3 Material accounting policy information
This note provides a list of the material accounting
policies adopted in the preparation of these
standalone financial statements.
3.1 Property, plant and equipment
Recognition and measurement
Property, plant and equipment are stated at
historical cost less accumulated depreciation and
accumulated impairment losses. Historical cost
includes expenditure that is directly attributable
to the acquisition of the items and comprises
its purchase price, including import duties and
non-refundable taxes or levies and any directly
attributable cost of the bringing the asset to its
working condition for its intended use; any trade
discounts and rebates are deducted in arriving at
the purchase price.
The cost of an item of property, plant and equipment
shall be recognised as an asset if , and only if it is
probable that future economic benefits associated
with the item will flow to the Group and the cost of
the item can be measured reliably.
When parts of an item of plant and equipment
have different useful lives, they are accounted for
as separate items (major components) of plant
and equipment.
Subsequent costs
The cost of replacing a component of an item of
plant and equipment is recognised in the carrying
amount of the item if it is probable that the future
economic benefits embodied within the component
will flow to the Company, and its cost can be
measured reliably. The carrying amount of the
replaced component is de-recognised. The costs
of the day-to-day servicing of plant and equipment
are recognised in standalone statement of profit
and loss as incurred.
Depreciation methods, estimated useful lives
and residual values
Depreciation is based on the cost of an asset less its
residual value. Significant components of individual
assets are assessed and if a component has a useful
life that is different from the remainder of that asset,
that component is depreciated separately.
Depreciation is recognised as an expense in
the standalone statement of profit and loss on a
straight-line basis over the estimated useful lives of
each component of an item of plant and equipment,
unless it is included in the carrying amount of
another asset.
Depreciation is recognised from the date that the
plant and equipment are installed and are ready for
use, or in respect of internally constructed assets,
from the date that the asset is completed and ready
for use.
The estimated useful lives for the current and
comparative year are as follows:
*For these class of assets, based on internal assessment and
technical evaluation carried out, the management believes
that the useful lives as given above best represent the period
over which management expects to use these assets. Hence,
the useful lives for these assets are different from the useful
lives as prescribed under Part C of the Schedule II to the
Companies Act, 2013.
Leasehold improvements are depreciated over the
shorter of their useful live or the lease term, unless
the Company expects to use the assets beyond the
lease term.
Depreciation methods, useful lives and residual
values are reviewed at the end of each reporting
period and adjusted if appropriate. 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
amortization period or method, as appropriate, and
are treated as changes in accounting estimates.
An 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.
Derecognition
The gain or loss on disposal of an item of plant and
equipment (calculated as the difference between
the net proceeds from disposal and the carrying
amount of the item) is recognised in the standalone
statement of profit and loss.
.2 Intangible assets
Customer contracts acquired in a business
combination are recognized at fair value at the
acquisition date. They have a finite useful life and
are subsequently carried at cost less accumulated
amortization and impairment losses, if any.
Amortisation methods and periods
Amortisation is calculated based on the cost of
the asset, less its residual value. Amortisation is
recognised in the standalone statement of profit
and loss on a straight-line basis over the estimated
useful lives of the intangible assets, other than
goodwill, from the date that they are available
for use.
Amortisation methods, useful lives and residual
values are reviewed at the end of each reporting
period and adjusted if appropriate.
The Company amortises intangible assets with a
finite useful life over the following periods:
Subsequent Measurement
Subsequent expenditure is capitalised only when it
increases the future economic benefits embodied
in the specific asset to which it relates and the
cost of asset can be measured reliably. All other
expenditure, including expenditure on internally
generated goodwill and brands, is recognised in
standalone statement of profit and loss as incurred.
Derecognition
Gains or losses arising from de-recognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the
carrying amount of the asset and are recognised in
the standalone statement of profit and loss when
the asset is derecognized.
3.3 Leases
At inception of a contract, the Company assesses
whether a contract is, or contains, a lease. A contract
is, or contains, a lease if the contract conveys the
right to control the use of an identified asset for
a period of time in exchange for consideration. To
assess whether a contract conveys the right to
control the use of an identified asset, the Company
evaluates whether:
(i) the contract involves the use of an
identified asset;
(ii) the Company has the right to obtain
substantially all the economic benefits from
use of the asset throughout the period of
use; and
(iii) the Company has the right to direct the use of
the asset.
