2.1 Statement of compliance
These financial statements are separate financial
statements of the Company (also called standalone
financial statements). The Company has prepared its
standalone financial statements for the year ended
March 31, 2026 in accordance with Indian Accounting
Standards (Ind AS) notified under the Companies
(Indian Accounting Standards) Rules, 2015 (as amended)
together with the comparative period data as at and
for the year ended March 31, 2025 and presentation
requirements of Division II of Schedule III to the
Companies Act, 2013, (Ind AS compliant Schedule III), as
applicable to the standalone financial statements.
2.2 Basis of preparation and presentation
The standalone financial statements have been prepared
on the historical cost convention and on an accrual
basis, except for: (i) certain financial instruments that
are measured at fair values at the end of each reporting
period; (ii) Non-current assets classified as held for
sale which are measured at the lower of their carrying
amount and fair value less costs to sell; (iii) investment
in associates are accounted for at cost (iv) derivative
financial instruments and (v) defined benefit plans - plan
assets that are measured at fair values at the end of
each reporting period, as explained in the accounting
policies below:
Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.
The standalone financial statements are presented
in Indian Rupees (^) and all values are rounded to the
nearest Million (^ 000,000) upto one decimal, except
when otherwise indicated.
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 in these financial statements
is determined on such a basis, except for share-based
payment transactions that are within the scope of Ind AS
102, leasing transactions that are within the scope of Ind
AS 116, 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 purposes, fair value
measurements 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 its entirety,
which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities that
the entity can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices
included within Level 1, that are observable for the
asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset
or liability.
The Company has consistently applied the following
accounting policies to all periods presented in these
financial statements.
a. Current vs. Non-current
Based on the time between the acquisition of
assets for processing and their realisation in
cash and cash equivalents, the Company has
identified twelve months as its operating cycle for
determining current and non-current classification
of assets and liabilities in the balance sheet.
b. Business combinations
The Company determines that it has acquired a
business when the acquired set of activities and
assets include an input and a substantive process
that together significantly contribute to the
ability to create outputs. The acquired process is
considered substantive if it is critical to the ability
to continue producing outputs, and the inputs
acquired include an organised workforce with
the necessary skills, knowledge, or experience to
perform that process or it significantly contributes
to the ability to continue producing outputs and is
considered unique or scarce or cannot be replaced
without significant cost, effort, or delay in the
ability to continue producing outputs.
The Company uses the acquisition method of
accounting to account for business combinations
that occurred on or after April 01, 2015. The
acquisition date is generally the date on which
control is transferred to the acquirer. Judgement
is applied in determining the acquisition date and
determining whether control is transferred from
one party to another. Control exists when the
Company is exposed to, or has rights to, variable
returns from its involvement with the entity and
has the ability to affect those returns through
power over the entity. In assessing control,
potential voting rights are considered only if the
rights are substantive. The Company measures
goodwill as of the applicable acquisition date at the
fair value of the consideration transferred, including
the recognised amount of any non-controlling
interest in the acquiree and the fair value of the
acquirer's previously held equity interest in the
acquiree (if any), less the net recognised amount
of the identifiable assets acquired and liabilities
assumed. When the fair value of the net identifiable
assets acquired and liabilities assumed exceeds the
consideration transferred, a bargain purchase gain is
recognised immediately in the OCI and accumulated
in equity as Capital reserve where there exists clear
evidence of the underlying reasons for classifying
the business combination as a bargain purchase
else the gain is directly recognised in equity as
Capital reserve. Consideration transferred includes
the fair values of the assets transferred, liabilities
incurred by the Company to the previous owners
of the acquiree, and equity interests issued by the
Company. Consideration transferred also includes
the fair value of any contingent consideration.
Changes in the fair value of the contingent
consideration that qualify as measurement period
adjustments are adjusted retrospectively, with
corresponding adjustments against goodwill or
capital reserve, as the case maybe. The subsequent
accounting for changes in the fair value of the
contingent consideration that do not qualify as
measurement period adjustments depends on
how the contingent consideration is classified.
Contingent consideration that is classified as
equity is not remeasured at subsequent reporting
dates and its subsequent settlement is accounted
for within equity. Contingent consideration that
is classified as an asset or a liability is remeasured
at fair value at subsequent reporting dates with
the corresponding gain or loss being recognised
in the statement of profit and loss. Consideration
transferred does not include amounts related to
settlement of pre-existing relationships.
