operate its entire fleet of aircrafts and a large
part of the same has become non-operational
due to non-maintenance. Underutilization
of the fleet during the period has further
affected the profitability of the Company.
Over this period, the Company has deferred
payments to various parties, including lessors
and other vendors and its dues to statutory
authorities and certain litigations which are
further explained in Note 47

The Company continues to implement
various measures such as return to
service of its grounded fleet, enhancing
customer experience, improving selling and
distribution, revenue management, fleet
rationalization, optimizing aircraft utilization,
redeployment of capacity in key focus
markets, renegotiation of contracts and other
costs control measures, to help the Company
establish consistent profitable operations and
cash flows in the future. The Company had
also issued fresh equity shares and equity
warrants on preferential basis in the current
year to various investors under non-promoter
category with an issue size of Rs. 10,600
million and qualified institutional buyers by
way of qualified institutional placement (as
further explained in Note 19A) amounting to
Rs. 30,000 million. During the current year, the
Company has also entered into settlements
with certain aircraft/engine lessors, as further
described in Note 64. The Company is also
in the process of regularising payments dues
to its vendors and is engaged in ongoing
discussions with other vendors/lessors and
expects some relief from settlement of their
outstanding dues. Based on the foregoing
business plans and its effect on cash flow
projections, the management is of the view
that the Company will be able to meet its
liabilities as they fall due.

Accordingly, these financial statements
have been prepared on the basis that the
Company will continue as a going concern
for the foreseeable future. The auditors
have included 'Material Uncertainty Related
to Going Concern' paragraph in their audit
report in this regard.

iv. Critical accounting estimates and judgements

In preparing these financial statements,
the management has made judgements,
estimates and assumptions that affect the
application of accounting policies and the
reported amounts of assets, liabilities, income
and expenses. Actual results may differ from
these estimates.

Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions
to accounting estimates are recognised
prospectively.

Information about significant areas of
estimation/uncertainty and judgements in
applying accounting policies that have the
most significant effect on the standalone
financial statements are as follows:

Note 2(A) (i)(iii) and 44 - estimates required
for employee benefits.

Note 2(A) (l) - estimates/judgement required
for leases.

Note 2(A) (d) and (e) - measurement of useful
life and residual values of property, plant and
equipment and intangible assets.

Note 2(A) (m) and (q) - estimation of
provision of maintenance.

Note 2(A) (f) and (r) - estimates/judgement
required in impairment assessment.

Note 2(A) (j) - judgement required to
determine probability of recognition of
deferred tax assets.

Note 2(A) (m)(ii) - estimation of provision for
aircraft redelivery.

Note 2(A) (x) - judgment relation to
contingent liabilities.

Note 2(A) (v) - estimates/judgement

required to determine grant date fair value of
stock options.

b) Current versus non-current classification

The Company presents assets and liabilities in
the balance sheet based on current/non-current
classification. An asset is treated as current when it is:

• Expected to be realised or consumed in
normal operating cycle;

• Held primarily for the purpose of trading;

• Expected to be realised within twelve months
after the reporting period; or

• Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability
for at least twelve months after the reporting
period.

All other assets are classified as non-current.

A liability is current when:

• It is expected to be settled in normal operating
cycle;

• It is held primarily for the purpose of trading;

• It is due to be settled within twelve months
after the reporting period; or

• There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period.

The Company classifies all other liabilities as non¬
current.

Deferred tax assets and liabilities are classified as
non-current assets and liabilities.

The Company has identified twelve months as its
operating cycle.

c) Business combination and asset acquisition

In case, the acquisition of an asset or a group of
assets that does constitute a business, identifiable
acquired assets and liabilities and contingent
liabilities assumed in a business combination are
measured initially at their acquisition-date fair values.
Goodwill is measured as excess of the aggregate of
the fair value of the consideration transferred, the
amount recognized for non-controlling interests
and fair value of any previous interest held, over the
fair value of the net of identifiable assets acquired
and liabilities assumed. If the fair value of the net of
identifiable assets acquired and liabilities assumed
is in excess of the aggregate mentioned above, the
resulting gain on bargain purchase is recognized
in other comprehensive income and accumulated
in equity as capital reserve. However, if there is
no clear evidence of bargain purchase, the entity
recognizes the gain directly in equity as capital
reserve, without routing the same through other
comprehensive income.

