2.2 Material accounting policies
The material accounting policies applied in the
preparation of the financial statements are set out below.
These policies have been consistently applied to all the
years presented, unless otherwise stated.
a. Foreign currency and translations
Functional and presentation currency
The Company's financial statements are presented
in Indian Rupees ("'"), which is also the Company's
functional currency.
Transactions and balances
Transactions in foreign currencies are initially
recorded by the Company at its functional currency
using spot rates at the date; the transaction first
qualifies for recognition. Monetary assets and
liabilities denominated in foreign currencies are
translated into the functional currency at exchange
rates at the reporting date. Exchange differences
arising on settlement or translation of monetary
items are recognised in statement of profit or loss
as expense or income in the year in which they occur
or arise.
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.
b. Fair value measurement
The Company measures financial instruments at fair
value at each balance sheet date.
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement is
based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:
• In the principal market for the asset or liability
or,
• 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 best
economic interest.
A fair value measurement of a non-financiat 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 setting 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:
Att assets and liabilities for which fair value is
measured or disctosed in the financiat statements
are categorised within the fair value hierarchy,
described as follows, based on the lowest tevet input
that is significant to the fair vatue measurement as
a whote:
• Level 1 — Quoted (unadjusted) market prices in
active markets for identicat assets or tiabitities
• Level 2 — Valuation techniques for which
the towest tevet input that is significant to
the fair vatue measurement is directty or
indirectty observabte
• Level 3 — Valuation techniques for which the
towest tevet input that is significant to the fair
vatue measurement is unobservabte
For assets and tiabitities that are recognised in
the financiat statements on a recurring basis,
the Company determines whether transfers have
occurred between tevets in the hierarchy by re¬
assessing categorisation (based on the towest tevet
input that is significant to the fair vatue measurement
as a whote) at the end of each reporting period.
Management determines the poticies and procedures
for both recurring fair vatue measurement, such as
derivative instruments and investment in mutuat
fund measured at fair vatue, and for non-recurring
measurement, such as assets hetd for distribution
in discontinued operations.
For the purpose of fair vatue disctosures,
management has determined ctasses of assets and
tiabitities on the basis of the nature, characteristics
and risks of the asset or tiabitity and the tevet of the
fair vatue hierarchy as exptained above.
At each reporting date, management anatyses the
movements in the vatues of assets and tiabitities,
which are required to be re-measured or re¬
assessed as per the Company's accounting poticies.
For this anatysis, the management verifies the major
inputs apptied in the tatest vatuation by agreeing
the information in the vatuation computation to
contracts and other retevant documents.
c. Revenue recognition
Revenue from contracts with customer
Revenues from contracts with customers are
recognised when controt has been transferred at
an amount that reftects the consideration to which
the Company expects to be entitted in exchange for
those goods. The Company acts as the principat in att
of its revenue arrangements since it is the primary
obtigor in att the revenue arrangements as it has
pricing tatitude and is atso exposed to inventory and
credit risks.
An entity cottects Goods and Services Tax ("GST")
on behatf of the government and not on its own
account. Hence, it is exctuded from revenue i.e.
revenue is net of GST.
Sale of food and beverages
The Company recognises revenue from sate of food
through Company's owned stores and third party
ontine ptatforms, and are recognised when the
items are detivered to or carried out by customers.
Scrap sale
Sate of scrap is recognised upon transfer of controt
of products to the customers which coincides with
their detivery to customer.
Dividend income
Dividend income is recognised when Company's
right to receive dividend is estabtished by the
reporting date.
Income from sub-franchisee operations
Sub-Franchisee income inctudes onetime initiat fees
and royatty income on sates. One time initiat fees
are non-refundabte and are recognised over the
term of contract. Royatty income is recognised on
accruat basis based on the terms of the agreement
over a period of time.
Interest income
For att financiat instruments measured at amortised
cost, interest income is recorded using the effective
interest rate ("EIR"), which is the rate that exactly
discounts the estimated future cash payments or
receipts through the expected life of the financial
instrument or a shorter period, where appropriate,
to the net carrying amount of the financial asset.
When calculating the effective interest rate, the
Company estimates the expected cash flows by
considering all the contractual terms of the financial
instrument but does not consider the expected
credit losses.
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
(m) Financial instruments - initial recognition and
subsequent measurement.
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.
d. Taxes
Tax expense for the year comprises of current tax
and deferred tax.
Current income tax
Current income tax is measured at the amount
expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961. The
income tax expense or credit for the period is the
tax payable on the current period's taxable income
based on the applicable income tax rate adjusted
by changes in deferred tax assets and liabilities
attributable to temporary differences and to
unused tax losses. The current income tax charge
is calculated based on the tax laws enacted or
substantively enacted at the end of reporting period
in India where the Company operates and generates
taxable income.
