2.2 Summary of material accounting policies

a) Revenue from contracts with customers

The Company has following streams of
revenue:

(i) Revenue from sale of goods

(ii) Revenue from Global Services
Business (GSB) - Network
integration projects and sale of
services (disclosed as part of
discontinued operations, pursuant
to scheme of arrangement for
demerger)

(iii) Revenue from sale of services

(iv) Revenue from software products/
licenses and implementation
activities

The Company accounts for a contract
when it has approval and commitment from
parties involved, the rights of the parties
are identified, payment terms are identified,
the contract has commercial substance and
collectability of consideration is probable.

The Company identifies distinct
performance obligations in each contract.
For most of the network integration
project contracts, the customer contracts
with the Company to provide a significant
service of integrating a complex set of
tasks and components into a single project
or capability. Hence, the entire contract
is accounted for as one performance
obligation.

However, the Company may promise
to provide distinct goods or services
within a contract, for example when
a contract covers multiple promises
(e.g., construction of network with its
maintenance and support), in which case
the Company separates the contract into
more than one performance obligation.

If a contract is separated into more than
one performance obligation, the Company
allocates the total transaction price to
each performance obligation on the basis
of the relative standalone selling price of
each distinct product or service promised
in the contract. Where standalone selling
price is not observable, the Company uses
the expected cost plus margin approach
to allocate the transaction price to each

integration project contracts to contain
liquidated damages on delay in completion/
performance, bonus on early completion,
or other provisions that can either increase
or decrease the transaction price. These
variable amounts generally are awarded
upon achievement of certain performance
metrics, program milestones or cost
targets and may be based upon customer
discretion.

The Company estimates variable
consideration using the most likely amount
to which it expects to be entitled. The
Company includes estimated amounts
in the transaction price to the extent it
is probable that a significant reversal of
cumulative revenue recognized will not
occur when the uncertainty associated
with the variable consideration is resolved.
The customer disputes or disagreement
on scope, quality of work and deductions
for delays are factored in the estimate of
variable consideration and updated as and
when new information arises. The estimates
of variable consideration and determination
of whether to include estimated amounts
in the transaction price are based largely
on an assessment of the anticipated
performance and all information (historical,
current and forecasted) that is reasonably
available.

Contracts are modified to account for
changes in contract specifications and
requirements. The Company considers
contract modifications to exist when
the modification either creates new or
changes the existing enforceable rights
and obligations. Most of the contract
modifications are for goods or services that
are not distinct from the existing contract
due to the significant integration service
provided in the context of the contract
and are accounted for as if they were part
of that existing contract. The effect of a
contract modification on the transaction
price and measure of progress for the
performance obligation to which it relates,
is recognized as an adjustment to revenue
(either as an increase in or a reduction of
revenue) on a cumulative catch-up basis.

When estimates of total costs to be
incurred exceed total estimates of revenue
to be earned on a performance obligation
related to a contract, a provision for the
entire loss on the performance obligation is
recognized in the period.

For fixed price contracts, the customer pays
the fixed amount based on the payment

schedule. If the services rendered by the
Company exceed the payment, a contract
asset is recognized. If the payment exceed
the services rendered, a contract liability is
recognised.

All the qualitative and quantitative
information related to significant changes
in contract asset and contract liability
balances such as impairment of contract
asset, changes in the timeframe for a
performance obligation to be satisfied
are disclosed by the Company at every
reporting period.

Financing components: The Company does
not expect to have any material contracts
where the period between the transfer
of the promised goods or services to the
customer and payment by the customer
exceeds one year except for few contracts.
As a consequence, apart from the these few
contracts, the Company does not adjust any
of the transaction prices for the time value
of money.

Revenue recognised at a point-in-time

For contracts where performance
obligation(s) are not satisfied over time,
revenue is recognized at a point in time
when control is transferred to the customer

- based on right to payment, alternative use
of goods, delivery terms, payment terms,
customer acceptance and other indicators
of control as mentioned above.

b) Property, plant and equipment

Freehold land and Capital work in progress
are carried at historical costs, net of
accumulated impairment losses, if any.