In case, the acquisition of an asset or a group of
assets that does not constitute a business, the
acquirer identifies and recognises the individual
identifiable assets acquired (including those assets
that meet the definition and recognition criteria
for intangible assets) and liabilities assumed. The
cost of the group (i.e. consideration paid) shall be
allocated to the individual identifiable assets and
liabilities on the basis of their relative fair values at
the date of purchase.

d) Property, plant and equipment

Recognition and measurement

Property, plant and equipment are stated at cost
less accumulated depreciation and impairment
losses, if any. Cost comprises the purchase price
and any attributable cost of 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 property, plant and equipment
not ready for intended use before such date is
disclosed under capital work-in-progress.

For depreciation purposes, the Company identifies
and determines cost of asset significant to the total
cost of the asset having useful life that is materially
different from that of the life of the principal
asset and depreciates them separately based on
their specific useful lives. Likewise, when a major
inspection is performed, its cost is recognised in
the carrying amount of the plant and equipment
as a replacement if the recognition criteria are
satisfied and the same is depreciated based on
their specific useful lives. All other expenses on
existing property, plant and equipment, including
day-to-day repair and maintenance expenditure,
are charged to the statement of profit and loss for
the year during which such expenses are incurred.

The Company has opted to avail the exemption
under Ind AS 101 to continue the policy adopted for
accounting for exchange differences arising from
translation of long-term foreign currency monetary
items recognised in financial statements for the year
ended immediately before beginning of first Ind AS
financial reporting period as per Indian GAAP (i.e.,
till 31 March 2016). Consequent to which exchange
differences arising on long-term foreign currency
monetary items related to acquisition of certain
Q400 aircrafts are capitalized and depreciated
over the remaining useful life of the asset.

Depreciation

The Company, based on technical assessment
and management estimates, depreciates certain
items of property, plant and equipment over¬
estimated useful lives which are different from the
useful life prescribed in Schedule II to the Act. The
management believes that these estimated useful
lives are realistic and reflect fair approximation of the
period over which the assets are likely to be used.

The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.

The Company has used the following rates to provide
depreciation on its property, plant and equipment.

Derecognition

An item of property, plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic
benefits are expected from its use or disposal.
Gains or losses arising from de-recognition of
property, plant and equipment are measured as
the difference between the net disposal proceeds
and the carrying amount of the asset and are
recognized in the statement of profit and loss
when the asset is derecognized.

e) Intangible assets

Recognition and measurement

Intangible assets (software) are stated at their cost
of acquisition. The cost comprises purchase price,
borrowing cost if capitalization criteria are met
and directly attributable cost of bringing the asset
to its working condition for the intended use.

Depreciation

Costs incurred towards purchase of computer
software are amortised using the straight-line
method over a period based on management's
estimate of useful lives of such software being in
the range of 2-6 years, or over the license period
of the software, whichever is shorter.

De-recognition

Intangible asset is de-recognised upon disposal or
when no future economic benefits are expected
from its use or disposal. Any gain or loss arising
on de-recognition of the asset (calculated as the
difference between the net disposal proceeds and
the carrying amount of the asset) is recognized in
the statement of profit and loss when the asset is
derecognised.

f) Impairment of non-financial assets

The Company assesses at each reporting date
whether there is an indication that an asset may
be impaired. If any indication exists, the Company
estimates the asset's recoverable amount. An
asset's recoverable amount is the higher of an
asset's or cash-generating units ('CGU') fair value
less cost of disposal and its value in use. The
recoverable amount is determined for an individual
asset, unless the asset does not generate cash
inflows that are largely independent of those from
other assets. Where the carrying amount of an
asset or CGU exceeds its recoverable amount, the
asset is considered impaired and is written down
to its recoverable amount.

In assessing value in use, the estimated future cash
flows are discounted to their present value using a
pre-tax discount rate that reflects current market
assessments of the time value of money and the
risks specific to the asset. In determining fair value
less cost of disposal, recent market transactions
are taken into account, if available. If no such
transactions can be identified, an appropriate
valuation model is used.

The Company bases its impairment calculation on
detailed budgets and forecast calculations which
are prepared separately for each of the cash¬
generating units to which the individual assets are
allocated. These budgets and forecast calculations
are generally covering a period as relevant for
asset or CGU tested for impairment. To estimate
cash flow projections beyond periods covered by
the most recent budgets/forecasts, the Company
extrapolates cash flow projections in the budget
using a growth rate for subsequent years.