Current income tax relating to items recognised
outside profit or loss is recognised outside profit
or loss (either in other comprehensive income
or in equity). Current tax items are recognised in
correlation to the underlying transaction either in
OCI or directly in equity. Management periodically
evaluates positions taken in the tax returns with
respect to situations in which applicable tax
regulations are subject to interpretation and
considers whether it is probable that a taxation
authority will accept an uncertain tax treatment.
The group shall reflect the effect of uncertainty for
each uncertain tax treatment by using either most
likely method or expected value method, depending
on which method predicts better resolution of
the treatment
Deferred tax
Deferred tax is provided using the balance sheet
approach on temporary differences between the
tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes at the
reporting date. Deferred tax liabilities are recognised
for all taxable temporary differences, except:
• When the deferred tax liability arises from the
initial recognition of goodwill or an asset or
liability in a transaction that is not a business
combination and, at the time of the transaction,
affects neither the accounting profit nor
taxable profit or loss. Deferred tax assets
are recognised for all deductible temporary
differences, the carry forward of unused tax
credits and any unused tax losses.
• Deferred tax assets are recognised to the
extent it is probable that taxable profit will
be available against which the deductible
temporary differences, and the carry forward
of unused tax credits and unused tax losses
can be utilised, except:
• When the deferred tax asset relating to the
deductible temporary difference arises from
the initial recognition of an asset or liability in a
transaction that is not a business combination
and, at the time of the transaction, affects
neither the accounting profit nor taxable profit
or loss.
The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of
the deferred tax asset to be utilised. Unrecognised
deferred tax assets are re-assessed at each
reporting date and are recognised to the extent that
it has become probable that future taxable profits
will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured
at the tax rates that are expected to apply in the
year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the
reporting date.
Deferred tax relating to items recognised outside
profit or loss is recognised outside profit or loss
(either in other comprehensive income or in equity).
Deferred tax items are recognised in correlation
to the underlying transaction either in other
comprehensive income (OCI) or in equity.
Deferred tax assets and deferred tax liabilities are
offset if a legally enforceable right exists to set off
current tax assets against current tax liabilities and
the deferred taxes relate to the same taxable entity
and the same taxation authority.
Property, plant and equipment
Property, plant and equipment (PPE) are stated at the
cost of acquisition including incidental costs related
to acquisition and installation less accumulated
depreciation and accumulated impairment loss, if
any. Cost comprises the purchase price and any
directly attributable cost of bringing the asset
to its working condition for its intended use and
initial estimate of restoration liabilities. Any trade
discounts and rebates are deducted in arriving at
the purchase price.
When significant parts of property, plant and
equipment are required to be replaced in regular
intervals, the Company recognises such parts as
separate component of assets. When an item of
PPE is replaced, then its carrying amount is de¬
recognised from the balance sheet and cost of the
new item of PPE is recognised. Further, in case the
replaced part was not being depreciated separately,
the cost of the replacement is used as an indication
to determine the cost of the replaced part at the
time it was acquired.
Capital work in progress comprises cost of property,
plant and equipment (including related expenses)
that are not yet ready for their intended use at
the reporting date and it is carried at cost less
accumulated impairment losses.
Gains or losses arising from derecognition of
property, plant and equipment are measured as the
difference between the net disposal proceeds and
carrying amount of the assets and are recognised
in the statement of profit and loss when the asset
is derecognised.
Depreciation on Property, Plant and Equipment
Depreciation is provided on straight line method on
a pro-rata basis from the date of use. The rates of
depreciation are based on technical evaluation of the
economic life of assets by the management, which
are given below and are equal to or greater than the
corresponding rates prescribed in Schedule II to the
Companies Act, 2013:
The useful lives, residual values and depreciation
method of PPE are reviewed, and adjusted
appropriately, at-least as at each reporting date to
ensure that the method and period of depreciation
are consistent with the expected pattern of economic
benefits from these assets. The effect 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.
f. Intangible assets
Intangible assets acquired separately are measured
on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost
less accumulated amortisation and accumulated
impairment loss, if any. An intangible asset is
recognized, where it is probable that the future
economic benefits attributable to the asset will flow
to the enterprise and where its cost can be reliably
measured. The Company capitalises software costs
where it is reasonably estimated that the software
has an enduring useful life. The Company capitalises
one-time initial franchisee fees paid for opening of
each store.
The useful lives of intangible assets are assessed
as either finite or indefinite. There are no intangible
assets assessed with indefinite useful life.
Intangible assets with finite lives are amortised on
a straight line basis over the useful economic life
and assessed for impairment whenever there is an
indication that the intangible asset may be impaired.
The amortisation period and the amortisation method
for an intangible asset with a finite useful life are
reviewed at least at the end of each reporting period.
Changes in the expected useful life or the expected
pattern of consumption of future economic benefits
embodied in the asset are considered to modify the
amortisation period or method, as appropriate, and
are treated as changes in accounting estimates.
The amortisation expense on intangible assets with
finite lives is recognised in the statement of profit
and loss unless such expenditure forms part of
carrying value of another asset.