All other items of property, plant and
equipment are stated at historical cost,
net of accumulated depreciation and
accumulated impairment losses, if any.

Depreciation is calculated using the
straight-line method to allocate their
cost, net of their residual values, over
their estimated useful lives. The Company,
based on technical assessments made
by technical experts and management
estimates, depreciates the certain items
of tangible assets over estimated useful
lives which are different from the useful life
prescribed in Schedule II to the Companies
Act, 2013. 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.
Table below provide the details of the
useful lives which are different from useful
lives prescribed under Schedule II of the
Companies Act, 2013:

* Considered on the basis of management's estimation, supported by technical advice, of the useful lives
of the respective assets.

# Residual value considered upto 15% on the basis of management's estimation, supported by technical
advice.

The leasehold improvements and property,
plant and equipment acquired under leases
is depreciated over the asset's useful life or
over the shorter of the asset's useful life and
the lease term, unless the entity expects to
use the assets beyond the lease term.

The Company depreciates building using
straight line method over 30 to 60 years

from the date of original purchase.

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.

See note (d) under 2.3 for the other relevant
accounting policies.

(c) Leases

As a Lessee:

The Company leases various assets
which includes land, building & plant and
machinery. Rental contracts are typically
made for fixed periods of 2 to 15 years but
may have extension options as described
below. Lease terms are negotiated on an
individual basis and contain a wide range
of different terms and conditions. The lease
agreements do not impose any covenants,
but leased assets may not be used as
security for borrowing purposes.

Leases are recognised as a right-of-use
asset and a corresponding liability at the
date at which the leased asset is available
for use by the company. Each lease
payment is allocated between the principal
(liability) and finance cost. The finance cost
is charged to profit or loss over the lease
period so as to produce a constant periodic
rate of interest on the remaining balance of
the liability for each period. The right-of-
use asset is depreciated over the shorter
of the asset's useful life and the lease term
on a straight-line basis. If the Company is
reasonably certain to exercise a purchase
option, the right-of-use asset is depreciated
over the underlying asset's useful life.

Assets and liabilities arising from a lease are
initially measured on a present value basis.
Lease liabilities include the net present
value of the fixed payments (including in¬
substance fixed payments), less any lease
incentives receivable.

Payments associated with short-term
leases and leases of low-value assets are
recognised on a straight-line basis as an
expense in profit or loss. Short-term leases
are leases with a lease term of 12 months or
less.

Extension and termination options are
included in a number of property and
equipment leases across the company.
These terms are used to maximise
operational flexibility in terms of managing
contracts. The majority of extension and
termination options held are exercisable
only by the Company and not by the
respective lessor.

See note (e) under 2.3 for the other relevant
accounting policies.

(d) Inventories

Inventories are valued at the lower of cost

and net realisable value. Costs are assigned
to individual items of inventory on the basis
of weighted average basis. Management
estimates and writes down value of slow
moving inventory, considering the future
usage and marketability of the product.

See note (f) under 2.3 for the other relevant
accounting policies.

(e) Share-based payments

The fair value of options granted under
the Employee Option Plan is recognised
as an employee benefits expense with a
corresponding increase in equity. The total
amount to be expensed is determined by
reference to the fair value of the options
granted:

• Including any market performance
conditions (e.g., the entity's share
price)

• Excluding the impact of any service
and non-market performance vesting
conditions (e.g. profitability, sales
growth targets and remaining an
employee of the entity over a specified
time period), and

• Including the impact of any
non-vesting conditions (e.g. the
requirement for employees to save or
holdings shares for a specific period of
time).