As a lessee
At inception or on reassessment of a contract that
contains a lease component, the Company allocates
the consideration in the contract to each lease
component on the basis of the relative stand-alone
prices of the lease components and the aggregate
stand-alone price of the non-lease components.
The Company recognises a right-of-use asset and
a lease liability at the lease commencement date.
The right-of-use asset is initially measured at cost,
which comprises the initial amount of the lease
liability adjusted for any lease payments made at
or before the commencement date, plus any initial
direct costs incurred and an estimate of costs to
dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it
is located, less any lease incentives received.
The right-of-use asset is subsequently
depreciated using the straight-line method from
the commencement date to the end of the lease
term, unless the lease transfers ownership of the
underlying asset to the Company by the end of
the lease term or the cost of the right-of-use asset
reflects that the Company will exercise a purchase
option. In that case the right-of-use asset will be
depreciated over the useful life of the underlying
asset, which is determined on the same basis as
those of property, plant and equipment. In addition,
the right-of-use asset is periodically reduced by
impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The Company recognises lease liability at the
present value of the future lease payments
discounted using the interest rate implicit in the
lease or, if that rate cannot be readily determined, the
Company's incremental borrowing rate. Generally,
the Company uses its incremental borrowing rate
as the discount rate.
The Company determines its incremental borrowing
rate by obtaining interest rates from various external
financing sources and makes certain adjustments
to reflect the terms of the lease and type of the
asset leased.
Lease payments included in the measurement of
the lease liability comprise the following:
(i) fixed payments, including in-substance
fixed payments;
(ii) variable lease payments that depend on an
index or a rate, initially measured using the
index or rate as at the commencement date;
(iii) amounts expected to be payable under a
residual value guarantee;
(iv) the exercise price under a purchase option
that the Company is reasonably certain to
exercise, and
(v) lease payments in an optional renewal period if
the Company is reasonably certain to exercise
an extension option, and penalties for early
termination of a lease unless the Company is
reasonably certain not to terminate early.
The lease liability is measured at amortised cost
using the effective interest method. It is remeasured
when there is a change in future lease payments
arising from a change in an index or rate, if there is
a change in the Company's estimate of the amount
expected to be payable under a residual value
guarantee, if the Company changes its assessment
of whether it will exercise a purchase, extension
or termination option or if there is a revision in in¬
substance fixed lease payments.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in
the standalone statement of profit and loss if the
carrying amount of the right-of-use asset has been
reduced to zero.
The Company presents right-of-use assets
that do not meet the definition of investment
property as right-of-use assets and lease
liabilities in the standalone financial statements.
Short-term leases and leases of low-value assets
The Company has elected not to recognise right-
of-use assets and lease liabilities for leases of low-
value assets and short-term leases. The Company
recognises the lease payments associated with
these leases as an expense on a straight-line basis
over the lease term.
3.4 Foreign currency translation
Transactions and balances
Foreign currency transactions are recorded at
exchange rates prevailing on the date of the
transaction. Foreign currency denominated
monetary assets and liabilities are restated
into the functional currency using exchange
rates prevailing on the reporting date.
Gains and losses arising on restatement of foreign
currency denominated monetary assets and
liabilities are included in the standalone statement of
profit and loss. Non-monetary assets and liabilities
denominated in a foreign currency and measured
at historical cost are translated at an exchange rate
that approximates the rate prevalent on the date of
the transaction.
Transaction gains or losses realized upon settlement
of foreign currency transactions are included in
determining net profit for the period in which the
transaction is settled. Revenue, expense and cash¬
flow items denominated in foreign currencies are
translated into the relevant functional currencies
using the exchange rate in effect on the date of
the transaction.
3.5 Financial instruments
(i) Recognition and initial measurement
Non-derivative financial assets and financial
liabilities Non-derivative financial instruments
consist of the following:
(i) financial assets, which include cash and
cash equivalents, trade receivables, security
deposits and eligible current and non¬
current assets;
(ii) financial liabilities, which include loans and
borrowings, finance lease liabilities, trade
payables and eligible current and non¬
current liabilities.
Non-derivative financial instruments are recognised
when the Company becomes a party to the contract
that gives rise to financial assets and liabilities.
Financial assets (excluding trade receivables)
and liabilities are initially measured at fair value.