Acquisition-related costs are expensed in the
periods in which the costs are incurred and the
services are received, with the exception of the
costs of issuing debt or equity securities that are
recognised in accordance with Ind AS 32 and Ind
AS 109.
A contingent liability of the acquiree is assumed
in a business combination only if such a liability
represents a present obligation and arises from
a past event and its fair value can be measured
reliably. On an acquisition-by-acquisition basis, the
Company recognises any non-controlling interest
in the acquiree either at fair value or at the non¬
controlling interest's proportionate share of the
acquiree's identifiable net assets. Transaction
costs that the Company incurs in connection with
a business combination, such as finder's fees, legal
fees, due diligence fees and other professional and
consulting fees, are expensed as incurred.
If the business combination is achieved in stages,
any previously held equity interest is re-measured
at its acquisition date fair value and any resulting
gain or loss is recognised in the statement of profit
and loss, as appropriate.
If the initial accounting for a business combination
is incomplete by the end of the reporting period
in which the combination occurs, the Company
reports provisional amounts for the items for which
the accounting is incomplete. Those provisional
amounts are adjusted during the measurement
period (see above), or additional assets or liabilities
are recognised, to reflect new information obtained
about facts and circumstances that existed at the
acquisition date that, if known, would have affected
the amounts recognised at that date.
c. Foreign currency
Foreign currency transactions
On initial recognition, transactions in currencies
other than the Company's functional currency
(foreign currencies) are translated at exchange rates
on the date of the transactions. Monetary assets
and liabilities denominated in foreign currencies at
the reporting date are translated into the functional
currency at the exchange rate on that date.
Exchange differences arising on the settlement of
monetary items or on translating monetary items
at rates different from those at which they were
translated on initial recognition during the period or
in previous period are recognised in profit or loss in
the period in which they arise except for:
• exchange differences on foreign currency
borrowings relating to assets under
construction for future productive use, which
are included in the cost of those assets when
they are regarded as an adjustment to interest
costs on those foreign currency borrowings.
• exchange differences on transactions
entered into in order to hedge certain foreign
currency risks.
• exchange differences relating to the
translation of the results and the net assets
of the Company's foreign operations from
their functional currencies to the Company's
presentation currency (i.e. ^) are recognised
directly in the other comprehensive income
and accumulated in foreign currency translation
reserve. Exchange difference in the foreign
currency translation reserve are reclassified
to profit or loss account on the disposal of the
foreign operation.
Non-monetary items that are measured in
terms of historical cost in foreign currency are
measured using the exchange rates at the date of
initial transaction.
d. Segment reporting
Operating segments are reported in a manner
consistent with the internal reporting provided
to the chief operating decision maker. The chief
operating decision maker of the Company is
responsible for allocating resources and assessing
performance of the operating segments.
e. Property, plant and equipment
Items of property, plant and equipment are
stated in balance sheet at cost less accumulated
depreciation and accumulated impairment losses, if
any. Freehold land is not depreciated.
Assets in the course of construction for production,
supply or administrative purposes are carried
at cost, less any recognised impairment loss.
Cost includes purchase price, borrowing costs
if capitalisation criteria are met and directly
attributable cost of bringing the asset to its working
condition for the intended use. Subsequent
expenditures are capitalised only when they
increase the future economic benefits embodied
in the specific asset to which they relate. Such
assets are classified to the appropriate categories
of property, plant and equipment when completed
and ready for intended use. Depreciation of
these assets, on the same basis as other assets,
commences when the assets are ready for their
intended use. When parts of an item of property,
plant and equipment have different useful lives,
they are accounted for as separate items (major
components) of property, plant and equipment.
Depreciation is recognised on the cost of assets
(other than freehold land and Capital work-in¬
progress) less their residual values on straight¬
line method over their useful lives. Leasehold
improvements are depreciated over period of the
lease agreement or the useful life, whichever is
shorter. Depreciation methods, useful lives and
residual values are reviewed at the end of each
reporting period, with the effect of any changes in
estimate accounted for on a prospective basis.
