2. (A) Material accounting policy information
2.A.1.1 Basis of accounting and preparation of financial statements
The Standalone financial statements ("financial statements") have been prepared in accordance
with the Indian Accounting Standard (Ind AS) notified under section 133 of the Companies Act, 2013,
read together with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015, Companies
(Indian Accounting Standards) Amendment Rules, 2016 and Companies (Indian Accounting
Standards) Amendment Rules, 2017 issued by the Ministry of Corporate Affairs (‘MCA’).
The financial statements have been prepared under historical cost convention on accrual and
going concern basis, except for the following assets and liabilities:-
i) Certain financial assets and liabilities measured at fair value (refer accounting policy
regarding financial instruments)
ii) Investments in unquoted equity shares measured at fair value
iii) Defined benefit liabilities are measured at present value of defined benefit obligation.
iv) Certain financial assets and liabilities at amortised cost
Accounting policies have been consistently applied except where a newly issued accounting
standard is initially adopted or a revision to an existing accounting standard requires a change in
the accounting policy hitherto in use.
The buyback of equity shares and related transaction costs are recorded as reduction of retained
earnings/general reserves. Capital redemption reserve is created as an apportionment from general
reserves.
The financial statements are presented in INR "(Indian Rupees)” and all values are rounded to the
nearest million, except when otherwise indicated.
2.A.1.2 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, regardless of whether that price
is directly observable or estimated using another valuation technique. In estimating the fair value
of an asset or a liability, the Company takes into account the characteristics of the asset or liability if
market participants would take those characteristics into account when pricing the asset or liability
at the measurement date. Fair value for measurement and/or disclosure purposes is determined on
such a basis and measurements that have some similarities to fair value but are not fair value, such
as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purpose, fair value measurement are categorised into level 1, 2,
or 3 based on the degree to which the inputs to the fair value measurements are observable and
the significance of the inputs to the fair value measurement in the entirety, which are described
as follows:
- Level 1: This level includes financial assets that are measured by reference to quoted prices
(unadjusted) in active markets for identical assets or liabilities
- Level 2: This level includes financial assets and liabilities, measured using inputs 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: This level includes financial assets and liabilities measured using inputs that are not
based on observable market data (unobservable inputs). Fair values are determined in whole or
in part, using a valuation model based on assumptions that are neither supported by prices from
observable current market transactions in the same instrument nor are they based on available
market data..
2.A.1.3 Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/non-current
classification
The Company classifies an asset as current asset when:
• it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle;
• it holds the asset for the purpose of trading;
• it expects to realise the asset within twelve months after the reporting period; or
• the asset is cash or a cash equivalent unless the asset is 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 classified as current when:
• it is expected to be settled in normal operating cycle;
• it holds the liability for the purpose of trading;
• the liability is due to be settled within twelve months after the reporting period; or
• it does not have an unconditional right to defer settlement of the liability for at least
twelve months after the reporting period. Terms of a liability that could, at the option of
the counterparty, result in its settlement by the issue of equity instruments do not affect its
classification.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation
in cash or cash equivalents.
The Company’s normal operating cycle is twelve months.
2.A.I.4. Significant accounting judgements, estimates and assumptions.
The preparation of the financial statements is in conformity with Indian Accounting Standards
(Ind AS) and requires the management to make estimates and assumptions considered in the
reported amounts of assets and liabilities and disclosures relating to contingent liabilities as at
the date of the financial statements and the reported income and expenses during the year. The
management believes that the estimates used in preparation of the financial statements are
prudent and reasonable. Future results could differ due to these estimates and the differences
between the actual results and the estimates are recognised in the periods in which the results
are known / materialise information, about significant areas of estimation uncertainty and critical
judgments in applying accounting policies that have the most significant effect on the amounts
recognized in the Standalone Financial Statements is included in the following notes.
• Deferred tax: Deferred tax is recognised in respect of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the
corresponding amounts used for taxation purposes. Significant management judgement is
required to determine the amount of deferred tax assets that can be recognised, based upon
the likely timing and the level of future taxable profits together with future tax planning
strategies.
• Impairment of financial assets and non-financial assets: The impairment provisions for
financial assets are based on assumptions about risk of default and expected cash loss rates.
The Company uses judgement in making these assumptions and selecting the inputs to the
impairment calculation, based on Company’s past history, existing market conditions as well
as forward-looking estimates at the end of each reporting period.
