2.1 Basis of preparation of financial statements

These financial statements comply in all material aspects
with Indian Accounting Standards (Ind AS) notified
under section 133 of the Companies Act, 2013 (the 'Act')
[Companies (Indian Accounting Standards) Rules, 2015] and
other relevant provisions of the Act.

These financial statements have been prepared on the
historical cost basis, except for certain financial assets and
liabilities (including derivative instruments) and defined
benefit plan assets which 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. Fair value is the price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the
measurement date.

The financial statements are presented in Indian Rupees
("INR") and all values are rounded to the nearest Crores,
except when otherwise indicated.

2.2 Summary of material accounting policy information

This note provides a list of the material accounting policies
adopted in the preparation of these financial statements.
These policies have been consistently applied to all the
years presented, unless otherwise stated.

a. Revenue

Revenue is recognised upon transfer of control of
promised products or services to the customer at
the amount of transaction price i.e. an amount that
reflects the consideration, to which an entity expects
to be entitled in exchange for transferring goods or
services to customers, excluding amounts collected
on behalf of third parties net of any taxes /duties.
Revenue is recognised as and when each distinct
performance obligation is satisfied.

Revenue from sale of goods and services is recognised
over time when the customer simultaneously receives
and consumes the benefits of the services provided
by the Company. Such revenue is recognised on a
straight-line basis over the period of the contract
where this appropriately reflects the pattern of
transfer of services to the customer.

Service revenues mainly pertain to usage, rentals
and activation charges for voice, data and manged
services. It also includes revenue from interconnection
charges for usage of the Company's network by
other operators for voice. The Company recognises
revenue from these services as they are provided.
Usage charges are recognised based on actual usage.
Activation charges are recognised over the estimated
customer relationship period or subscription pack
validity period, whichever is lower.

Revenues in excess of invoicing are classified as
unbilled revenue because the company has not yet
issued an invoice; however, the balance has been
included under trade receivable(as opposed to
contract assets) because it has an unconditional
right to consideration whereas invoicing in excess of
revenue are classified as Deferred revenue (unearned
revenue) which is disclosed under current and non¬
current liabilities.

Service revenue from activation and installation
for customers, and associated acquisition costs are
amortised over the average customer life since the
date of activation of service.

Deferred contract costs are incremental costs of
obtaining a contract which are recognised as contract
assets and amortised over average customer life.
However, such incremental costs are recognised as
expense if the amortisation period of the asset that
the entity would have otherwise recognised is one
year or less.

For accounting policy of interconnect revenues, refer
note 2.2(b).

b. Interconnect revenues and costs (Access charges)

The Telecom Regulatory Authority of India (TRAI)
issued Interconnection Usage Charges Regulation
2003 ('IUC regime') effective May 1, 2003 and
subsequently amended the same from time to time.
Under the IUC regime, with the objective of sharing
of call/Short Message Services ('SMS') revenues across
different operators involved in origination, transit
and termination of every call/SMS, the Company
pays interconnection charges (prescribed as rate per
minute of call time and per SMS) for outgoing (Toll
Free, NLD, ILD) calls and SMS originating in its network
to other operators.

Accordingly, interconnect revenues are recognised as
those on calls originating in another telecom operator
network and terminating in the Company's network.
Interconnect cost is recognised as charges incurred
on termination of calls/SMS originating from the
Company's network and terminating on the network
of other telecom operators. The interconnect revenue
and costs are recognised in the financial statement
on a gross basis and included in service revenue
and Interconnection and other access costs in the
statement of profit and loss, respectively.

c. Property, Plant and Equipment ('PPE')

Property, plant and equipment and capital work in
progress is stated at cost of acquisition or construction,
net of accumulated depreciation and accumulated
impairment losses, if any. Such cost includes purchase
price and directly attributable cost of bringing the
asset to its working condition for the intended use.
When significant parts of plant and equipment are
required to be replaced, the Company depreciates
them separately based on their specific useful lives.
The carrying amount of any component accounted
for as a separate asset is derecognised when replaced.