The estimated useful lives are as follows:
Software for internal use, which is primarily
acquired from third-party vendors and which is an
integral part of a property, plant and equipment,
including consultancy charges for implementing
the software, is capitalised as part of the related
property, plant and equipment. Subsequent costs
associated with maintaining such software are
recognised as expense as incurred. The capitalised
costs are amortised over the lower of the estimated
useful life of the software and the remaining useful
life of the tangible fixed asset.
The Company, based on technical assessment
made by technical expert and management
estimate, depreciates certain items of building,
plant and equipment and furniture and fixtures
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.
f. Goodwill and Other Intangible assets
Goodwill
Goodwill represents the excess of consideration
transferred, together with the amount of non¬
controlling interest in the acquiree, over the fair
value of the Company's share of identifiable net
assets acquired. Goodwill is measured at cost less
accumulated impairment losses.
Other Intangible assets
Other Intangible assets that are acquired by the
Company and that have finite useful lives are
measured at cost less accumulated amortisation
and accumulated impairment losses, if any.
Subsequent expenditures are capitalised only
when they increase the future economic benefits
embodied in the specific asset to which they relate.
Research and development
Expenditure on research activities undertaken with
the prospect of gaining new scientific or technical
knowledge and understanding are recognised as
an expense when incurred. Development activities
involve a plan or design for the production of new
or substantially improved products and processes.
An internally-generated intangible asset arising
from development is recognised if and only if all of
the following have been demonstrated:
• development costs can be measured reliably;
• the product or process is technically and
commercially feasible;
• future economic benefits are probable; and
• the Company intends to and has sufficient
resources/ability to complete development and
to use or sell the asset.
Development expenditure is capitalised when the
criteria for recognising an asset are met, usually
when a regulatory filing has been made in a major
market and approval is considered highly probable.
The expenditure to be capitalised include the cost
of materials and other costs directly attributable to
preparing the asset for its intended use.
Payments to third parties that generally take the
form of up-front payments and milestones for
in-licensed products, compounds and intellectual
property are capitalised since the probability of
expected future economic benefits criterion is
always considered to be satisfied for separately
acquired intangible assets.
Acquired research and development intangible
assets which are under development, are
recognised as In-Process Research and
Development assets (“IPR&D”). IPR&D assets
are not amortised, but evaluated for potential
impairment on an annual basis or when there are
indications that the carrying value may not be
recoverable. Any impairment charge on such IPR&D
assets is recognised in the statement of profit and
loss. Intangible assets relating to products under
development, other intangible assets not available
for use and intangible assets having indefinite
useful life are tested for impairment annually, or
more frequently when there is an indication that
the assets may be impaired. All other intangible
assets are tested for impairment when there
are indications that the carrying value may not
be recoverable.
The consideration for acquisition of intangible asset
which is based on reaching specific milestone that
are dependent on the Company's future activity
is recognised only when the activity requiring the
payment is performed.
Subsequent expenditures are capitalised only
when they increase the future economic benefits
embodied in the specific asset to which they relate.
All other expenditures, including expenditures
on internally generated goodwill and brands, are
recognised in the statement of profit and loss
as incurred.
Amortisation is recognised on a straight-line basis
over the estimated useful lives of intangible assets.
Intangible assets that are not available for use are
amortised from the date they are available for use.
The estimated useful lives for Product related
intangibles and Other intangibles range from 3 to
14 years.
The estimated useful life and amortisation method
are reviewed at the end of each reporting period,
with the effect of any changes in estimate being
accounted for on a prospective basis.
De-recognition of intangible assets
Intangible assets are de-recognised either on their
disposal or where no future economic benefits
are expected from their use. Gain or loss arising
on such de-recognition is recognised in the
statement of profit and loss, and are measured as
the difference between the net disposal proceeds,
if any, and the carrying amount of respective
intangible assets as on the date of de-recognition.
g. Investments in the nature of equity in
subsidiaries and associates
The Company has elected to recognise its
investments in equity instruments in subsidiaries
and associates at cost in the separate financial
statements in accordance with the option available
in Ind AS 27, ‘Separate Financial Statements'.
Impairment of Investments in the nature of equity
in subsidiaries and associates The Company
reviews its carrying value of investments carried
at cost annually, or more frequently when there
is indication for impairment. If the recoverable
amount is less than its carrying amount, the
impairment loss is recorded in the Statement of
Profit and Loss.