Intangible assets are amortised on a straight line
basis as follows:
Gains or losses arising from the 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 recognised
in the statement of profit and loss when the asset
is derecognised.
g. Borrowing costs
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.
h. 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.
Company as a 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 recognises lease liabilities
to make lease payments and right-of-use assets
representing the right to use the underlying assets.
Right-of use assets
The Company recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and accumulated impairment losses
and adjusted for any remeasurement of lease
liabilities. The cost of right-of-use assets includes
the amount of lease liabilities recognised, initial
direct costs incurred, deferred lease components
of security deposits and lease payments made at
or before the commencement date less any lease
incentives received. The present value of the
expected cost for the restoration of an asset after
its use is included in the cost of the respective asset
if the recognition criteria for a provision are met.
Unless the Company is reasonably certain to obtain
ownership of the leased asset at the end of the
lease term, the recognised right-of-use assets are
depreciated on a straight-line basis over the shorter
of its estimated useful life and the lease term. Right-
of-use assets are subject to impairment.
Right-of-Use Leasehold Restaurants and
Restaurant Equipments are amortised over a period
of lease term.
Lease Liabilities
At the commencement date of the lease, the
Company recognises lease liabilities measured at
the present value of lease payments to be made
over the tease 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
atso inctude the exercise price of a purchase option
reasonabty certain to be exercised by the Company
and payments of penalties for terminating a lease, if
the lease term reflects the Company exercising the
option to terminate. The variable lease payments
that do not depend on an index or a rate are
recognised as expense in the period on which the
event or condition that triggers the payment occurs.
In calculating the present value of lease payments,
the Company uses the incremental borrowing rate
at the tease commencement date if the interest rate
implicit in the lease is not readily determinable.
After the commencement date, the amount of lease
tiabitities is increased to reftect 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 tease term, a change in the in-substance fixed
tease payments or a change in the assessment to
purchase the underlying asset.
The determination of whether an arrangement is
(or contains) a tease is based on the substance of
the arrangement at the inception of the lease. The
arrangement is, or contains, a tease if futfitment of
the arrangement is dependent on the use of a specific
asset or assets and the arrangement conveys a right
to use the asset or assets, even if that right is not
explicitly specified in an arrangement.
Short-term leases and leases of low-value assets
The Company applies the short-term lease
recognition exemption to its short-term teases of
restaurant and equipment (i.e., those teases that
have a lease term of 12 months or less from the
commencement date and do not contain a purchase
option). It atso appties the tease of tow-vatue
assets recognition exemption to teases of office
equipment's that are of low value. Lease payments
on short-term teases and teases of tow-vatue assets
are recognised as expense in statement of profit
and toss.
i. Inventories
Inventories (comprising of food, beverages,
condiments, paper & packing materiats and
suppties) are vatued at tower of cost (determined
on weighted average method) and net reatisabte
vatue. However, materiats and other items hetd for
use the production of inventories are not written
down betow cost if the finished products in which
they witt be incorporated are expected to be sotd at
or above cost. Net realisable value is the estimated
setting price in the ordinary course of business,
less estimated costs of completion and estimated
costs necessary to make the sale. Company has
changed inventory valuation method from first in
first out to weighted average method during the
year, pursuant to change in enterprise resource
planning application. The impact of change in
method is not materiat.
j. Impairment of non- financial assets
The Company assesses, at each reporting date,
whether there is an indication that an asset may be
impaired. If any indication exists, or when annual
impairment testing for an asset is required, the
Company estimates the asset's recoverable amount.
An asset's recoverable amount is the higher of
an asset's or cash - generating unit's (CGU) fair
value less costs of disposal and its value in use.
Recoverable amount is determined for an individual
asset, unless the asset does not generate cash
flows that are largely independent of those from
other assets or group of assets. When the carrying
amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is
written down to its recoverabte amount.
In assessing value in use, the estimated future cash
flows are discounted to their present value using a
pre-tax discount rate that reftects current market
assessments of the time value of money and the
risks specific to the asset. In determining fair value
tess costs of disposat, recent market transactions
are taken into account. If no such transactions can
be identified, an appropriate valuation model is used.
These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded
companies or other available fair value indicators.
The Company bases its impairment calculation on
detailed budgets and forecast calculations, which
are prepared separately for each of the Company's
CGUs to which the individual assets are allocated.
For assets, an assessment is made at each reporting
date to determine whether there is an indication
that previously recognised impairment losses no
longer exist or have decreased. If such indication
exists, management estimates the asset's or CGU's
recoverable amount. A previously recognised
impairment loss is reversed only if there has been
a change in the assumptions used to determine
the asset's recoverable amount since the last
impairment loss was recognised. The reversal is
limited so that the carrying amount of the asset does
not exceed its recoverable amount, nor exceed the
carrying amount that would have been determined,
net of depreciation, had no impairment loss been
recognised for the asset in prior years. Such
reversal is recognised in the statement of profit
and loss unless the asset is carried at a revalued
amount, in which case, the reversal is treated as a
revaluation increase.
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