The total expense is recognised over the
vesting period, which is the period over
which all of the specified vesting conditions
are to be satisfied. At the end of each
period, the entity revises its estimates of
the number of options that are expected
to vest based on the non-market vesting
and service conditions. It recognises the
impact of the revision to original estimates,
if any, in profit or loss, with a corresponding
adjustment to equity.

(f) Impairment of non-financial assets

Non-financial assets are tested for
impairment whenever events or changes
in circumstances indicate that the carrying
amount may not be recoverable. An
impairment loss is recognised for the
amount by which the asset's carrying
amount exceeds its recoverable amount.
The recoverable amount is the higher of an
asset's fair value less costs of disposal and
value in use. For the purposes of assessing
impairment, assets are grouped at the
lowest levels for which there are separately
identifiable cash inflows which are largely

independent of the cash inflows from other
assets or groups of assets (cash-generating
units). Non-financial assets that suffered
an impairment are reviewed for possible
reversal of the impairment at the end of
each reporting period.

(g) Investments and Other Financial assets

i) Classification & Recognition:

The Company classifies its financial
assets in the following measurement
categories:

• Those to be measured
subsequently at fair value (either
through other comprehensive
income, or through profit or loss)

• Those measured at amortised cost.

The classification depends on the
entity'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 profit or loss
or other comprehensive income. For
investments in debt instruments, this
will depend on the business model
in which the investment is held. For
investments in equity instruments, this
will depend on whether the Company
has made an irrevocable election at the
time of initial recognition to account
for the equity investment at fair value
through other comprehensive income.

The Company reclassifies debt
investments when and only when its
business model for managing those
assets changes.

ii) Measurement:

At initial recognition, the Company
measures a financial asset (excluding
trade receivables which do not contain
a significant financing component)
at its fair value plus, in the case of a
financial asset not at fair value through
profit or loss, transaction costs that are
directly attributable to the acquisition
of the financial asset. Transaction costs
of financial assets carried at fair value
through profit or loss are expensed in
profit or loss.

Equity instruments

The Company subsequently measures
all equity investments at fair value.
Where the company's management

has elected to present iair value gains
and losses on equity investments in
other comprehensive income, there is
no subsequent reclassification of fair
value gains and losses to profit or loss.
Dividends from such investments are
recognised in profit or loss as other
income when the company's right to
receive payments is established.

Changes in the fair value of financial
assets at fair value through profit or
loss are recognised in other income/
(expenses) in the statement of profit
and loss. Impairment losses (and
reversal of impairment losses) on equity
investments measured at FVOCI are not
reported separately from other changes
in fair value.

Equity investment in subsidiaries are
carried at historical cost as per the
accounting policy choice given by Ind
AS 27. Investments in subsidiaries are
tested for impairment in accordance
with Ind AS 36 Impairment of Assets.
The carrying amount of the investment
is tested for impairment by comparing
its recoverable amount with its
carrying amount, any impairment
loss recognised reduces the carrying
amount of the investment.

iii) Impairment of financial assets:

In accordance with Ind AS 109, the
Company applies expected credit loss
(ECL) model for measurement and
recognition of impairment loss on the
following financial assets and credit risk
exposure:

• Financial assets that are debt
instruments, and are measured
at amortised cost e.g., loans,
debt securities, deposits, trade
receivables and bank balance;

• Trade receivables or any
contractual right to receive cash or
another financial asset that result
from transactions that are within
the scope of Ind AS 115.

The Company follows 'simplified
approach' for recognition of impairment
loss allowance on trade receivables or
contract revenue receivables.

The application of simplified approach
does not require the Company to
track changes in credit risk. Rather, it
recognises impairment loss allowance
based on lifetime ECLs at each

reporting date, right from its initial
recognition.

For recognition of impairment loss on
other financial assets and risk exposure,
the Company determines that whether
there has been a significant increase in
the credit risk since initial recognition.