When an impairment loss subsequently reverses,
the carrying amount of the Investment is increased
to the revised estimate of its recoverable amount,
so that the increased carrying amount does not
exceed the cost of the Investment. A reversal of an
impairment loss is recognised immediately in the
Statement of Profit and Loss
h. Impairment of non-financial assets other
than goodwill
The carrying amounts of the Company's non¬
financial assets are reviewed at each reporting date
to determine whether there is any indication of
impairment. If any such indication exists, then the
asset's recoverable amount is estimated in order to
determine the extent of the impairment loss, if any.
The recoverable amount of an asset or cash¬
generating unit (as defined below) is the higher of
its value in use and its fair value less costs to sell.
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 or the cash¬
generating unit for which the estimates of future
cash flows have not been adjusted. For the purpose
of impairment testing, assets are grouped together
into the smallest group of assets that generates
cash inflows from continuing use that are largely
independent of the cash inflows of other assets or
groups of assets (the “cash-generating unit”).
An impairment loss is recognised in the statement
of profit and loss if the estimated recoverable
amount of an asset or its cash generating unit is
lower than its carrying amount. Impairment losses
recognised in respect of cash-generating units are
allocated first to reduce the carrying amount of any
goodwill allocated to the units and then to reduce
the carrying amount of the other assets in the unit
on a pro-rata basis.
In respect of assets other than goodwill, impairment
losses recognised in prior periods are assessed at
each reporting date for any indications that the loss
has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the
estimates used to determine the recoverable
amount. An impairment loss is reversed only to the
extent that the asset's carrying amount does not
exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if
no impairment loss had been recognised.
i. Non-current assets held for sale
Non-current assets and disposal groups are
classified as held for sale if their carrying amount
will be recovered principally through a sale
transaction rather than through continuing use.
This condition is regarded as met only when the
asset (or disposal group) is available for immediate
sale in its present condition subject only to terms
that are usual and customary for sales of such asset
(or disposal group) and its sale is highly probable.
Management must be committed to the sale, which
should be expected to qualify for recognition as
a completed sale within one year from the date
of classification.
Non-current assets (and disposal groups) classified
as held for sale are measured at the lower of
their carrying amount and fair value less costs
to sell. Non-current assets held for sale are not
depreciated or amortised.
j. Financial instruments
A financial instrument is any contract that gives
rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
All financial assets except Trade Receivables
are recognised initially at fair value plus, in the
case of financial assets not recorded at fair value
through profit or loss, transaction costs that are
attributable to the acquisition of the financial
asset. Trade receivables that do not contain a
significant financing component are measured at
the transaction price determined under Ind AS 115.
Purchases or sales of financial assets that require
delivery of assets within a time frame established
by regulation or convention in the market place
(regular way trades) are recognised on the date
the Company commits to purchase or sell the
financial assets.
Subsequent measurement
For purposes of subsequent measurement, financial
assets are classified in four categories:
• Debt instruments at amortised cost
• Debt instruments at fair value through other
comprehensive income (FVTOCI)
• Debt instruments and equity instruments at fair
value through profit or loss (FVTPL)
• Equity instruments measured at fair value
through other comprehensive income (FVTOCI)
Debt instruments at amortised cost
A ‘debt instrument' is measured at the amortised
cost if both the following conditions are met:
a) The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and
b) Contractual terms of the asset give rise on
specified dates to cash flows that are solely
payments of principal and interest (SPPI) on
the principal amount outstanding.
After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method. Amortised cost
is calculated by taking into account any discount or
premium on acquisition and fees or costs that are
an integral part of the EIR. The EIR amortisation is
included in Other Income in the statement of profit
and loss. The losses arising from impairment are
recognised in the statement of profit and loss.
Debt instrument at FVTOCI
A ‘debt instrument' is measured as at FVTOCI if
both of the following criteria are met:
a) The objective of the business model is
achieved both by collecting contractual cash
flows and selling the financial assets, and
b) The contractual terms of the instrument give
rise on specified dates to cash flows that are
SPPI on the principal amount outstanding.
Debt instruments included within the FVTOCI
category are measured initially as well as at each
reporting date at fair value. Fair value movements
are recognised in the other comprehensive income
(OCI). However, the Company recognises interest
income, impairment losses and reversals and
foreign exchange gain or loss in the statement of
profit and loss. On de-recognition of the asset,
cumulative gain or loss previously recognised in
OCI is reclassified from the equity to profit or
loss. Interest earned whilst holding FVTOCI debt
instrument is reported as interest income using the
EIR method.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments.
