1) Significant accounting policies
a) Basis of preparation
i. Compliance with Ind AS
The financial statements have been prepared in all material respects in accordance with the Indian Accounting
Standards (Ind AS) notified under Section 133 of the Companies Act, 2013, read with the Companies (Indian
Accounting Standards) Rules, 2015, and other relevant provisions of the Act.
ii. Historical cost convention
The financial statements have been prepared on a historical cost basis, except for the following:
- Non-Current Investment that are measured at fair value;
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
b) Use of Estimates & Judgements
The preparation of financial statements requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent
liabilities, at the end of the reporting period. Although these estimates are based on the management’s best
knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the
outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.
Fair value measurement
The company measures financial instruments, such as investment in Equity share etc, 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
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 — Quoted (unadjusted) prices in active markets for identical assets or liabilities
• Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement
is directly or indirectly observable
• Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement
is unobservable
At each reporting date, management analyses the movements in the values of assets and liabilities which are required
to be remeasured or re-assessed as per the company’s accounting policies. For this analysis, management regularly
reviews significant unobservable inputs applied in the valuation by agreeing the information in the valuation
computation to contracts and other relevant documents
c) Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash in hand,
deposits held at call with financial institutions, other short-term highly liquid investments 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.
d) Cash flow statement
Cash flows are reported using indirect method, whereby Profit before tax reported under the statement of profit/
(loss) is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future
cash receipts or payments. The cash flows from operating, investing and financing activities of the company are
segregated based on available information.
e) Property, plant and equipment
All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost
includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the
asset ‘s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Company and the cost of the item can be measured
reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced.
All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Depreciation methods, estimated useful lives and residual value
Depreciation is provided on a pro-rata basis on the straight-line method over the estimated useful lives of the assets.
The estimates of useful lives of the assets are as follows:
The useful lives have been determined based on Schedule II to the Companies Act; 2013. The residual values are
not more than 5% of the original cost of the asset.
The assets residual values and useful life are reviewed, and adjusted if appropriate, at the end of each reporting
period.
The asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in
profit or loss within other gains/(losses).
f) Revenue recognition
Sale of Goods
Revenue from the sale of goods is recognized, when the significant risks and rewards of ownership of the goods
have passed to the buyer, as per the terms of company and no significant uncertainty exists regarding the amount of
consideration that will be derived from the sale of goods, usually on delivery of the goods. Revenue is recognized
at the fair value of consideration received or receivable, net of returns and allowance trade discounts, volume rebates
and outgoing sales tax and is recognized either on delivery or on transfer of significant risk and rewards of ownership
of the goods.
g) Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular
way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame
established by regulation or convention in the marketplace. All recognised financial assets are subsequently
measured in their entirety at either amortised cost or fair value, depending on the classification of the financial
assets.
Classification of financial assets
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 amortized cost.
The classification depends on the groups business model for managing the financial assets and the contractual terms
of the cash flows.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating
interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash receipts (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 debt instrument, or, where
appropriate, a shorter period, to the net carrying amount on initial recognition.
However, The Company is not following the effective interest method and Interest income is recognised on a simple
interest basis for debt instruments other than those financial assets classified as at Fair Value Through Profit and
Loss (FVTPL). Interest income is recognised in profit or loss and is included in the “Other income” line item.
Investments in equity instruments at FVTOCI
On initial recognition, the Company can make an irrevocable election (on an instrument-by-instrument basis) to
present the subsequent changes in fair value in other comprehensive income pertaining to investments in equity
instruments. This election is not permitted if the equity investment is held for trading. These elected investments
are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains
and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the
‘Reserve for equity instruments through other comprehensive income’. The cumulative gain or loss is not
reclassified to profit or loss on disposal of the investments.
A financial asset is held for trading if:
• it has been acquired principally for the purpose of selling it in the near term; or
• on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together
and has a recent actual pattern of short-term profit-taking; or
• it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.
Financial assets at Fair Value Through Profit or Loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial
recognition to present subsequent changes in fair value in other comprehensive income for investments in equity
instruments which are not held for trading.
Debt instruments that do not meet the amortised cost criteria or FVTOCI criteria (see above) are measured at
FVTPL. In addition, debt instruments that meet the amortised cost criteria or the FVTOCI criteria but are designated
as at FVTPL are measured at FVTPL.
A financial asset that meets the amortised cost criteria or debt instruments that meet the FVTOCI criteria may be
designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognising the
gains and losses on them on different bases. The Company has not designated any debt instrument as at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses
arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates
any dividend or interest earned on the financial asset and is included in the ‘Other income’ line item.
Impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured
at amortised cost, debt instruments at FVTOCI, lease receivables, trade receivables, other contractual rights to
receive cash or other financial asset, and financial guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the
weights. Credit loss 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 (or credit-adjusted effective interest rate for purchased or originated credit-
impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial
instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial
instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the cost at which such
instrument was booked.