If credit risk has not increased
significantly, 12-month ECL is used to
provide for impairment loss. However,
if credit risk has increased significantly,
lifetime ECL is used. If, in a subsequent
period, credit quality of the instrument
improves such that there is no longer
a significant increase in credit risk
since initial recognition, then the entity
reverts to recognising impairment loss
allowance based on 12-month ECL.

Lifetime ECL are the expected credit
losses resulting from all possible
default events over the expected life
of a financial instrument. The 12-month
ECL is a portion of the lifetime ECL
which results from default events that
are possible within 12 months after the
reporting date.

ECL is the difference between all
contractual cash flows that are due to
the Company in accordance with the
contract and all the cash flows that the
entity expects to receive (i.e., all cash
shortfalls), discounted at the original
EIR. When estimating the cash flows, an
entity is required to consider:

• All contractual terms of the
financial instrument (including
prepayment, extension, call and
similar options) over the expected
life of the financial instrument.
However, in rare cases when the
expected life of the financial
instrument cannot be estimated
reliably, then the entity is required
to use the remaining contractual
term of the financial instrument;

• Cash flows from the sale of
collateral held or other credit
enhancements that are integral to
the contractual terms.

ECL impairment loss allowance (or
reversal) recognized during the period
is recognized as income/ expense in
the statement of profit and loss. This
amount is reflected under the "net
impairment losses on financial and
contract assets” in the statement of
profit and loss. The balance sheet

presentation for various financial
instruments is described below:

• Financial assets measured as at

amortised cost, contractual revenue
receivables: ECL is presented as an
allowance, i.e., as an integral part of
the measurement of those assets
in the balance sheet. The allowance
reduces the net carrying amount.
Until the asset meets write-off
criteria, the Company does not
reduce impairment allowance from
the gross carrying amount.

For assessing increase in credit risk
and impairment loss, the Company
combines financial instruments
on the basis of shared credit risk
characteristics with the objective of
facilitating an analysis that is designed
to enable significant increases in credit
risk to be identified on a timely basis.

The Company does not have any
purchased or originated credit-impaired
(POCI) financial assets, i.e., financial
assets which are credit impaired on
purchase/ origination.

See note (i) under 2.3 for the other
relevant accounting policies.

(h) Derivatives and hedging activities

Derivatives are only used for economic
hedging purposes and not as speculative
investments. However, where derivatives
do not meet the hedge accounting criteria,
they are classified as 'held for trading' for
accounting purposes and are accounted
for at FVPL. They are presented as current
assets or liabilities to the extent they are
expected to be settled within 12 months
after the end of the reporting period.

Derivatives are initially recognised 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.

The Company designates their derivatives
as hedges of foreign exchange risk
associated with the cash flows of assets
and liabilities and highly probable forecast
transactions and variable interest rate risk
associated with borrowings (cash flow
hedges). 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 recognised
in cash flow hedging reserve within equity.
The gain or loss relating to the ineffective
portion is recognised immediately in profit
or loss, within other gains/(losses).

When forward contracts are used to
hedge forecast transactions, the Company
designate the full change in fair value
of the forward contract as the hedging
instrument. The gains and losses relating
to the effective portion of the change in
fair value of the entire forward contract are
recognised in the cash flow hedging reserve
within equity.

Amounts accumulated in equity are
reclassified to profit or loss in the periods
when the hedged item affects profit or loss
(for example, when the forecast sale that is
hedged takes place).

When the hedged forecast transaction
results in the recognition of a non-financial
asset (for example inventory), the amounts
accumulated in equity are transferred to
profit or loss as follows:

• With respect to gain or loss relating
to the effective portion of the forward
contracts, the deferred hedging gains
and losses are included within the
initial cost of the asset. The deferred
amounts are ultimately recognised
in profit or loss as the hedged item
affects profit or loss (for example,
through cost of sales).

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 profit or loss within other
gains/(losses).