Any debt instrument, which does not meet the
criteria for categorisation as at amortised cost or as
FVTOCI, is classified as at FVTPL.
In addition, the Company may elect to designate a
debt instrument, which otherwise meets amortised
cost or FVTOCI criteria, as at FVTPL. However,
such election is allowed only if doing so reduces
or eliminates a measurement or recognition
inconsistency (referred to as ‘accounting mismatch').
Debt instruments included within the FVTPL
category are measured at fair value with all the
changes recognised in the statement of profit
and loss.
Equity instruments
All equity instruments in scope of Ind AS 109 are
measured at fair value. Equity instruments which
are held for trading are classified as at FVTPL.
For all other equity instruments, the Company
may make an irrevocable election to present
subsequent changes in the fair value in OCI. The
Company makes such election on an instrument-
by-instrument basis. The classification is made on
initial recognition and is irrevocable.
If the Company decides to classify an equity
instrument as at FVTOCI, then all fair value
changes on the instrument, including foreign
exchange gain or loss and excluding dividends, are
recognised in the OCI. There is no recycling of the
amounts from OCI to profit or loss, even on sale of
investment. However, the Company may transfer
the cumulative gain or loss within equity.
Equity instruments included within the FVTPL
category are measured at fair value with all changes
recognised in the statement of profit and loss.
De-recognition
A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e. removed from
the Company's balance sheet) when:
• The contractual rights to receive cash flows
from the asset have expired, or
• The Company has transferred its rights to
receive contractual cash flows from the asset
or has assumed an obligation to pay the
received cash flows in full without material
delay to a third party under a ‘pass-through'
arrangement; and either (a) the Company
has transferred substantially all the risks and
rewards of the asset, or (b) the Company has
neither transferred nor retained substantially
all the risks and rewards of the asset, but has
transferred control of the asset.
When the Company has transferred its rights to
receive cash flows from an asset or has entered into
a pass-through arrangement, it evaluates if and to
what extent it has retained the risks and rewards
of ownership. When it has neither transferred nor
retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, the
Company continues to recognise the transferred
asset to the extent of the Company's continuing
involvement. In that case, the Company also
recognises an associated liability. The transferred
asset and the associated liability are measured on
a basis that reflects the rights and obligations that
the Company has retained.
On de-recognition of a financial asset in its entirety,
the difference between the asset's carrying amount
and the sum of the consideration received and
receivable and the cumulative gain or loss that had
been recognised in OCI and accumulated in equity
is recognised in profit or loss if such gain or loss
would have otherwise been recognised in profit or
loss on disposal of that financial asset.
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 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 any contractual right to receive
cash or another financial asset. 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.
As a practical expedient, the Company uses a
provision matrix to determine impairment loss
allowance on portfolio of its trade receivables. The
provision matrix is based on its historically observed
default rates over the expected life of the trade
receivables and is adjusted for forward-looking
estimates. At every reporting date, the historical
observed default rates are updated and changes in
the forward-looking estimates are analysed.
In respect of other financial assets (e.g.: debt
securities, deposits, bank balances etc.), the
Company generally invests in instruments with
high credit rating and consequently low credit risk.
In the unlikely event that the credit risk increases
significantly from inception of investment, lifetime
ECL is used for recognising impairment loss on
such assets.
For debt instruments at fair value through OCI, the
Company applies the low credit risk simplification.
At every reporting date, the Company evaluates
whether the debt instrument is considered to have
low credit risk using all reasonable and supportable
information that is available without undue cost
or effort. In making that evaluation, the Company
reassesses the internal credit rating of the
debt instrument.
However, in certain cases, the Company may also
consider a financial asset to be in default when
internal or external information indicates that the
Company is unlikely to receive the outstanding
contractual amounts in full before taking into
account any credit enhancements held by the
Company. A financial asset is written off when there
is no reasonable expectation of recovering the
contractual cash flows.
Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by a Company
are classified as either financial liabilities or as
equity in accordance with the substance of the
contractual arrangements and the definitions of a
financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences
a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments
issued by a Company are recognised at the
proceeds received, net of direct issue costs.