Impairment losses are recognized in the statement
of profit and loss. After impairment, depreciation/
amortization is provided on the revised carrying
amount of the asset over its remaining useful life.

An assessment is made at each reporting
date as to whether there is any indication that
previously recognized impairment losses may
no longer exist or may have decreased. If such
indication exists, the Company estimates the
asset's or cash-generating unit's recoverable
amount. A previously recognized impairment
loss is reversed only if there has been a change
in the assumptions used to determine the asset's
recoverable amount since the last impairment loss
was recognized. The reversal is limited so that the
carrying amount of the asset does not exceed
its recoverable amount, nor exceed the carrying
amount that would have been determined, net
of depreciation/amortization, had no impairment
loss been recognized for the asset in prior years.

Such reversal is recognized in the statement of
profit and loss.

g) Borrowing Costs

Borrowing costs directly attributable to the
acquisition, construction or production of an
asset that necessarily takes a substantial period
of time to get ready for its intended use or sale
are capitalised as part of the cost of the asset. All
other borrowing costs are expensed in the period
in which they occur.

Borrowing costs consist of interest and other
costs that an entity incurs in connection with the
borrowing of funds. Borrowing cost also includes
exchange differences to the extent regarded as an
adjustment to the borrowing costs.

h) Revenue from contracts with customer

Revenue from contracts with customers is
recognised when control of the goods or services
are transferred to the customer (point in time
consideration) at an amount that reflects the
consideration to which the Company expects to be
entitled in exchange for those goods or services.
The Company has generally concluded that it is
the principal in its revenue arrangements because
it typically controls the goods or services before
transferring them to the customer. The revenue is
recognized net of amounts collected on behalf of
third parties. No significant element of financing is
deemed present as the sales are either made with a
nil credit term or with a credit period of 0-90 days.

Rendering of services

Passenger revenues are recognised on flown basis

i.e. when the service is rendered and cargo revenue
is recognised when goods are transported i.e.
when the service is rendered. Amounts received in
advance towards travel bookings/reservations are
shown under other current liabilities as contract
liability. If the Company performs by transferring
services to a customer before the consideration is
due and billed, a contract asset is recognised for
the earned consideration.

When another party is involved in providing
services to its customer, the Company determines
whether it is a principal or an agent in these
transactions by evaluating the nature of its promise
to the customer. The Company is a principal and
records revenue on a gross basis if it controls the
promised services before providing them to the
customer. However, if the Company's role is only to
arrange for another entity to provide the services,
then the Company is an agent and will need to
record revenue at the net amount that it retains for
its agency services.

The Company recognizes an expected breakage
amount as revenue in proportion to the pattern
of rights exercised by the customer. Breakage
revenue represents the amount of unexercised
rights of customers which are non-refundable in
nature.

The unutilized balances in unearned revenue is
recognized as income based on past statistics,
trends and management estimates, after
considering the Company's refund policy.

Fees charged for cancellations or any changes to
flight tickets and towards special service requests
are recognized as revenue on rendering of related
services.

Government grants

Grants from the government are recognised where
there is a reasonable assurance that the grant will
be received and the Company will comply with all
attached conditions. The grant which is revenue in
nature is recognised as other operating revenue on
a systematic basis over the period for which such
grant is entitled.

Other revenues

Income in respect of hiring/renting out of space
in premises and equipment is recognised at rates
agreed with the customers, as and when related
services are rendered.

Tours and packages

Income and related expense from sale of tours
and packages are recognised upon services being
rendered and where applicable, are stated net of
discounts and applicable taxes. The income and
expense are stated on gross basis. The sale of
tours and packages not yet serviced is credited
to unearned revenue, i.e., 'Contract liabilities'
disclosed under other current liabilities.

Sale of food and beverages

Revenue from sale of food and beverages is
recognised when the goods are delivered or
served to the customer. Revenue from such sale
is measured at the consideration received or
receivable, net of returns and allowances, trade
discounts and volume rebates. Amounts received
in advance towards food and beverages are shown
under other current liabilities.

Training income

Revenue from training income is recognized
proportionately with the degree of completion of
services, based on management estimates of the
relative efforts as well as the period over which
related training activities are rendered.