If the Company measured loss allowance for a financial instrument at lifetime expected credit loss model in the
previous period, but determines at the end of a reporting period that the credit risk has not increased significantly
since initial recognition due to improvement in credit quality as compared to the previous period, the Company
again measures the loss allowance based on 12-month expected credit losses.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition,
the Company uses the change in the risk of a default occurring over the expected life of the financial instrument
instead of the change in the amount of expected credit losses. To make that assessment, the Company compares the
risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on
the financial instrument as at the date of initial recognition and considers reasonable and supportable information,
that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial
recognition.
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions
that are within the scope of Ind AS 11 and Ind AS 18, the Company always measures the loss allowance at an
amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company
has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed
based on a provision matrix which takes into account historical credit loss experience and adjusted for forward¬
looking information.
The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt
instruments at FVTOCI except that the loss allowance is recognised in other comprehensive income and is not
reduced from the carrying amount in the balance sheet.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues
to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability
for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a
transferred financial asset, the Company continues to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum
of the consideration received and receivable and the cumulative gain or loss that had been recognised in other
comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have
otherwise been recognised in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to
repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset
between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the
basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount
allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer
recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income
is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal
of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is
allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of
the relative fair values of those parts.
h) Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by a 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.
All equity Instruments are classified at Fair Value through Other Comprehensive Income (FVTOCI). An equity
instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by a Company are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company's own equity instruments is recognised and deducted directly in equity.
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or
when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and
commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance
with the specific accounting policies set out below.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration
recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for
trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
• it has been incurred principally for the purpose of repurchasing it in the near term; or
• on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together
and has a recent actual pattern of short-term profit-taking; or
• it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading or contingent consideration recognised by the
Company as an acquirer in a business combination to which Ind AS 103 applies, may be designated as at FVTPL
upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would
otherwise arise;
• the financial liability forms part of a Company’s financial assets or financial liabilities or both, which is managed
and its performance is evaluated on a fair value basis, in accordance with the Company's documented risk
management or investment strategy, and information about the Company is provided internally on that basis; or
• it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire
combined contract to be designated as at FVTPL in accordance with Ind AS 109.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised
in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial
liability and is included in the ‘Other income' line item.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in the
fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in
other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other
comprehensive income would create or enlarge an accounting mismatch in profit or loss, in which case these effects
of changes in credit risk are recognised in profit or loss. The remaining amount of change in the fair value of liability
is always recognised in profit or loss. Changes in fair value attributable to a financial liability’s credit risk that are
recognised in other comprehensive income are reflected immediately in retained earnings and are not subsequently
reclassified to profit or loss.
Gains or losses on financial guarantee contracts and loan commitments issued by the Company that are designated
by the Company as at fair value through profit or loss are recognised in profit or loss.
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 costs' 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 net carrying amount on initial recognition.
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms
of a debt instrument.
Financial guarantee contracts issued by a Company are initially measured at their fair values and, if not designated
as at FVTPL, are subsequently measured at the higher of:
• the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
• the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance
with the principles of Ind AS 18.
Commitments to provide a loan at a below-market interest rate
Commitments to provide a loan at a below-market interest rate are initially measured at their fair values and, if not
designated as at FVTPL, are subsequently measured at the higher of:
• the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
• the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance
with the principles of Ind AS 18.
Derecognition 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 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
derecognised and the consideration paid and payable is recognised in profit or loss.
i) Employee benefits
Employee benefits are recognized as an expense in the profit and loss account of the year
j) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Interest 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 recognised in profit or loss in the period in which they are incurred.
k) Earnings per share
i) Basic earnings per share
Basic earnings per share is calculated by dividing:
• The profit attributable to owners of the Company.
• By the weighted average number of Equity shares outstanding during the financial year, adjusted for bonus
elements in equity shares issued during the year and excluding treasury shares.
ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account.
• The after income tax effect of interest and other financing costs associated with dilutive potential equity shares
and
• The weighted average number of additional equity shares that would have been outstanding assuming the
conversion of all dilutive potential equity shares.
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 for each jurisdiction 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 on the basis of the tax laws enacted or substantively enacted at the end
of the reporting period in the countries where the Company and its subsidiaries (including branches) operate and
generate taxable income. 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 income tax is provided in full, using the liability method, on temporary differences arising between the
tax basis of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is also
not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred
income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of
the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred
income tax liability is settled.
Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilize 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 entity has a legally enforceable right to offset and intends either to settle on a net
basis, or to realize the asset and settle the liability simultaneously.
Current tax & deferred tax is recognized in statement of profit or loss, except to the extent that it relates to items
recognized in Other Comprehensive Income or directly in equity. In this case, the tax is also recognized in Other
Comprehensive Income or directly in equity, respectively.
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