• Useful lives of depreciable/amortisable assets: Value of property, plant and equipment and
intangibles at the end of each reporting period. Factors such as changes in the expected
level of usage could significantly impact the economic useful lives and the residual values of
these assets. Consequently, the future depreciation charge could be revised and may have
an impact on the profit of the future years.
• Estimation of defined benefit obligation: Employee benefit obligations are determined using
actuarial valuations. An actuarial valuation involves making various assumptions that may
differ from actual developments. These include the estimation of the appropriate discount rate,
future salary increases and mortality rates. Due to the complexities involved in the valuation and
its long-term nature, the employee benefit obligation is highly sensitive to changes in these
assumptions. All assumptions are reviewed at each reporting date.
• Estimation for expected credit losses of trade receivables: Trade receivables do not carry
any interest and are stated at their normal value as reduced by appropriate allowances
for estimated irrecoverable amounts. Individual trade receivables are written off when
management believes that there is uncertainty of collections. Provision is recognised based
on the expected credit losses, which are the present value of the cash shortfall over the
expected life of the financial assets.
• Incremental rate of borrowing for lease accounting: The Company cannot readily determine
the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR)
to measure lease liabilities. The IBR is the rate of interest that the Company would have to
pay to borrow over a similar term, and with a similar security, the funds necessary to obtain
an asset of a similar value to the right-of-use asset in a similar economic environment. The
IBR therefore reflects what the Company ‘would have to pay’, which requires estimation
when no observable rates are available or when they need to be adjusted to reflect the
terms and conditions of the lease. The Company estimates the IBR using observable inputs
(such as market interest rates) when available and is required to make certain entity-specific
estimates.
2A2.1. Property, plant and equipment
Property, plant and equipment held for use in production or supply of goods and services, or for
administrative purpose, are stated at historic cost, net of accumulated depreciation (net of input
tax credits availed) including taxes and other incidental expenses related to acquisition, installation
and borrowing cost on loan taken for the acquisition of qualifying assets upto the date the assets
are ready for their intended use. Subsequent measurement of property, plant and equipment is
done in accordance with cost model.
The cost of an item of property, plant and equipment shall be recognised as an asset if, and only if:
(a) it is probable that future economic benefits associated with the item will flow to the entity;
and
(b) the cost of the item can be measured reliably.
Subsequent expenditure can be capitalised only if it is probable that future economic benefits
associated with the expenditure will flow to the company.
An item of property, plant and equipment is derecognised on disposal, or when no future economic
benefit are expected to arise from the continued use of assets. Any gain and loss arising on the
disposal of or retirement is determined as the difference between the sale proceeds and the
carrying amount of the assets and is recognised in the statement of profit and loss.
2A2.2.Intangible assets
Intangible assets are recognised when it is probable that future economic benefits attributed to
the asset will flow to the entity and the cost of the asset can be reliably measured.
Intangible assets held for use in production or supply of goods and services, or for administrative
purpose, are stated at are stated at historic cost, net of accumulated depreciation (net of input tax
credits availed) including taxes and other incidental expenses related to acquisition, installation and
borrowing cost on loan taken for the acquisition of qualifying assets upto the date the assets are
ready for their intended use. Subsequent measurement of intangible assets is done in accordance
with cost model.
An item of intangible asset is derecognised on disposal, or when no future economic benefit are
expected to arise from the continued use of assets. Any gain and loss arising on the disposal of or
retirement is determined as the difference between the sale proceeds and the carrying amount of
the assets and is recognised in the statement of profit and loss.
2A2.3.Capital work-in-progress
Capital work-in-progress represents expenditure incurred in respect of capital projects under
development and are carried at cost. Cost includes related acquisition expenses, development/
construction costs, borrowing costs and other direct expenditure. Subsequent measurement of
capital work-in-progress is done in accordance with cost model.
2A2.4.Leases
Lessee accounting
1. Lease liability is recognised at the commencement of lease and measured at an amount
equal to the present value of minimum lease payments during the lease term that are not
yet paid.
2. Right of use asset is recognised at the commencement of lease and measured at cost,
consisting of initial measurement of lease liability plus any lease payments made to the lessor
at or before the commencement date less any lease incentives received, initial estimate of
the restoration costs and any initial direct costs incurred by the lessee. Right-of-use assets
are amortized on a straight-line basis over the shorter of the lease term and the estimated
useful lives of the assets and impairment loss. Subsequent measurement of right-of-use
assets is done in accordance with cost model.
3. The lease liability is measured in subsequent periods using the effective interest rate method.
4. Recognition and measurement exemption is availed for low-value assets and short term
leases. Assets of low value include IT equipment or office furniture. No monetary threshold
has been defined for low-value assets. Short-term leases are defined as leases with a lease
term of 12 months or less.