Repurchase of the Company's own equity
instruments is recognised and deducted directly
in equity. No gain or loss is recognised in the
statement of profit and loss on the purchase,
sale, issue or cancellation of the Company's own
equity instruments.
Initial recognition and measurement
All financial liabilities are recognised initially at
fair value and, in the case of loans and borrowings
and payables, net of directly attributable
transaction costs.
The Company's financial liabilities include trade
and other payables, loans and borrowings
including bank overdrafts and lease liabilities,
financial guarantee contracts and derivative
financial instruments.
Subsequent measurement
All financial liabilities are subsequently measured at
amortised cost using the effective interest method
or at FVTPL.
Financial liabilities at fair value through
profit or loss
Financial liabilities are classified as at FVTPL
when the financial liability is held for trading or
is designated upon initial recognition as at fair
value through profit or loss. Financial liabilities are
classified as held for trading if they are incurred
principally for the purpose of repurchasing in the
near term or on initial recognition it is part of a
portfolio of identified financial instruments that the
Company manages together and has a recent actual
pattern of short-term profit-taking. This category
also includes derivative financial instruments that
are not designated as hedging instruments in hedge
relationships as defined by Ind AS 109. Gains or
losses on liabilities held for trading are recognised
in the statement of profit and loss.
Financial liabilities designated upon initial
recognition at fair value through profit or loss are
designated as such at the initial date of recognition,
and only if the criteria in Ind AS 109 are satisfied.
For instruments not held-for-trading financial
liabilities designated as at FVTPL, fair value gains/
losses attributable to changes in own credit risk are
recognised in OCI, unless the recognition of the
effects of changes in the liability's credit risk in OCI
would create or enlarge an accounting mismatch in
profit or loss, in which case these effects of changes
in credit risk are recognised in profit or loss. These
gains/ loss are not subsequently transferred to
profit or loss. All other changes in fair value of such
liability are recognised in profit or loss.
Financial liabilities subsequently measured at
amortised cost
Financial liabilities that are not held-for-trading and
are not designated as at FVTPL are measured at
amortised cost in subsequent accounting periods.
The carrying amounts of financial liabilities that
are subsequently measured at amortised cost
are determined based on the effective interest
rate (EIR) method. Interest expense that is not
capitalised as part of costs of an asset is included
in the 'Finance costs' line item in the statement of
profit and loss.
After initial recognition, such financial liabilities are
subsequently measured at amortised cost using
the EIR method. Amortised cost is calculated by
taking into account any discount or premium on
acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as
finance costs in the statement of profit and loss.
De-recognition
A financial liability is derecognised when the
obligation under the liability is discharged or
cancelled or expires. When an existing financial
liability is replaced by another from the same lender
on substantially different terms, or the terms of
an existing liability are substantially modified,
such an exchange or modification is treated as
the de-recognition of the original liability and
the recognition of a new liability. The difference
between the carrying amount of the financial
liability derecognised and the consideration paid
and payable is recognised in the statement of profit
and loss.
Reclassification of financial assets
The Company determines classification of financial
assets and liabilities on initial recognition. After
initial recognition, no reclassification is made for
financial assets which are equity instruments
and financial liabilities. For financial assets which
are debt instruments, a reclassification is made
only if there is a change in the business model
for managing those assets. Changes to the
business model are expected to be infrequent.
The Company's senior management determines
change in the business model as a result of external
or internal changes which are significant to the
Company's operations. Such changes are evident
to external parties. A change in the business model
occurs when the Company either begins or ceases
to perform an activity that is significant to its
operations. If the Company reclassifies financial
assets, it applies the reclassification prospectively
from the reclassification date which is the first day
of the immediately next reporting period following
the change in business model. The Company does
not restate any previously recognised gains, losses
(including impairment gains or losses) or interest.
Derivative financial instruments and
hedge accounting
Initial recognition and subsequent measurement
The Company uses derivative financial instruments,
such as forward currency contracts, full currency
swap, principal only swap, options and interest
rate swaps to hedge its foreign currency risks and
interest rate risks respectively. Such derivative
financial instruments are initially recognised at fair
value on the date on which a derivative contract
is entered into and are subsequently re-measured
at fair value at the end of each reporting period.
Derivatives are carried as financial assets when the
fair value is positive and as financial liabilities when
the fair value is negative.