Subsequent costs are included in the assets 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 can be measured reliably.
All other repair and maintenance costs are recognised
in the statement of profit and loss account as incurred.
The present value of the expected cost for the
decommissioning of an asset after its use is included
in the cost of the respective asset if the recognition
criteria for a provision are met.

Gains and losses arising from retirement or disposal
of property, plant and equipment are determined as
the difference between the net disposal proceeds and
the carrying amount of the asset and are recognised in
the statement of profit and loss account on the date of
retirement or disposal. 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. Assets are depreciated
to the residual values on a straight-line basis over the
estimated useful lives. The assets' useful lives are
reviewed at each financial year end or whenever there
are indicators for review, and adjusted prospectively
so as to ensure that the method and period of
depreciation are consistent with the expected pattern
of economic benefits from these assets. The effect
of any change in the estimated useful lives, residual
values and / or depreciation method are accounted
prospectively, and accordingly the depreciation is
calculated over the PPE's remaining revised useful life.

Freehold land is not depreciated and is carried at
historical cost as it has unlimited useful life.

The useful lives have been determined based on
technical evaluation done by the management's
expert and based on past experience which are in
variance with the lives specified by Schedule II to the
Companies Act, 2013, in order to reflect the actual
usage of the assets. Estimated useful lives of the assets
are as follows:

d. Impairment of non-financial assets

Non-financial assets which are subject to depreciation
or amortisation are reviewed for impairment,
whenever events or changes in circumstances
indicate that the carrying amount of such assets may
not be recoverable. If any such indication exists, the
recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any).
When it is not possible to estimate the recoverable
amount of an individual asset, the Company estimates
the recoverable amount of the cash-generating unit to
which the asset belongs.

Recoverable amount is the higher of fair value less
costs of disposal and value in use. In assessing value
in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate
that reflects current market assessments of the time
value of money and the risks specific to the asset. In
determining fair value less costs of disposal, recent
market transactions are taken into account. If the
recoverable amount of an asset is estimated to be
less than its carrying amount, an impairment loss is
recognised by reducing the carrying amount of the
asset to its recoverable amount.

When an impairment loss subsequently reverses,
the carrying amount of the asset is increased to the
revised estimate of its recoverable amount, but so that
the increased carrying amount does not exceed the
carrying amount that would have been determined
had no impairment loss been recognised for the asset
(or cash-generating unit) in prior years. A reversal of
an impairment loss is recognised immediately in
statement of profit or loss.

e. Leases

The Company, at the inception of a contract,
assesses the contract as, or containing, a lease if the
contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys
the right to control the use of an identified asset, the
Company assesses whether the contract involves the
use of an identified asset, the Company has the right to
obtain substantially all of the economic benefits from
use of the asset throughout the period of use; and the
Company has the right to direct the use of the asset
(Refer note 4).

Company as a Lessee

The Company evaluates if an arrangement qualifies
to be a lease as per the requirements of Ind AS 116.
Identification of a lease requires significant judgment.

The Company uses significant judgment in assessing
the lease term (including anticipated renewals) and
the applicable discount rate.

The Company determines the lease term as the non¬
cancellable period of a lease, together with both
periods covered by an option to extend the lease if
the Company is reasonably certain to exercise that
option; and periods covered by an option to terminate
the lease if the Company is reasonably certain not
to exercise that option. In assessing whether the
Company is reasonably certain to exercise an option
to extend a lease, or not to exercise an option to
terminate a lease, it considers all relevant facts and
circumstances that create an economic incentive for
the Company to exercise the option to extend the
lease, or not to exercise the option to terminate the
lease. The Company revises the lease term if there is a
change in the non-cancellable period of a lease.

i) Right-of-use assets ('ROU')

The Company recognises a right-of-use asset and
a lease liability at the lease commencement date
except for short term leases which are less than
12 months and low value leases.

