carried at cost less any
accumulated amortization and accumulated impairment losses, if any.
Research costs are expensed as incurred. Internally generated intangible asset arising from
development activity is recognized at cost on demonstration of its technical feasibility, the
intention and ability of the company to complete, use or sell it, only if, it is probable that the asset
would generate future economic benefit and the expenditure attributable to the said assets during
its development can be measured reliably.
An item of Intangible assets is derecognised 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 Intangible assets are determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in the profit or loss,
e) Leases
Company as a lessee
The Company assesses at contract inception whether a contract is or contains a lease, which
applies if the contract conveys the right to control the use of the identified asset for a period of
time in exchange for consideration. The Company recognises a right-of-use asset at the
commencement date of the lease, i.e. the date the underlying asset is available for use. Assets and
liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of the following lease payments to be made over the lease term:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payment that are based on an index or a rate, initially measured using the index
or rate as at the commencement date
• amounts expected to be payable by the Company under residual value guarantees
• the exercise price of a purchase option if the Company is reasonably certain to exercise that
option, and
• payments of penalties for terminating the lease, if the lease term reflects the Company exercising
that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot
be readily determined, which is generally the case for leases in the Company, then the lessee's
incremental borrowing rate is used. Such borrowing rate is calculated as the rate that the
individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar
value to the right-of-use asset in a similar economic environment with similar terms, security and
conditions. The Company's lease liabilities are included in borrow ings.
Lease payments are allocated between principal and interest cost. The interest cost is charged to
statement of profit and loss over the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost less accumulated depreciation and accumulated
impairment comprised of the following:
• the amount of the initial measurement of lease liability
• any lease payments made at or before the commencement date less any lease incentives received
• any initial direct costs, and
• restoration costs.
Right-of-use assets are generally depreciated over the shorter of the assetis useful life and the
lease term on a straight-line basis. Payments associated with short-term leases of equipment and
vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in
the statement of profit and loss. Short-term leases are leases with a lease term of 12 months or
less. Low-value assets comprise IT equipment and small items of office furniture.
The right-of-use assets are initially recognised on the balance sheet at cost, which is calculated as
the amount of the initial measurement of the corresponding lease liability, adjusted for any lease
payments made at or prior to the commencement date of the lease, any lease incentive received
and any initial direct costs incurred by the Company.
Company as a lessor:
At the inception of the lease the Company classifies each of its leases as either an operating lease
or a finance lease. The Company recognises lease payments received under operating leases as
income on a straight- line basis over the lease term. In case of a finance lease, finance income is
recognised over the lease term based on a pattern reflecting a constant periodic rate of return on
the lessor's net investment in the lease. When the Company is an intermediate lessor it accounts
for its interests in the head lease and the sub-lease separately. It assesses the lease classification of
a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference
to the underlying asset. If a head lease is a short term lease to which the Company applies the
exemption described above, then it classifies the sub-lease as an operating lease.
Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to
the lessee, the contract is classified as a finance lease.
If an arrangement contains lease and non-lease components, the Company applies Ind AS 115
“Revenue from Contracts with Customers" to allocate the consideration in the contract.
f) Inventories
Inventories are valued at the lower of cost and net realisable value. Inventories consist of shares,
debentures, units, bonds and other securities, and finished goods and are measured at the lower
of cost and net realisable value. In the context of a company trading shares and debentures,
inventory refers to the financial instruments held for trading purposes. These financial
instruments are treated as tradable assets and are classified as trading securities in the balance
sheet.
When the company acquires shares and debentures for trading purposes, they are initially
recognized at cost, which includes the purchase price and any directly attributable transaction
costs. The fair value of these financial instruments may also be considered for initial recognition
if it can be reliably measured at the time of acquisition.
After initial recognition, trading securities are measured at fair value. Changes in fair value are
recognized in the income statement as gains or losses, affecting the overall profitability of the
company. Trading securities are typically revalued at the end of each reporting period to reflect
their fair value. The fair value is determined based on the market prices of the shares or
debentures at the reporting date.
Trading securities are presented as a separate category in the balance sheet, distinct from the other
assets. The company should disclose the carrying amount, fair value, and any significant changes
in the fair value of trading securities.
If there is an indication of impairment in the value of trading securities, such as a significant
decline in market prices, the company should recognize an impairment loss. The impairment loss
is recognized as an expense in the income statement, reducing the carrying amount of the trading
securities.
g) Impairment
Non-financial assets
The carrying amounts of the Company's non-financial assets, other than inventories and deferred
tax assets are reviewed at each reporting date to determine whether there is any indication of
impairment. If any such indication exists, then the assetis recoverable amount is estimated. For
goodwill and intangible assets that have indefinite lives or that are not yet available for use, an
impairment test is performed each year at 31 March.
The recoverable amount of an asset or cash-generating unit (as defined below) is the greater of its
value in use and its fair value less costs to sell. 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 or the cash¬
generating unit. For the purpose of impairment testing, assets are grouped together into the
smallest group of assets that generate cash inflows from continuing use that are largely
independent of the cash inflows of other assets or groups of assets (the "cash-generating unit").