If the hedge ratio for risk management
purposes is no longer optimal but the risk
management objective remains unchanged
and the hedge continues to qualify for
hedge accounting, the hedge relationship
will be rebalanced by adjusting either the
volume of the hedging instrument or the
volume of the hedged item so that the
hedge ratio aligns with the ratio used for
risk management purposes. Any hedge
ineffectiveness is calculated and accounted
for in profit or loss at the time of the hedge
relationship rebalancing.

See note (l) under 2.3 for the other relevant
accounting policies.

(i) Presentation of EBITDA

The Company presents Earnings before
interest, tax, depreciation and amortisation
('EBITDA') in the statement of profit or loss;
this is not specifically required by Ind AS
1. The term EBITDA is not defined in Ind
AS. Ind AS compliant Schedule III allows
companies to present line items, sub-line
items and sub-totals to be presented as
an addition or substitution on the face
of the financial statements when such
presentation is relevant to an understanding
of the company's financial position or
performance.

Accordingly, the Company has elected to
present EBITDA as a separate line item on
the face of the statement of profit and loss.
The Company measures EBITDA based on
profit/ (loss) from continuing operations.

In its measurement, the Company does
not include depreciation and amortization
expense, finance costs and tax expense.

(j) Income Taxes
Current income tax

The income tax expense or credit for the
period is the taxpayable on the current
period's taxable income based on the
applicable income tax rate adjusted by
changes in deferred tax assets and liabilities

attributable to temporary differences.

The current income tax charge is calculated
on the basis of the tax laws enacted or
substantively enacted at the end of the
reporting period. Management periodically
evaluates positions taken in tax returns with
respect to situations in which applicable
tax regulation is subject to interpretation. It
establishes provisions where appropriate on
the basis of amounts expected to be paid
to the tax authorities.

Deferred tax

Deferred tax is provided in full, using the
liability method, on temporary differences
arising between the tax bases of assets and
liabilities and their carrying amounts in the
financial statements at the reporting date.

Deferred tax liabilities are recognised for all
taxable temporary differences, except:

• When the deferred tax liability arises
from the initial recognition of goodwill
or an asset or liability in a transaction
that is not a business combination and,
at the time of the transaction, affects
neither the accounting profit nor
taxable profit or loss;

• In respect of taxable temporary
differences between the carrying
amount and tax bases of investments in
subsidiaries, branches, associates and
interests in joint ventures, when the
timing of the reversal of the temporary
differences can be controlled by the
Company and it is probable that the
temporary differences will not reverse
in the foreseeable future.

Deferred tax assets are recognised for
all deductible temporary differences and
unused tax losses only if it is probable that
future taxable amounts will be available
to utilise those temporary differences and
losses.

The carrying amount of deferred tax
assets is reviewed at each reporting date
and reduced to the extent that it is no
longer probable that sufficient taxable
profit will be available to allow all or part
of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are
re-assessed at each reporting date and
are recognised to the extent that it has
become probable that future taxable
profits will allow the deferred tax asset to
be recovered.

Deferred income tax is determined using
tax rates (and tax laws) that have been

enacted or substantively enacted at the
reporting date and are expected to apply
in the year when the asset is realised or the
liability is settled.

Current and Deferred tax is recognised
in profit or loss, except to the extent that
it relates to items recognised in other
comprehensive income or directly in equity.
In this case, the tax is also recognised in
other comprehensive income or directly in
equity, respectively.

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 income taxes levied
by same taxation authorities on either same
taxable entity or different taxable entities
which intend either to settle the current tax
assets and tax liabilities on a net basis or
to realise the asset and settle the liability
simultaneously.

(k) Discontinued operations

A discontinued operation is a component
of the entity that has been disposed of
or is classified as held for sale and that
represents a separate major line of business
or geographical area of operations, is
part of a single co-ordinated plan to
dispose of such a line of business or area
of operations, or is a subsidiary acquired
exclusively with a view to resale. The results
of discontinued operations are presented
separately in the statement of profit and
loss.