Interest

Interest income is recorded using the effective
interest rate ('EIR'). EIR is the rate that exactly
discounts the estimated future cash payments
or receipts over the expected life of the financial
instrument or a shorter period, where appropriate,
to the gross carrying amount of the financial asset.
Interest income is included in finance income in the
statement of profit and loss.

i) Employee benefits

i. Short-term employee benefits

Liabilities for wages and salaries, including
non-monetary benefits that are expected to
be settled wholly within 12 months after the
end of the period in which the employees
render the related service are recognised in
respect of employees' services up to the end
of the reporting period and are measured
at the amounts expected to be paid when
the liabilities are settled. The liabilities are
presented as current employee benefit
obligations in the balance sheet.

Accumulated leave, which is expected to
be utilized within the next 12 months, is
treated as short-term employee benefit. The
Company measures the expected cost of
such absences as the additional amount that
it expects to pay as a result of the unused
entitlement that has accumulated at the
reporting date.

ii. Other long-term employee benefits

The Company also provides benefit of
compensated absences to its employees
(as per policy of the Company) which are
in the nature of long-term employee benefit
plan. The Company measures the expected
cost of compensated absences which are
expected to be settled within 12 months
as an additional amount that it expects to
pay as a result of the unused entitlement
that has accumulated at the reporting
date. Liability in respect of compensated
absences becoming due and expected to be
carried forward beyond twelve months are
provided for based on the actuarial valuation
using the projected unit credit method at
the year-end. Remeasurement gains/losses
are immediately taken to the statement of
profit and loss and are not deferred. The
Company presents the entire leave as a
current liability in the balance sheet, since
it does not have an unconditional right to
defer its settlement for 12 months after the
reporting date.

iii. Post-employment benefits

The Company operates the following post¬
employment schemes:

a. Defined benefit plans - gratuity

The Company has unfunded gratuity as
defined benefit plan where the amount
that an employee will receive on retirement
is defined by reference to the employee's
length of service and final salary. The
gratuity plan provides a lump sum payment
to vested employees at retirement,
death, incapacitation or termination of
employment, of an amount based on the
respective employee's salary and the tenure
of employment. The Company's liability is
actuarially determined (using the Projected
Unit Credit method) at the end of each year.
This is based on standard rates of inflation,
salary growth rate and mortality.

Discount factors are determined close
to each year-end by reference to market
yields on government bonds that have
terms to maturity approximating the terms
of the related liability. Service cost and net
interest expense on the Company's defined
benefit plan is included in employee
benefits expense.

Actuarial gains/losses resulting from
re-measurements of the defined
benefit obligation are included in other
comprehensive income.

b. Defined contribution plan - provident fund

Contribution towards provident fund is
made to the regulatory authorities, where
the Company has no further obligations.
The Company recognizes contribution paid
as an expense, when an employee renders
the related service.

j) Taxes

Current income tax

Current income tax assets and liabilities are
measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax
rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at
the reporting date.

Current income tax relating to items recognised
outside profit or loss is recognised outside profit
or loss (either in other comprehensive income or
in equity). Management periodically evaluates
positions taken in the tax returns with respect to

situations in which applicable tax regulations are
subject to interpretation and establishes provisions
where appropriate.

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 realise the asset and settle the liability
simultaneously.

Deferred tax

Deferred tax is recognised on temporary

differences between the carrying amounts of
assets and liabilities in the financial statements
and the corresponding tax bases used in the
computation of taxable profit.

Deferred tax assets are generally recognised for all
deductible temporary differences to the extent that
it is probable that taxable profits will be available
against which those deductible temporary

differences can be utilised. Such deferred tax assets
and liabilities are not recognised if the temporary
difference arises from the initial recognition (other
than in a business combination) of assets and
liabilities in a transaction that affects neither the
taxable profit nor the accounting profit.

Deferred tax asset is recognised for the carry
forward of unused tax losses (including unabsorbed
depreciation) and unused tax credits to the extent
that it is probable that future taxable profit will be
available against which the unused tax losses and
unused tax credits can be utilised.

The carrying amount of deferred tax assets is
reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to
allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at
the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled,
based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting
date. Deferred tax relating to items recognised
outside profit or loss is recognised outside profit
or loss (either in other comprehensive income or
in equity).