2.A.3 Depreciation and amortisation
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its
estimated residual value.
The Company is following written down value method in case of Furniture, fixtures and office
equipment and straight line method in respect of other assets.
Depreciation on tangible property, plant and equipment has been provided as per the useful life
prescribed in Schedule II to the Companies Act, 2013 except in respect of the certain categories
of assets, in whose case the life of the assets has been assessed based on technical advice, taking
into account the nature, the estimated usage, operating conditions of the asset, past history of
replacement, anticipated technological changes and maintenance practices etc. Followings are
the estimated useful lives of various category of assets used:
Depreciation on assets acquired/sold/discarded during the year is charged on pro-rata basis except
for furniture, fixtures and equipments where full year’s depreciation is computed in the year of
acquisition and no depreciation is provided in the year of sale.
The estimated useful lives, residual values and depreciation method are reviewed at the end of
each reporting period, and the effect of any changes in estimate is accounted for on a prospective
basis
2.A.4. Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the
contractual provisions of the instruments.
Transaction costs that are directly attributable to the acquisition or issue of financial assets and
financial liabilities that are not at fair value through profit or loss are added to the fair value on initial
recognition.
Financial assets
All regular way purchases or sales of financial assets are accounted for at trade date basis. Regular
way purchases or sales are purchase or sales of financial assets that require delivery of assets within
the time frame established by regulation or convention in the market place.
Classification of financial assets
Financial assets that meet the following conditions are subsequently measured at amortised
cost
i) The asset is held within a business model whose objective is to hold assets in order to collect
contractual cash flows; and
ii) The contractual terms of the instrument give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
Financial assets that meet the following conditions are subsequently measured at
fair value through other comprehensive income (except for debt instruments that
are designated as at fair value through profit or loss on initial recognition):
i) The asset is held within a business model whose objective is achieved both by collecting
contractual cash flows and selling financial assets; and
ii) The contractual terms of the instrument give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through profit or loss
Financial asset which are not classified in any of the above categories are subsequently measured
at fair value through profit or loss (FVTPL).
Trade receivables that do not contain a significant financing component or for which the Company
has applied the practical expedient are measured at the transaction price determined under Ind AS
115. The average credit period is 55 days.
Investments
Investment in subsidiaries are carried at cost less impairment losses, if any. Any permanent
diminution in the value of investments is provided for in the books of account.
Investments in mutual funds and investment in equity instrument are measured at fair value
through profit or loss.
Financial liabilities
All financial liabilities are subsequently measured at amortised cost or at fair value through profit or
loss (FVTPL). For trade and other payables maturing within one year from the Balance Sheet date,
the carrying amounts approximate fair value due to the short maturity of these instruments.
Fair value is determined in the manner described in note no 44.
2.A.5. Derivative financial instruments
The Company enters into a variety of derivative financial instruments to manage its exposure to
interest rate and foreign exchange rate risks, including foreign exchange forward contracts and
cross currency interest rate swaps.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered
into and are subsequently remeasured to their fair value at the end of each reporting period. The
resulting gain or loss is recognised in the statement of profit and loss immediately unless the
derivative is designated and effective as a hedging instrument, in which event the timing of the
recognition in the statement of profit and loss depends on the nature of the hedging relationship
and the nature of the hedged item.
(i) Financial assets or financial liabilities, at fair value through profit or loss.
This category has derivative financial assets or liabilities which are not designated as
hedges. Although the Company believes that these derivatives constitute hedges from an
economic perspective, they may not qualify for hedge accounting under Ind AS 109, Financial
Instruments. Any derivative that is either not designated a hedge, or is so designated but is
ineffective as per Ind AS 109, is categorized as a financial asset or financial liability, at fair
value through profit or loss.
Derivatives not designated as hedges are recognized initially at fair value and attributable
transaction costs are recognized in net profit in the statement of profit and loss when incurred.
Subsequent to initial recognition, these derivatives are measured at fair value through the
statement of profit and loss and the resulting exchange gains or losses are included in the
statement of profit and loss. Assets/liabilities in this category are presented as current assets/
current liabilities if they are either held for trading or are expected to be realized within 12
months after the Balance sheet date.
(ii) Hedge accounting
The Company designates the derivatives as hedge of foreign exchange risk associated with
the cash flows of highly probable forecast transaction.