The right-of-use asset is initially measured at cost
comprises the following -

a) the initial amount of the lease liability

b) any initial direct costs incurred less any
lease incentives received

c) restoration cost

The right-of-use assets is subsequently measured
at cost less any accumulated depreciation,
accumulated impairment losses, if any and
adjusted for any remeasurement of the lease
liability. The right-of-use assets is depreciated
using the straight-line method from the
commencement date over the shorter of lease
term or useful life of right-of-use asset. Right of-
use assets are tested for impairment whenever
there is any indication that their carrying
amounts may not be recoverable. Impairment
loss, if any, is recognised in the statement of
profit and loss.

Indefeasible Right to Use ('IRU') taken for optical
fiber and ducts, by the Company are capitalised
as RoU at the amounts paid for acquiring the
right and are amortised on straight line basis,
over the period of lease term.

ii) Lease liabilities

Lease liabilities include the net present value of
the following lease payment:

a) Fixed payments, including in-substance
fixed payments;

b) Variable lease payments that depend on an
index or a rate, initially measured using the
index or rate as at the commencement date.

c) Using the practical expedient maintenance
charges are also included in the lease
payments as it is not practical to separate
maintenance cost from the lease rent.
(In any agreement, where rent and
maintenance are separately mentioned
or identifiable, then such maintenance
charges are not considered as a part of
lease payments).

d) The exercise price of a purchase option
if the company is reasonably certain to
exercise that option, and

e) Payment of penalties for terminating the
lease, if the company is reasonably certain
to exercise that option.

The lease liability is initially measured at the
present value of the lease payments that are
not paid at the commencement date, the lease
payment are discounted using the interest rate
implicit in the lease. If the rate cannot be readily
determined, which is generally the case for
leases in the company, the lessee's incremental
borrowing rate is used, being the rate that the
initially lessees would have to pay to borrow fund
necessary to obtain an asset on similar value
to the right-of-use asset in a similar economic
environment with similar terms, security
and condition.

Generally, the Company uses its incremental
borrowing rate as the discount rate [Refer note

2.3 (vi)].

Lease payments also include an extension,
purchase and termination option payments, if
the Company is reasonably certain to exercise
such options.

In the Balance Sheet, the ROU and lease liabilities
are presented separately. In the statement of
profit and loss, interest expense on lease liabilities
are presented separately from the depreciation

charge for the ROU. Interest expense on the lease
liability is a component of finance costs, which
are presented separately in the statement of
profit or loss. In the statement of cash flows,
cash payments for the principal portion of lease
payments and the interest portion of lease
liability are presented as financing activities,
and short term lease payments and payments
for leases of low-value assets and variable lease
payments not included in the measurement of
the lease liability, if any, as operating activities.

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

The Company recognises the amount of
the re-measurement of lease liability due to
modification as an adjustment to the right-
of-use asset and statement of profit and loss
depending upon the nature of modification.
Where the carrying amount of the right-of-use
asset is reduced to zero and there is a further
reduction in the measurement of the lease
liability, the Company recognises any remaining
amount of the re-measurement in statement of
profit and loss.

Under IND AS 116, lease term is defined as non¬
cancellable period together with any renewal
option or termination option with lessee if it
is reasonably certain to exercise the option.
Both these options with the Company are only
considered for the purpose of determination
of lease term and the options with lessor is
ignored. Most of the lease contracts have an
option of extension and termination on mutual
concession. The company reassesses whether it
is reasonably certain to exercise the options if
there is a significant event or significant change

in circumstances within its control. Generally,
the company assesses at lease commencement
whether it is reasonably certain to exercise the
options. The Company assesses the probability
of options basis the review of the network design
and the technology and business plans.