Transaction costs that are directly attributable
to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and
financial liabilities at fair value through profit and
loss) are added to or deducted from the fair value
measured on initial recognition of financial asset
or financial liability.. Trade receivables that do
not contain a significant financing component are
measured at transaction price. Trade receivables
that contain a significant financing component
are measured at their present value with interest
thereon being accreted over the period to the
receivables becoming due for collection.
Financial assets - Business model assessment
The Company makes an assessment of the objective
of the business model in which a financial asset is
held at a portfolio level because this best reflects
the way the business is managed and information
is provided to management. The information
considered includes:
• the stated policies and objectives for the portfolio
and the operation of those policies in practice.
These include whether management's strategy
focuses on earning contractual interest income,
maintaining a particular interest rate profile,
matching the duration of the financial assets to
the duration of any related liabilities or expected
cash outflows or realising cash flows through the
sale of the assets;
• how the performance of the portfolio is evaluated
and reported to the Company's management;
• the risks that affect the performance of the
business model (and the financial assets held
within that business model) and how those risks
are managed;
• how managers of the business are compensated
- e.g. whether compensation is based on the fair
value of the assets managed or the contractual
cash flows collected; and
• the frequency, volume and timing of sales of
financial assets in prior periods, the reasons
for such sales and expectations about future
sales activity.
Financial assets that are held for trading or are
managed and whose performance is evaluated on
a fair value basis are measured at FVTPL.
Financial assets - Assessment whether
contractual cash flows are solely payments of
principal and interest
For the purposes of this assessment, 'principal'
is defined as the fair value of the financial asset
on initial recognition. 'Interest' is defined as
consideration for the time value of money and
for the credit risk associated with the principal
amount outstanding during a particular period of
time and for other basic lending risks and costs (e.g.
liquidity risk and administrative costs), as well as a
profit margin.
In assessing whether the contractual cash flows
are solely payments of principal and interest, the
Company considers the contractual terms of the
instrument. This includes assessing whether the
financial asset contains a contractual term that
could change the timing or amount of contractual
cash flows such that it would not meet this condition.
In making this assessment, the Company considers:
• contingent events that would change the amount
or timing of cash flows;
• terms that may adjust the contractual coupon
rate, including variable-rate features;
• prepayment and extension features; and
• terms that limit the Company's claim to cash
flows from specified assets (e.g. non-recourse
features).
A prepayment feature is consistent with the solely
payments of principal and interest criterion if the
prepayment amount substantially represents unpaid
amounts of principal and interest on the principal
amount outstanding, which may include reasonable
compensation for early termination of the contract.
Additionally, for a financial asset acquired at a
discount or premium to its contractual par amount,
a feature that permits or requires prepayment
at an amount that substantially represents the
contractual par amount plus accrued (but unpaid)
contractual interest (which may also include
reasonable compensation for early termination) is
treated as consistent with this criterion if the fair
value of the prepayment feature is insignificant at
initial recognition.
Subsequent to initial recognition, non¬
derivative financial instruments are measured as
described below.
(ii) Classification and subsequent measurement
Non-derivative 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 and loss), and
• those to be 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 the standalone statement
of profit and loss or other comprehensive income.
Financial assets are not reclassified subsequent
to their initial recognition unless the Company
changes its business model for managing financial
assets, in which case all affected financial assets
are reclassified on the first day of the first reporting
period following the change in the business model.
Measurement
At initial recognition, the Company measures a
financial asset (unless it is a trade receivable without
a significant financing component) or financial
liability at fair value plus, for an item not at fair
value through profit and loss ("FVTPL"), transaction
costs that are directly attributable to its acquisition
or issue. A trade receivable without a significant
financing component is initially measured at the
transaction price. Transaction costs of financial
assets carried at fair value through profit and loss
are expensed in standalone statements of profit
and loss.
Debt instruments
Subsequent measurement of debt instruments
depends on the Company's business model
for managing the asset and the cash flow
characteristics of the asset. There are three
measurement categories into which the Company
classifies its debt instruments:
Amortised cost: Assets that are held for collection
of contractual cash flows where those cash flows
represent solely payments of principal and interest
are measured at amortised cost. Interest income
from these financial assets is included in Other
Income using the effective interest rate method. Any
gain or loss arising on derecognition is recognised
directly in standalone statement of profit and loss
and presented in other gains/(losses). Impairment
losses are presented as separate line item in the
standalone statement of profit and loss.