The goodwill acquired in a business combination is, for the purpose of impairment testing,
allocated to cash-generating units that are expected to benefit from the synergies of the
combination.
An impairment loss is recognised in the statement of profit and loss if the estimated recoverable
amount of an asset or its cash-generating unit is lower than its carrying amount. Impairment
losses recognised in respect of cash-generating units are allocated first to reduce the carrying
amount of any goodwill allocated to the units and then to reduce the carrying amount of the other
assets in the unit on a pro-rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment
losses recognised in prior periods are assessed at each reporting date for any indications that the
loss has decreased or no longer exists. An impairment loss is reversed if there has been a change
in the estimates used to determine the recoverable amount. An impairment loss is reversed only
to the extent that the assetis carrying amount does not exceed its recoverable amount, nor exceed
the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised. Goodwill that forms part of the carrying amount of an
investment in joint venture is not recognised separately, and therefore is not tested for
impairment separately. Instead, the entire amount of the investment in joint venture is tested for
impairment as a single asset when there is objective evidence that the investment in joint venture
may be impaired,
h) Employee Benefits
Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is
recognised for the amount expected to be paid if the Company has a present legal or constructive
obligation to pay this amount as a result of past service provided by the employee and the
obligation can be estimated reliably.
Defined contribution plans
The Company's contributions to defined contribution plans are charged to the statement of profit
and loss as and when the services are received from the employees.
Defined benefit plans
The liability in respect of defined benefit plans and other post-employment benefits is calculated
using the projected unit credit method consistent with the advice of qualified actuaries. The
present value of the defined benefit obligation is determined by discounting the estimated future
cash outflows using interest rates of high-quality corporate bonds that are denominated in the
currency in which the benefits will be paid, and that have terms to maturity approximating to the
terms of the related defined benefit obligation. In countries where there is no deep market in such
bonds, the market interest rates on government bonds are used. The current service cost of the
defined benefit plan, recognized in the statement of profit and loss in employee benefit expense,
reflects the increase in the defined benefit obligation resulting from employee service in the
current year, benefit changes, curtailments and settlements. Past service costs are recognized
immediately in the statement of profit and loss.
The net interest cost is calculated by applying the discount rate to the net balance of the defined
benefit obligation and the fair value of plan assets. This cost is included in employee benefit
expense in the statement of profit and loss. Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions for defined benefit obligation and plan assets
are recognized in OCI in the period in which they arise.
When the benefits under a plan are changed or when a plan is curtailed, the resulting change in
benefit that relates to past service or the gain or loss on curtailment is recognised immediately in
the statement of profit and loss. The Company recognises gains or losses on the settlement of a
defined benefit plan obligation when the settlement occurs.
Termination benefits
Termination benefits are recognised as an expense in the statement of profit and loss when the
Company is demonstrably committed, without realistic possibility of withdrawal, to a formal
detailed plan to either terminate employment before the normal retirement date, or to provide
termination benefits as a result of an off er made to encourage voluntary redundancy.
Termination benefits for voluntary redundancies are recognised as an expense in the statement
of profit and loss if the Company has made an off er encouraging voluntary redundancy, it is
probable that the off er will be accepted, and the number of acceptances can be estimated reliably.
Other long-term employee benefits
The Company's net obligation in respect of other long-term employee benefits is the amount of
future benefit that employees have earned in return for their service in the current and previous
periods. That benefit is discounted to determine its present value. Re-measurements are
recognised in the statement of profit and loss in the period in which they arise.
Compensated absences
The Company's current policies permit certain categories of its employees to accumulate and
carry forward a portion of their unutilised compensated absences and utilise them in future
periods or receive cash in lieu thereof in accordance with the terms of such policies. The Company
measures the expected cost of accumulating compensated absences as the additional amount that
the Company incurs as a result of the unused entitlement that has accumulated at the reporting
date. Such measurement is based on actuarial valuation as at the reporting date carried out by a
qualified actuary,
i) Share Based Payments
Equity settled share-based payment transactions
The grant date fair value of options granted to employees is recognised as an employee benefit
expense, in the statement of profit and loss, with a corresponding increase in equity, over the
period that the employees become unconditionally entitled to the options. The amount recognised
as an expense is adjusted to reflect the number of awards for which the related service and
performance conditions are expected to be met, such that the amount ultimately recognised is
based on the number of awards that meet the related service and performance conditions at the
vesting date. The expense is recorded for each separately vesting portion of the award as if the
award was, in substance, multiple awards. The increase in equity recognised in connection with
share-based payment transaction is presented as a separate component in equity under “share-
based payment reserve". The amount recognised as an expense is adjusted to reflect the actual
number of stock options that vest.
Cash settled share-based payment transactions
The fair value of the amount payable to employees in respect of share-based payment transactions
which are settled in cash is recognised as an expense, with a corresponding increase in liabilities,
over the period during which the employees become unconditionally entitled to payment. The
liability is re-measured at each reporting date and at the settlement date based on the fair value
of the share-based payment transaction. Any changes in the liability are recognised in the
statement of profit and loss.
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