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

The Company applies the 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) and leases of low-
value assets. Lease payments on short-term
leases and low value assets are recognised on a
straight-line basis as an expense in statement of
profit and loss account over the lease term.

Company 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.

In IRU granted for dark fiber, duct and embedded
electronics are treated as finance lease, where
the IRU term substantially covers the estimated
economic useful life of the asset and the routes
are explicitly identified in the agreement. The
cases where the IRU term does not significantly
represent the estimated useful life of the
asset, the IRU is treated as operating lease. The
Company enters into 'Indefeasible right to
use'('IRU') arrangements wherein the right to use
the assets is given over the substantial part of the
asset life. However, as the title to the assets and
the significant risks associated with the operation
and maintenance of these assets remains with
the Company, such arrangements are recognised
as operating lease. The contracted price is
recognised as revenue during the tenure of the
agreement. Unearned IRU revenue received in
advance is presented as deferred revenue within
liabilities in the Balance Sheet.

f. Employee benefits

(i) Post Employment benefits

The Company has schemes of retirement benefits
for provident fund and gratuity.

1) Provident fund with respect to employees
covered with the Government administered
fund is a defined contribution scheme.
The contributions to the government
administered fund are charged to the
statement of profit and loss for the year
when the contributions are due for the year
as and when employee renders services.

2) Gratuity liability as per the Code on Social
Security, 2020, is defined benefit plan and
is provided for on the basis of an actuarial
valuation made at the end of each year as
per the Projected Unit Credit Method (Refer
note 36).

Re-measurements, comprising of actuarial
gains and losses and the return on plan
assets (excluding amounts included in net
interest on the net defined benefit liability),
are recognised immediately in the balance
sheet with a corresponding charge or credit
to other comprehensive income in the period
in which they occur. Remeasurements are not
reclassified to statement of profit or loss in
subsequent periods.

Net interest is calculated by applying the
discount rate to the net defined benefit liability
or asset. The Company recognises the following
changes in the net defined benefit obligation as
an expense in the statement of profit and loss:

• Service costs comprising current service
costs; and

• Net interest expense or income

Actuarial gains/losses are immediately taken to
the statement of Other Comprehensive Income
and are not deferred.

(ii) Short-term and other long-term employee
benefits

(a) Short-term obligations

Liabilities for wages, salaries and bonus,
including non-monetary benefits that are

expected to be settled wholly within 12
months after the end of the year in which
the employees render the related service
are recognised in respect of employees'
services up to the end of the year and are
measured at the amounts expected to be
paid when the liabilities are settled. The
liabilities are presented as current employee
benefit obligations in the balance sheet.

(b) Other long-term employee benefit
obligations

The company has liabilities for earned
leaves that are not expected to be settled
wholly within 12 months after the end of
the year in which the employees render
the related service. These obligations are
therefore measured as the present value of
expected future payments to be made in
respect of services provided by employees
up to the end of the year using the projected
unit credit method. The benefits are
discounted using the appropriate market
yields at the end of the year that have terms
approximating to the terms of the related
obligation. Remeasurements as a result of
experience adjustments and changes in
actuarial assumptions are recognised in
profit or loss.

g. Fair value measurement

The Company measures financial instruments such
as derivatives and certain investments, at fair value at
each balance sheet date.

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

• In the principal market for the asset or liabilities or

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

The principal or the most advantageous market must
be accessible by the Company.

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

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

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows,
based on the lowest level input that is significant to
the fair value measurement as a whole:

• Level 1 — Quoted (unadjusted) market prices in
active markets for identical assets or liabilities

• Level 2 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is directly or indirectly observable

• Level 3 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is unobservable

For assets and liabilities that are recognised in the
balance sheet on a recurring basis, the Company
determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to
the fair value measurement as a whole) at the end of
each reporting period.

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

h. 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.

i) Financial assets

Initial recognition and measurement

All financial assets (excluding trade receivable
which do not contain significant financing
components) 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. Transaction costs of financial

assets carried at fair value through profit and loss
are expensed in the statement of profit or loss.

