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 equipmentRecognition 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 recognized as an asset if , and only if 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.

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 recognized 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-recognized. The
costs of the day-to-day servicing of plant and equipment
are recognized 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 recognized 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 recognized 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 recognized in the standalone statement of profit
and loss.

3.2 Intangible assets

Intangible assets purchased or acquired in business
combination, are measured at cost or fair value as of
the date of acquisition, as applicable, less accumulated
amortization and accumulated impairment, if any. The
amortization period and the amortization method are
reviewed at least at each financial year end.

For internally generated intangible assets, expenses
incurred during the research phase are expensed as
incurred. Development and product enhancements are
capitalized as an intangible asset when the following
criteria are met:

- Technical feasibility of completing the intangible
asset so that the asset will be available for use or
sale

- Intention to complete and its ability and intention to
use or sell the asset

- Ability to generate future economic benefits

- the availability of resources to complete the asset

- the ability to measure reliably the expenditure during
development

Intangible assets have a finite useful life and are
subsequently carried at cost less accumulated
amortization and impairment losses, if any.

Amortization methods and periods

Amortization is calculated based on the cost of the asset,
less its residual value. Amortization is recognized 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.

Amortization methods, useful lives and residual values are
reviewed at the end of each reporting period and adjusted
if appropriate.

The Company amortizes intangible assets with a finite
useful life over the following periods:

Subsequent Measurement

Subsequent expenditure is capitalized 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 recognized 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 recognized 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 recognizes 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 recognizes 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 amortized 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 recognize right-of-use
assets and lease liabilities for leases of low- value assets
and short-term leases. The Company recognizes the lease
payments associated with these leases as an expense on
a straight-line basis over the lease term.

3.4 Foreign currency translationTransactions 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 measurementNon-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, investments 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
recognized 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:

0 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 realizing cash
flows through the sale of the assets;

0 how the performance of the portfolio is
evaluated and reported to the Company’s
management;

0 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;

0 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

0 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:

0 contingent events that would change the
amount or timing of cash flows;

0 terms that may adjust the contractual coupon
rate, including variable-rate features;

0 prepayment and extension features; and

0 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 amortized 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:

• Amortized 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
amortized 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
recognized 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 recognized in standalone statement of
profit and loss. When the financial asset is
derecognized, the cumulative gain or loss
previously recognized in OCI is reclassified
from equity to standalone statement of profit
and loss and recognized 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 amortized 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 recognized 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 recognized
in other gains/ (losses) in the standalone
statement of profit and loss.

A financial asset is measured at amortized 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
amortized cost.

These financial liabilities are initially measured at
fair value less directly attributable transaction costs.
They are subsequently measured at amortized
cost using the effective interest method. Interest
expense and foreign exchange gains and losses are
recognized 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 derecognizes 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 derecognizes a financial liability
when its contractual obligations are discharged or
cancelled, or expire. The Company also derecognizes
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 recognized 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 recognized 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 realize 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 categorized 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 recognized in the
standalone financial statements on a recurring
basis, the Company determines whether transfers
have occurred between levels in the hierarchy by re¬
assessing categorization (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
recognized 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 recognizes expected credit loss
allowances (‘ECLs’) on:

• financial assets measured at amortized 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 amortized 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 reorganization; 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
amortized 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
recognized 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 recognized 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 benefitsDefined 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 recognized 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 recognized 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 recognized 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 recognizes 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 recognized immediately
in in standalone statement of profit and loss when the
plan amendment or curtailment occurs.

The Company recognizes 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 recognized 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.