The Company documents at the inception of the hedging transaction the economic
relationship between hedging instrument and hedge items. The Company documents its
risk management objective and strategy for undertaking various hedge transactions at the
inception of each hedge relationship.
When forward contracts are used to hedge forecast transactions, the Company generally
designates related forward contract related as the hedging instruments.
The effective portion of changes in the fair value of derivatives that are designated and qualify
as cash flow hedges, is recognised in other comprehensive income and accumulated under
the heading of cash flow hedge reserve. The gain or loss relating to the ineffective portion is
recognised immediately in the statement of profit and loss. Amounts previously recognised
in other comprehensive income and accumulated in equity relating to (effective portion as
described above) are reclassified to the statement of profit and loss in the periods when the
hedged item affects profit or loss, in the same line as the recognised hedged item. For the
same, Company matches critical terms of hedge item and hedge instruments.
Hedge accounting is discontinued when the hedging instrument expires or is sold,
terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or
loss recognised in other comprehensive income and accumulated in equity at that time
remains in equity and is recognised when the forecast transaction and cross currency
interest rate swap transaction is ultimately recognised in the statement of profit and loss.
When a forecast transaction and cross currency interest rate swap transaction is no longer
expected to occur, the gain or loss accumulated in equity is recognised immediately in the
statement of profit and loss.
Fair value is determined in the manner described in note no 44.
2.A.6. Employee benefits
Retirement benefit costs and termination benefits:
Payments to defined contribution retirement benefit plans are recognised as an expense when
employees have rendered service entitling them to the contributions.
Contribution towards Provident Fund and Superannuation Fund is paid as per the statutory
provisions/Company’s scheme. These benefits are charged to the statement of profit and loss of
the year when they become due. For the provident fund trust administrated by the trustees, the
Company is liable to meet the shortfall, if any, in payment of interest at the rates declared by Central
Government and such liability is recognised in the year of shortfall. For defined post-employment
employee benefit plans, the cost of providing benefits is determined using the projected unit
credit method, with actuarial valuations being carried out at the end of each annual reporting
period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the
return on plan assets (excluding net interest), is reflected immediately in the balance sheet with
a charge or credit recognised in other comprehensive income in the period in which they occur.
Remeasurement recognised in other comprehensive income is reflected immediately in retained
earnings and is not reclassified to the statement of profit and loss. Past service cost is recognised
in the statement of profit and loss in the period of a plan amendment. Net interest is calculated by
applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
Defined benefit costs are categorised as follows:
i) Service cost (including current service cost, past service cost, as well as gains and losses on
curtailments and settlements);
ii) Net interest expense or income; and
iii) Re-measurement.
Short-term and other long-term employee benefits:
A liability is recognised for benefits accruing to employees in respect of wages and salaries in the
period the related service is rendered at the undiscounted amount of the benefits expected to be
paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted
amount of the benefits expected to be paid in exchange for the related service.
Leave availment / encashment benefit is provided as per Company’s scheme. Employees are
entitled to accumulate leaves subject to certain limit as per Company’s scheme.
Liabilities for compensated absence that are not expected to be settled wholly within 12 months
after the end of the period in which the employees rendered the related service, are measured
at the present value of expected future payment to be made in respect of service provided by
employees up to the end of reporting period using the projected unit credit method. The benefit
are discounted using the market yields at the end of reporting period. Remeasurement as a result
of experience adjustments and change in actuarial assumptions are recognised in the statement
of profit and loss.
Employee benefits in the form of long service awards is provided as per Company scheme. The
liability is determined through actuarial valuation using projected unit credit method.
2.A.7. Taxes on income
Income tax expense comprises current and deferred income tax. Income tax expense is recognized in
net profit in the Statement of Profit and Loss except to the extent that it relates to items recognized
directly in equity, in which case it is recognized in other comprehensive income. Current income tax
for current and prior periods is recognized at the amount expected to be paid to or recovered from
the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted
by the Balance Sheet date. Deferred income tax assets and liabilities are recognized for all temporary
differences arising between the tax bases of assets and liabilities and their carrying amounts in the
financial statements. Deferred tax assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit will be realized.
Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been
enacted or substantively enacted by the Balance Sheet date and are expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled.
The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as
income or expense in the period that includes the enactment or the substantive enactment date.
A deferred income tax asset is recognized to the extent that it is probable that future taxable profit
will be available against which the deductible temporary differences and tax losses can be utilized.
The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable
right to set off the recognized amounts and where it intends either to settle on a net basis, or to
realize the asset and settle the liability simultaneously.
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