Subsequent measurement

For purposes of subsequent measurement
financial assets are classified in two
broad categories:

• Financial assets at fair value through profit or loss/
Other Comprehensive Income(OCI)

• Financial assets at amortised cost

Where assets are measured at fair value, gains and
losses are either recognised in the statement of
profit and loss (i.e. fair value through profit or loss), or
recognised in other comprehensive income (i.e. fair
value through other comprehensive income).

A financial asset that meets the following two
conditions is measured at amortised cost (net of
any write down for impairment) unless the asset is
designated at fair value through profit or loss under
the fair value option.

Business model test

The objective of the Company's business model is to
hold the financial asset to collect the contractual cash
flows (rather than to sell the instrument prior to its
contractual maturity to realise its fair value changes).

Cash flow characteristics test

The contractual terms of the financial asset give
rise on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding. Even if an instrument meets the
two requirements to be measured at amortised cost
or fair value through other comprehensive income,
a financial asset is measured at fair value through
profit or loss if doing so eliminates or significantly
reduces a measurement or recognition inconsistency
(sometimes referred to as an 'accounting mismatch')
that would otherwise arise from measuring assets or
liabilities or recognising the gains and losses on them
on different bases.

All other financial asset is measured at fair value
through profit or loss.

De-recognition

A financial asset (or, where applicable, a part of a
financial asset or part of a Company of similar financial
assets) is primarily derecognised (i.e. removed from
the Company's statement of financial position) when:

• The rights to receive cash flows from the asset have
expired, or

• The Company has transferred its rights to receive
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.

Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset
and the maximum amount of consideration that the
Company could be required to repay.

Impairment of financial assets

The Company assesses impairment based on expected
credit losses (ECL) model to the following:

• Financial assets measured at amortised cost;

• Financial assets measured at fair value through
other comprehensive income (FVTOCI)

Expected credit losses are measured through a loss
allowance at an amount equal to:

• The 12-month expected credit losses (expected
credit losses that result from those default events
on the financial instrument that are possible within
12 months after the reporting date); or

• Full lifetime expected credit losses (expected credit
losses that result from all possible default events
over the life of the financial instrument).

The Company follows 'simplified approach' for
recognition of impairment loss allowance on:

• Trade receivables ; and

• All lease receivables

Under the simplified approach, the Company does
not track changes in credit risk. Rather, it recognises
impairment loss allowance based on lifetime ECLs at
each reporting date, right from its initial recognition.

The Company uses a provision matrix to determine
impairment loss allowance on the portfolio of trade
receivables. The provision matrix is based on its
historically observed default rates over the expected
life of the trade receivable 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.

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 Company reverts to recognising impairment loss
allowance based on 12-month ECL.

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.

ii) Financial liabilities

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.

Subsequent measurement

The measurement of financial liabilities depends on
their classification, as described below:

• Financial liabilities at amortised cost

• Financial liabilities at fair value through profit or
loss include financial liabilities held for trading
and financial liabilities designated upon initial
recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if
they are incurred for the purpose of repurchasing in
the near term. This category also includes derivative
financial instruments entered into by the Company
that are not designated as hedging instruments

in hedge relationships as defined by Ind AS 109.
Separated embedded derivatives are also classified as
held for trading unless they are designated as effective
hedging instruments.

Gains or losses on liabilities held for trading are
recognised in the statement of profit and loss.

Financial liabilities are initially recognised at fair value
through profit or loss only if the criteria in Ind AS 109
are satisfied.

Redeemable preference shares

The redeemable preference shares issued by the
Company is a compound financial instrument and is
classified separately as financial liability and equity
in accordance with the substance of the contractual
arrangement and the definitions of a financial liability
and an equity instrument. At the date of issue, fair
value of the liability component is estimated using
the prevailing market interest rate of a similar non¬
compound instrument. This amount is recognised as
liability on an amortised cost basis using the effective
interest rate method until extinguished at the
instrument's maturity date. The difference between
the fair value of the liability component at the date
of issue and the issue price is recognised as Equity
component of compound financial instruments under
Other Equity.