Fair value through other comprehensive income
(FVOCI): Assets that are held for collection of
contractual cash flows and for selling the financial
assets, where the assets' cash flows represent solely
payments of principal and interest, are measured
at FVOCI. Movements in the carrying amount are
taken through OCI, except for the recognition of
impairment gains or losses, interest income and
foreign exchange gains and losses which are
recognised in standalone statement of profit and
loss. When the financial asset is derecognised, the
cumulative gain or loss previously recognised in OCI
is reclassified from equity to standalone statement
of profit and loss and recognised in other gains/
(losses). Interest income from these financial assets
is included in other income using the effective
interest rate method. Foreign exchange gains and
losses are presented in other gains/(losses) and
impairment expenses are presented as separate
line item in standalone statement of profit and loss.
Fair value through profit and loss: Assets that do
not meet the criteria for amortised cost or FVOCI
are measured at fair value through profit and
loss. A gain or loss on a debt instrument that is
subsequently measured at fair value through profit
and loss is recognised in standalone statement of
profit and loss and presented net within other gains/
(losses) in the period in which it arises. Interest
income from these financial assets is included in
other income.
Changes in the fair value of financial assets at fair
value through profit and loss are recognised in
other gains/ (losses) in the standalone statement
of profit and loss.
A financial asset is measured at amortised cost
if it meets both of the following conditions and
is not designated as at FVTPL: it is held within
a business model whose objective is to hold
assets to collect contractual cash flows; and its
contractual terms give rise on specified dates to
cash flows that are solely payments of principal
and interest on the principal amount outstanding
Non-derivative financial liabilities: Classification,
subsequent measurement and gains and losses
Financial liabilities are classified as measured at
amortised cost.
These financial liabilities are initially measured at fair
value less directly attributable transaction costs.
They are subsequently measured at amortised
cost using the effective interest method. Interest
expense and foreign exchange gains and losses are
recognised in standalone statement of profit and
loss. These financial liabilities comprises of trade
and other payables, borrowings and lease liabilities.
For trade and other payables maturing within one
year from the reporting date, the carrying amounts
approximate fair value due to the short maturity of
these instruments.
Derivatives financial instruments
The Company is exposed to foreign currency
fluctuations on foreign currency assets and
liabilities. The Company holds derivative financial
instruments such as foreign exchange forward
contracts to mitigate the risk of changes in
exchange rates on foreign currency exposures on
highly forecasted future revenue of the Company.
The counterparty for these contracts is generally
a bank.
Derivatives are initially recognized at fair value
on the date a derivative contract is entered into
and are subsequently re-measured to their fair
value at the end of each reporting period. The
accounting for subsequent changes in fair value
depends on whether the derivative is designated
as a hedging instrument, and if so, the nature of
the item being hedged and the type of hedge
relationship designated. The Company designates
their derivatives as hedges of foreign exchange risk
associated with the cash flows of highly probable
forecast transactions. The Company documents
at the inception of the hedging transaction the
economic relationship between hedging instruments
and hedged items including whether the hedging
instrument is expected to offset changes in cash
flows of hedged items. The Company documents
its risk management objective and strategy for
undertaking various hedge transactions at the
inception of each hedge relationship. The full fair
value of a hedging derivative is classified as a
non-current asset or liability when the remaining
maturity of the hedged item is more than 12 months;
it is classified as a current asset or liability when the
remaining maturity of the hedged item is less than
12 months.
Cash flow hedges that qualify for hedge
accounting
The effective portion of changes in the fair value
of derivatives that are designated and qualify
as cash flow hedges is recognized in the other
comprehensive income in cash flow hedging
reserve within equity. The gain or loss relating to
the ineffective portion is recognized immediately
in standalone statement of profit and loss, within
other income. When a hedging instrument expires,
or is sold or terminated, or when a hedge no
longer meets the criteria for hedge accounting,
any cumulative deferred gain or loss and deferred
costs of hedging in equity at that time remains in
equity until the forecast transaction occurs. When
the forecast transaction is no longer expected to
occur, the cumulative gain or loss and deferred
costs of hedging that were reported in equity are
immediately reclassified to standalone statement
of profit and loss within other income.
Others
Changes in fair value of foreign currency derivative
instruments not designated as cash flow hedges
are recognized in the standalone statement of profit
and loss and reported within foreign exchange
gains, net.