Deferred tax assets and deferred tax liabilities are
offset if a legally enforceable right exists to set off
current tax assets against current tax liabilities and
the deferred taxes relate to the same taxable entity
and the same taxation authority.

k) Earnings per share

Basic earnings per share are calculated by dividing
the net profit or loss for the year attributable to

equity shareholders by the weighted average
number of equity shares outstanding during the
year.

For the purpose of calculating diluted earnings per
share, the net profit or loss for the year attributable
to equity shareholders and the weighted average
number of shares outstanding during the year are
adjusted for the effects of all dilutive potential
equity shares.

l) Leases

The Company's lease asset classes primarily
consist of leases for aircrafts, aircraft components
(including engines) and buildings. The Company
assesses at contract inception whether a contract is,
or contains, a lease. That is, if the contract conveys
the right to control the use of an identified asset
for a period of time in exchange for consideration.

Company as a lessee

The Company applies a single recognition and
measurement approach for all leases, except
for short-term leases and leases of low-value
assets. The Company recognises lease liabilities
to make lease payments and right-of-use assets
representing the right to use the underlying assets.

i) Right of use assets

At the commencement date, the right of
use assets are measured at cost. The cost
includes an amount equal to the lease
liabilities plus any lease payments made
before the commencement date and any
initial direct costs, less any incentives received
from equipment manufacturer in terms of
the same lease. An estimate of costs to be
incurred in respect of redelivery obligation,
in accordance with the terms of the lease,
is also included in the right of use assets at
commencement date.

After the commencement date, the right of
use assets are measured in accordance with
the accounting policy for property, plant
and equipment i.e. right-of-use assets are
measured at cost, less any accumulated
depreciation and impairment losses, and
adjusted for any remeasurement of lease
liabilities. Right-of-use assets are depreciated
on a straight-line basis over the shorter of the
lease term and the estimated useful lives of
the assets, as follows:

Aircrafts - 1 to 12 years

Aircraft components - 1 to 10 years

Buildings - 2 to 10 years

If ownership of the leased asset transfers to
the Company at the end of the lease term or
the cost reflects the exercise of a purchase
option, depreciation is calculated using the
estimated useful life of the asset.

The right-of-use assets are also subject to
impairment. Refer to the accounting policy
in point (e) above on impairment of non¬
financial assets.

ii) Lease liabilities

At the commencement date of the lease,
the Company recognises lease liabilities
measured at the present value of lease
payments to be made over the lease term.
The lease payments include fixed payments
(including in substance fixed payments) less
any lease incentives receivable, plus variable
lease payments that depend on an index
or a rate, and amounts expected to be paid
under residual value guarantees. The lease
payments also include the exercise price of
a purchase option reasonably certain to be
exercised by the Company and payments of
penalties for terminating the lease, if the lease
term reflects the Company exercising the
option to terminate. Variable lease payments
that do not depend on an index or a rate
are recognised as expenses in the period in
which the event or condition that triggers the
payment occurs.

In calculating the present value of lease
payments, the Company uses its incremental
borrowing rate at the lease commencement
date because the interest rate implicit in the
lease is not readily determinable. After the
commencement date, the amount of lease
liabilities is increased to reflect the accretion
of interest and reduced for the lease payments
made. In addition, the carrying amount of
lease liabilities is remeasured if there is a
modification, a change in the lease term, a
change in the lease payments (e.g., changes
to future payments resulting from a change in
an index or rate used to determine such lease
payments) or a change in the assessment of
an option to purchase the underlying asset.

iii) Lease term

At the commencement date, the Company
determines the lease term which represents
non-cancellable period of initial lease for which
the asset is expected to be used, together
with the periods covered by an option to
extend or terminate the lease, if the Company
is reasonably certain at the commencement

date to exercise the extension or termination
option.

iv) Sale and leaseback transactions

Where sale proceeds received are judged to
reflect the aircraft's fair value, any gain or
loss arising on disposal is recognised in the
income statement, to the extent that it relates
to the rights that have been transferred. Gains
and losses that relate to the rights that have
been retained are included in the carrying
amount of the right of use assets recognised
at commencement of the lease. Where sale
proceeds received are not at the aircraft's fair
value, any below market terms are recognised
as a prepayment of lease payments, and
above market terms are recognised as
additional financing provided by the lessor.

v) Short-term leases and leases of low-value
assets

The Company applies the short-term lease
recognition exemption to its short-term
leases of building and equipment (i.e., those
leases that have a lease term of 12 months or
less from the commencement date and do
not contain a purchase option). It also applies
the lease of low-value assets recognition
exemption to leases of office equipment
that are considered to be low value. Lease
payments on short-term leases and leases of
low-value assets are recognised as expense
on a straight-line basis over the lease term
or another systematic basis which is more
representative of the pattern of use of
underlying asset.