2.3 Summary of other accounting policies

l) Other Income

1. Interest income

Interest income is accrued on a time
basis, by reference to the principal
outstanding and at the effective
interest rate applicable. Interest
income is included in finance income
in the statement of profit and loss.

2. Dividends

Dividends are recognised in profit or
loss only when the right to receive
payment is established, it is probable
that the economic benefits associated
with the dividend will flow to the
Company, and the amount of
the dividend can be measured
reliably.

m) Government Grant

Grants from the government are recognised
at their fair value where there is a
reasonable assurance that the grant will
be received, and the Company will comply
with all attached conditions.

Government grants relating to income is
revenue in nature and are deferred and
recognised in the profit or loss over the
period necessary to match them with the
costs that they are intended to compensate
and presented within other operating
revenue.

Government grants relating to the purchase
of property, plant and equipment are capital
in nature and are recognised in books by
deducting the grant from the carrying
amount of the asset.

n) Property, plant and equipment

Historical cost includes non-refundable
tax and duties, freight and other incidental
expenditure that is directly attributable to
the acquisition of the items.

Subsequent costs are included in the
asset's carrying amount or recognised as a
separate asset, as appropriate, only when it
is probable that future economic benefits
associated with the item will flow to the
Company and the cost of the item can be
measured reliably. The carrying amount of
any component accounted for as a separate
asset is derecognised when replaced. All
other repairs and maintenance are charged
to profit or loss during the reporting period
in which they are incurred.

When significant parts of the property,
plant and equipment are required to
be replaced at intervals, the Company
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. All
other repair and maintenance costs are
recognised in statement of profit or loss as
incurred. No decommissioning liabilities are
expected or be incurred on the assets of
plant and equipment.

Expenditure directly relating to construction
activity is capitalised. Indirect expenditure
incurred during construction period is
capitalised as part of the construction
costs to the extent the expenditure can be
attributable to construction activity or is

incidental there to. Income earned during
the construction period is deducted from
the total of the indirect expenditure.

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. Any gain or loss
arising on derecognition of the asset
(calculated as the difference between the
net disposal proceeds and the carrying
amount of the asset) is included in the
statement of profit or loss when the asset is
derecognised.

Gains and losses on disposals are
determined by comparing proceeds with
carrying amount. These are included in
profit or loss within other gains/(losses).

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

o) Leases

As a Lessee:

Lease payments to be made under
reasonably certain extension options are
also included in the measurement of the
liability. The lease payments are discounted
using the interest rate implicit in the lease.

If that rate cannot be readily determined,
the lessee's incremental borrowing rate is
used, being the rate that the lessee would
have to pay to borrow the funds necessary
to obtain an asset of similar value in a
similar economic environment with similar
terms, security and conditions.

Right-of-use assets are measured at cost
comprising the following:

• the amount of the initial measurement
of lease liability

• any lease payments made at or before
the commencement date less any lease
incentives received

• any initial direct costs, and restoration
costs.

As a Lessor:

Lease income from operating leases where
the Company is a lessor is recognised in
income on a straight line basis over the
lease term. Initial direct costs incurred in
obtaining an operating lease are added to
the carrying amount of the underlying asset
and recognised as expense over the lease

term on the same basis as lease income.

The respective leased assets are included in
the balance sheet based on their nature.

p) Inventories

Cost of raw materials and traded goods
comprises cost of purchases. Cost of work-
in progress and finished goods comprises
direct materials, direct labour and an
appropriate proportion of variable and
fixed overhead expenditure, the latter being
allocated on the basis of normal operating
capacity. Cost of inventories also include
all other costs incurred in bringing the
inventories to their present location and
condition. Cost includes the reclassification
from equity of any gains or losses on
qualifying cash flow hedges relating to
purchases of raw material but excludes
borrowing costs. Costs of purchased
inventory are determined after deducting
rebates and discounts. Net realisable value
is the estimated selling price in the ordinary
course of business less the estimated costs
of completion and the estimated costs
necessary to make the sale.