(iii) Derecognition
Financial assets
The Company derecognises a financial asset when
the contractual rights to the cash flows from the
financial asset expire, or it transfers the rights to
receive the contractual cash flows in a transaction
in which either substantially all of the risks and
rewards of ownership of the financial asset are
transferred or in which the Company neither
transfers nor retains substantially all of the risks
and rewards of ownership and it does not retain
control of the financial asset.
Financial liabilities
The Company derecognises a financial liability
when its contractual obligations are discharged
or cancelled, or expire. The Company also
derecognises a financial liability when its terms
are modified and the cash flows of the modified
liability are substantially different, in which case a
new financial liability based on the modified terms
is recognised at fair value.
On derecognition of a financial liability, the difference
between the carrying amount extinguished and the
consideration paid (including any non-cash assets
transferred or liabilities assumed) is recognised in
standalone statement of profit and loss.
(iv) Offsetting
Financial assets and financial liabilities are offset
and the net amount is presented in the standalone
balance sheet when, and only when, the Company
currently has a legally enforceable right to set off
the amounts and it intends either to settle them on
a net basis or to realise the asset and settle the
liability simultaneously.
(v) Cash and cash equivalents
Cash and cash equivalents comprise cash balances
and short-term deposits with original maturities of
three months or less from the date of acquisition
that are subject to an insignificant risk of changes
in their fair value, and are used by the Company
in the management of its short-term commitments.
For the purpose of the statement of cash flows,
bank overdrafts and cash credits that are repayable
on demand and that form an integral part of the
Company's cash management are included in cash
and cash equivalents.
Fair value of financial instruments
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 in the principal or, in its
absence, the most advantageous market to which
the Company has access at that date. The fair value
of a liability reflects its non-performance risk.
A number of the Company's accounting policies
and disclosures require the measurement of fair
values, for both financial and non-financial assets
and liabilities.
When a quote is available, the Company measures
the fair value of an instrument using the quoted
price in an active market for that instrument. A
market is regarded as 'active' if transactions for the
asset or liability take place with sufficient frequency
and volume to provide pricing information on an
ongoing basis.
If there is no quoted price in an active market,
then the Company uses valuation techniques that
maximize the use of relevant observable inputs
and minimize the use of unobservable inputs. The
chosen valuation technique incorporates all of the
factors that market participants would take into
account in pricing a transaction.
In determining the fair value of its financial
instruments, the Company uses following hierarchy
and assumptions that are based on market
conditions and risks existing at each reporting date.
Fair value hierarchy
All assets and liabilities for which fair value is
measured or disclosed in the standalone 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.
Level 2 — Inputs are other than quoted prices
included within Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3 — Inputs for the assets or liabilities that are
not based on observable market data (unobservable
inputs).
For assets and liabilities that are recognised in
the standalone financial statements on a recurring
basis, the Company determines whether transfers
have occurred between levels in the hierarchy
by re-assessing categorisation (based on the
lowest level input that is significant to the fair
value measurement as a whole) at the end of each
reporting period
Extinguishment of liabilities
In cases where terms of a financial liability are re¬
negotiated such that it results in issuance of equity
instruments to the creditor to extinguish all or part
of the financial liability i.e debt to equity swap, then
the fair value of the equity instruments issued are
considered to be reflective of the consideration
paid to extinguish the liability. Any gain/loss on
extinguishment is recognized in the standalone
statement of profit and loss. A gain or loss is
calculated as the difference between the carrying
amount of a financial liability (or part of a financial
liability) extinguished and the consideration paid
by way of issue of equity shares. However, if the
transaction is with a shareholder, the Company
assesses and concludes if the extinguishment was
carried out with the other party in their capacity
as a shareholder or a lender. In cases where the
Company concludes the transaction was carried
out in capacity as a shareholder, the entire
transaction is considered a capital transaction and
recognized in equity with no gain/loss recognized in
the standalone statement of profit and loss.
3.6 Share capital
Equity shares
Equity shares are classified as equity. Incremental
costs directly attributable to the issue of equity
shares are recognised as a deduction from equity,
net of any tax effects. Consideration received in
cash or kind against issue of shares, in excess of
the face value of shares is recorded as securities
premium, a component of other equity.
3.7 Impairment
(i) Non-derivative financial assets and contract
assets
The Company recognises expected credit loss
allowances ('ECLs') on:
• financial assets measured at amortised costs; and
• contract assets (as defined in Ind AS 115).