Company as a lessor

Leases in which the Company does not
transfer substantially all the risks and rewards
incidental to ownership of an asset are
classified as operating leases. Rental income
arising is accounted for on a straight-line
basis over the lease terms. Initial direct costs
incurred in negotiating and arranging an
operating lease are added to the carrying
amount of the leased asset and recognised
over the lease term on the same basis as rental
income. Contingent rents are recognised
as revenue in the period in which they are
earned.

m) Supplementary rentals and aircraft repair and

maintenance

i) Supplementary rentals

The Company accrues monthly expenses in
the form of supplementary rentals which are

based on aircraft utilisation that is calculated
with reference to the number of hours or
cycles operated during each month. Accrual
of supplementary rentals are made for heavy
maintenance visits, engine overhaul and
landing gear overhaul for aircraft taken on
lease.

ii) Aircraft repair and maintenance

Aircraft repairs and maintenance includes
additional accrual, beyond supplementary
rentals, for the estimated future costs of
engine maintenance checks. These accruals
are based on past trends for costs incurred
on such events, future expected utilization of
engine, condition of the engine and expected
maintenance interval and are recorded over
the period of the next expected maintenance
visit.

Aircraft maintenance covered by third party
maintenance agreements, wherein the cost is
charged to the statement of profit and loss at
a contractual rate per hour in accordance with
the terms of the agreements. The Company
recognises aircraft repair and maintenance
cost (other than major inspection costs) in
the statement of profit and loss on incurred
basis.

n) Cash and cash equivalents

Cash and cash equivalent in the balance sheet
comprise cash on hand and at banks and short¬
term deposits with an original maturity of three
months or less, which are subject to an insignificant
risk of changes in value.

For the purpose of statement of cash flow, cash
and cash equivalents consist of cash and short¬
term deposits, as defined above, net of outstanding
bank overdrafts as they are considered an integral
part of the Company's cash management.

o) Foreign currency transactions

The financial statements of the Company is
presented in Indian Rupees (Rs.) which is also the
Company's functional and presentation currency.

Initial recognition

Transactions in foreign currencies entered into by
the Company are accounted at the exchange rates
prevailing on the date of the transaction or at the
average rates that closely approximate the rate at
the date of the transaction.

Conversion

Foreign currency monetary items are translated
using the exchange rate prevailing at the reporting

date. Non-monetary items which are measured in
terms of historical cost denominated in a foreign
currency are translated using the exchange rate
at the date of the transaction; and non-monetary
items which are carried at fair value denominated
in a foreign currency are translated using the
exchange rates that existed when the values were
determined.

Exchange differences

Exchange differences arising on settlement or
translation of monetary items are recognised in
statement of profit and loss except to the extent
it is treated as an adjustment to borrowing costs.

p) Fair value measurement

Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement
is based on the presumption that the transaction
to sell the asset or transfer the liability takes place
either:

• In the principal market for the asset or liability;
or

• In the absence of a principal market, in the
most advantageous market for the asset or
liability

The fair value of an asset or a liability is measured
using the assumptions that market participants
would use when pricing the asset or liability,
assuming that market participants act in their best
economic interest.

A fair value measurement of a non-financial asset
considers a market participant's ability to generate
economic benefits by using the asset in its highest
and best use or by selling it to another market
participant that would use the asset in its highest
and best use.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.

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) market 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

For assets and liabilities that are recognised in
the 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.

Involvement of external valuers is decided upon
annually by the Company. At each reporting
date, the Company analyses the movements
in the values of assets and liabilities which are
required to be remeasured or re-assessed as per
the accounting policies. For this analysis, the
Company verifies the major inputs applied in the
latest valuation by agreeing the information in
the valuation computation to contracts and other
relevant documents.

For the purpose of fair value disclosures, the
Company has determined classes of assets and
liabilities on the basis of the nature, characteristics
and risks of the asset or liability and the level of the
fair value hierarchy as explained above.