Any gains or losses arising from changes in the
fair value of derivatives are taken directly to profit
or loss, except for the effective portion of cash
flow hedges, which is recognised in OCI and later
reclassified to profit or loss when the hedge item
affects profit or loss or treated as basis adjustment
if a hedged forecast transaction subsequently
results in the recognition of a non-financial asset or
non-financial liability.
For the purpose of hedge accounting, hedges are
classified as:
• Fair value hedges when hedging the exposure
to changes in the fair value of a recognised
asset or liability or an unrecognised
firm commitment.
• Cash flow hedges when hedging the exposure
to variability in cash flows that is either
attributable to a particular risk associated with a
recognised asset or liability or a highly probable
forecast transaction or the foreign currency risk
in an unrecognised firm commitment
• Hedges of a net investment in a
foreign operation.
At the inception of a hedge relationship, the
Company formally designates and documents the
hedge relationship to which the Company wishes to
apply hedge accounting and the risk management
objective and strategy for undertaking the hedge.
The documentation includes the Company's risk
management objective and strategy for undertaking
hedge, the hedging/economic relationship, the
hedged item or transaction, the nature of the risk
being hedged, hedge ratio and how the entity will
assess the effectiveness of changes in the hedging
instrument's fair value in offsetting the exposure
to changes in the hedged item's fair value or cash
flows attributable to the hedged risk. Such hedges
are expected to be highly effective in achieving
offsetting changes in fair value or cash flows and
are assessed on an ongoing basis to determine that
they actually have been highly effective throughout
the financial reporting periods for which they
were designated.
Hedges that meet the strict criteria for hedge
accounting are accounted for, as described below:
(i) Fair value hedges
Changes in fair value of the designated portion
of derivatives that qualify as fair value hedges
are recognised in the statement of profit and
loss immediately, together with any changes
in the fair value of the hedged asset or liability
that are attributable to the hedged risk.
(ii) Cash flow hedges
The effective portion of changes in the fair
value of the hedging instrument is recognised
in OCI in the cash flow hedge reserve,
while any ineffective portion is recognised
immediately in profit or loss. The Company
uses forward currency contracts as hedges
of its exposure to foreign currency risk in
forecast transactions and firm commitments.
Amounts recognised as OCI are transferred
to profit or loss when the hedged transaction
affects profit or loss, such as when a forecast
sale occurs. When the hedged item is the
cost of a non-financial asset or non-financial
liability, the amounts recognised as OCI are
transferred to the initial carrying amount of
the non-financial asset or liability.
If the hedging instrument expires or is sold,
terminated or exercised or if its designation
as a hedge is revoked, or when the hedge no
longer meets the criteria for hedge accounting,
any cumulative gain or loss previously
recognised in OCI remains separately in
equity until the forecast transaction occurs
or the foreign currency firm commitment
is met. When a forecast transaction is
no longer expected to occur, the gain or
loss accumulated in equity is recognised
immediately in profit or loss.
k. Leases
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 the short-term lease
recognition exemption to its short-term leases (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 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.
Company as a lessor
Rental income from operating lease is generally
recognised on a straight-line basis over the term
of the relevant lease. Where the rentals are
structured solely to increase in line with expected
general inflation to compensate for the Company's
expected inflationary cost increases, such increases
are recognised in the year in which such benefits
accrue. 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.
l. Inventories
Inventories consisting of raw materials and packing
materials, work-in-progress, stock-in-trade, stores
and spares and finished goods are measured at
the lower of cost and net realisable value. The
cost of all categories of inventories is based on the
weighted average method. Cost of raw materials
and packing materials, stock-in-trade, stores and
spares includes cost of purchases and other costs
incurred in bringing the inventories to its present
location and condition. Cost of work-in-progress
and finished goods comprises direct material,
direct labour, amortisation and depreciation of
intangible / property, plant and equipment and an
appropriate proportion of other variable and fixed
overhead expenditure.
Net realisable value is the estimated selling price in
the ordinary course of business, less the estimated
costs of completion and costs necessary to make
the sale.
The factors that the Company considers in
determining the allowance for slow moving,
obsolete and other non-saleable inventory
include estimated shelf life, planned product
discontinuances, price changes, ageing of inventory
and introduction of competitive new products,
to the extent each of these factors impact the
Company's business and markets. The Company
considers all these factors and adjusts the inventory
provision to reflect its actual experience on a
periodic basis
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