Loss allowances of the Company are measured on
either of the following bases:
• 12-month ECLs: these are ECLs that result from
default events that are possible within the 12
months after the reporting date (or for a shorter
period if the expected life of the instrument is
less than 12 months); or
• Lifetime ECLs: these are ECLs that result from all
possible default events over the expected life of
a financial instrument or contract asset.
Simplified approach
The Company applies the simplified approach
to provide for ECLs for all trade receivables and
contract assets. The simplified approach requires
the loss allowance to be measured at an amount
equal to lifetime ECLs.
General approach
The Company applies the general approach to
provide for ECLs on all other financial instruments.
Under the general approach, the loss allowance
is measured at an amount equal to 12-month ECL
at initial recognition. At each reporting date, the
Company assesses whether the credit risk of a
financial instrument has increased significantly
since initial recognition. When credit risk has
increased significantly since initial recognition,
loss allowance is measured at an amount equal to
lifetime ECLs.
When determining whether the credit risk of a
financial asset has increased significantly since
initial recognition and when estimating ECLs, the
Company considers reasonable and supportable
information that is relevant and available without
undue cost or effort. This includes both quantitative
and qualitative information and analysis, based
on the Company's historical experience and
informed credit assessment and includes forward¬
looking information.
If credit risk has not increased significantly since
initial recognition or if the credit quality of the
financial instruments improves such that there is
no longer a significant increase in credit risk since
initial recognition, loss allowance is measured at an
amount equal to 12-month ECLs.
The maximum period considered when estimating
ECLs is the maximum contractual period over which
the Company is exposed to credit risk.
Measurement of ECLs
ECLs are probability-weighted estimates of credit
losses. Credit losses are measured at the present
value of all cash shortfalls (i.e. the difference
between the cash flows due to the entity in
accordance with the contract and the cash flows
that the Company expects to receive). ECLs are
discounted at the effective interest rate of the
financial asset.
Credit-impaired financial assets
At each reporting date, the Company assesses
whether financial assets carried at amortised cost
are credit-impaired. A financial asset is 'credit-
impaired' when one or more events that have a
detrimental impact on the estimated future cash
flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired
includes the following observable data:
• significant financial difficulty of the borrower
or issuer;
• a breach of contract such as a default;
• the restructuring of a loan or advance by the
Company on terms that the Company would not
consider otherwise;
• it is probable that the borrower will enter
bankruptcy or other financial reorganisation; or
• the disappearance of an active market for a
security because of financial difficulties.
Presentation of allowance for ECLs
Loss allowances for financial assets measured at
amortised cost and contract assets are deducted
from the gross carrying amount of these assets.
Write-off
The gross carrying amount of a financial asset is
written off (either partially or in full) to the extent
that there is no realistic prospect of recovery. This is
generally the case when the Company determines
that the debtor does not have assets or sources
of income that could generate sufficient cash
flows to repay the amounts subject to the write¬
off. However, financial assets that are written off
could still be subject to enforcement activities in
order to comply with the Company's procedures for
recovery of amounts due.
(ii) Non-financial assets
Property, plant and equipment and intangible
assets with finite life are evaluated for recoverability
whenever there is any indication that their carrying
amounts may not be recoverable. If any such
indication exists, the recoverable amount (i.e.
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.
If the recoverable amount of an asset (or CGU) is
estimated to be less than its carrying amount, the
carrying amount of the asset (or CGU) is reduced
to its recoverable amount. An impairment loss is
recognised in the standalone statement of profit
and loss.
Investment in subsidiaries
The Company assesses investments in subsidiaries
for impairment whenever events or changes in
circumstances indicate that the carrying amount
of the investment may not be recoverable. If any
such indication exists, the Company estimates the
recoverable amount of the investment in subsidiary.
The recoverable amount of such investment is
the higher of its fair value less cost of disposal
("FVLCD") and its value-in-use ("VIU"). The VIU
of the investment is calculated using projected
future cash flows. If the recoverable amount of
the investment is less than its carrying amount,
the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment
loss and is recognised in the standalone statement
of profit and loss.
Goodwill
Goodwill is tested for impairment on an annual basis
and more often, if there is an indication that goodwill
may be impaired, relying on a number of factors
including operating results, business plans and
future cash flows. For the purpose of impairment
testing, goodwill acquired in a business combination
is allocated to the Company's cash generating units
(CGU) expected to benefit from the synergies
arising from the business combination. A CGU is
the smallest identifiable Company of assets that
generates cash inflows that are largely independent
of the cash inflows from other assets or Company
of assets. Impairment occurs when the carrying
amount of a CGU including the goodwill, exceeds
the estimated recoverable amount of the CGU.
The recoverable amount of a CGU is the higher of
its fair value less cost to sell and its value-in-use.
Value-in-use is the present value of future cash
flows expected to be derived from the CGU. The
Company estimates the value in use of CGU's based
on the future cash flows after considering current
economic conditions and trends, estimated future
operating results, growth rate and estimated future
economic and regulatory conditions. The estimated
cash flows are developed using internal forecasts.
The discount rates used for the CGU's represents
the weighted average cost of capital based on the
historical market return of comparable companies.
If the recoverable amount of a CGU is less than its
carrying amount, the impairment loss is allocated
first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets
of the unit pro-rata based on the carrying amount
of each asset in the unit. Any impairment loss on
goodwill is recognized in the standalone statement
of profit and loss. Impairment losses relating to
goodwill are not reversed in future periods.
3.8 Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment
benefit plan under which the Company pays fixed
contributions into a separate entity and will have
no legal or constructive obligation to pay further
amounts. Obligations for contributions to defined
contribution pension plans are recognised as
an employee benefit expense in the standalone
statement of profit and loss in the periods during
which related services are rendered by employees.
Defined benefit plans
A defined benefit plan is a post-employment benefit
plan other than a defined contribution plan. The
Company's net obligation in respect of defined
benefit plans is calculated separately for each plan
by estimating the amount of future benefit that
employees have earned in return for their service
in the current and prior periods; that benefit is
discounted to determine its present value. The fair
value of any plan assets is deducted. The Company
determines the net interest expense (income) on
the net defined benefit liability (asset) for the period
by applying the discount rate used to measure the
defined benefit obligation at the beginning of the
annual period to the net defined benefit liability
(asset).
The discount rates used for determining the present
value are based on the market yields on Government
Securities as at the reporting date.
The calculation is performed annually by a qualified
independent actuary using the projected unit credit
method. When the calculation results in a benefit
to the Company, the recognised asset is limited to
the present value of economic benefits available
in the form of any future refunds from the plan or
reductions in future contributions to the plan. In
order to calculate the present value of economic
benefits, consideration is given to any minimum
funding requirements that apply to any plan in the
Company. An economic benefit is available to the
Company if it is recognised during the life of the
plan, or on settlement of the plan liabilities.
Remeasurements of the net defined benefit liability
comprise actuarial gains and losses, the return on
plan assets (excluding interest) and the effect of
the asset ceiling (if any, excluding interest). The
Company recognises them immediately in OCI and
all expenses related to defined benefit plans in
employee benefits expense in standalone statement
of profit and loss. When the benefits of a plan are
changed, or when a plan is curtailed, the portion
of the changed benefit related to past service by
employees, or the gain or loss on curtailment, is
recognised immediately in in standalone statement
of profit and loss when the plan amendment or
curtailment occurs.
The Company recognises gains and losses on
the settlement of a defined benefit plan when the
settlement occurs. The gain or loss on settlement
is the difference between the present value
of the defined benefit obligation being settled
as determined on the date of settlement and
the settlement price, including any plan assets
transferred and any payments made directly by the
Company in connection with the settlement.
Short-term employee benefits
Short-term employee benefit obligations are
measured on an undiscounted basis and are
expensed as the related service is provided. A
liability is recognised for the amount expected to
be paid under short-term cash bonus or profit¬
sharing plans 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.
Compensated absences
The Company has a policy on compensated absences
that is both accumulating and non-accumulating in
nature. Non-accumulating compensated absences
are measured on an undiscounted basis and are
recognized in the period in which absences occur.
The cost of short-term compensated absences are
provided for based on estimates. The expected
cost of accumulating compensated absences is
determined by actuarial valuation at each reporting
date measured based on the amounts expected to
be paid / availed as a result of the unused entitlement
that has accumulated at the reporting date. The
Company treats accumulated leave expected to
be carried forward beyond twelve months, as
long-term employee benefits for measurement
purposes. Such long-term compensated absences
are provided for based on the actuarial valuation
using the projected unit credit method at the
year-end. Actuarial gains/losses are immediately
taken to the standalone statement of profit and
loss. The Company presents the entire obligation
for compensated absences as a current liability,
since it does not have an unconditional right to
defer its settlement beyond 12 months from the
reporting date.
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