Loans and borrowings

After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised
cost using the EIR (Effective Interest Rate) method.
Gains and losses are recognised in profit or loss when
the liabilities are derecognised.

Amortised cost is calculated by taking into account
any discount or premium on draw down 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.

Financial guarantee contracts

Financial guarantee contracts issued by the Company
are those contracts that require a payment to be made
to reimburse the holder for a loss it incurs because the
specified debtor fails to make a payment when due
in accordance with the terms of a debt instrument.
Financial guarantee contracts are recognised
initially as a liability at fair value. Subsequently, the
liability is measured at the higher of the amount
of loss allowance determined as per impairment
requirements of Ind AS 109 and the amount recognised
less cumulative amortisation.

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 derecognition of the
original liability and the recognition of a new liability.
The difference in the respective carrying amounts is
recognised in the statement of profit and loss, unless
it is in the nature of equity contribution by parent.

iii) Offsetting of financial instruments

Financial assets and financial liabilities are offset and
the net amount is reported in the balance sheet if
there is a currently enforceable legal right to offset
the recognised amounts and there is an intention to
settle on a net basis, to realise the assets and settle the
liabilities simultaneously. The legally enforceable right
must be enforceable in the normal course of business
and in the event of default, insolvency or bankruptcy
of the Company or the counterparty.

iv) 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, interest
rate swaps.

Any gains or losses arising from changes in the fair
value of derivatives are taken directly to statement
of profit and loss, except for the effective portion
of cash flow hedges, which is recognised in other
comprehensive income and presented as a separate
component of equity which is later reclassified to
statement of profit and loss when the hedge item
affects profit or loss.

Embedded derivatives

Derivatives embedded in non-derivative host
contracts that are not financial assets within the scope
of Ind AS 109 are treated as separate derivatives when
their risks and characteristics are not closely related
to those of the host contracts and the host contracts
are not measured at fair value through profit or loss
(FVTPL).

v) Hedge accounting

The Company designates its derivatives as hedging
instruments, as cash flow hedges.

At the inception of the hedge relationship, the entity
documents the relationship between the hedging

instrument and the hedged item, along with its
risk management objectives and its strategy for
undertaking various hedge transactions. Furthermore,
at the inception of the hedge and on an ongoing
basis, the Company documents whether the hedging
instrument is highly effective in offsetting changes
in fair values or cash flows of the hedged item
attributable to the hedged risk.

Cash flow hedges

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 hedging reserve. The gain or loss relating to the
ineffective portion is recognised immediately in profit
or loss.

Amounts previously recognised in other
comprehensive income and accumulated in equity
relating to (effective portion as described above) are
reclassified to profit or loss in the periods when the
hedged item affects profit or loss, in the same line as
the recognized hedged item.

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 is ultimately recgonised in profit or loss.
When a forecast transaction is no longer expected
to occur, the gain or loss accumulated in equity is
recognised immediately in profit or loss.

i. Contingent liabilities

A contingent liability is a possible obligation that arises
from past events whose existence will be confirmed
by the occurrence or non-occurrence of one or
more uncertain future events beyond the control
of the Company or a present obligation that is not
recognised because it is not probable that an outflow
of resources will be required to settle the obligation. A
contingent liability also arises in extremely rare cases
where there is a liability that cannot be recognised
because it cannot be measured reliably. The Company
does not recognise a contingent liability but discloses
its existence in the financial statements.

Contingent assets are not recognised and disclosed
only where an inflow of economic benefits is probable.

j. Onerous Contracts

An onerous contract is a contract under which the
unavoidable costs (i.e., the costs that the Company

cannot avoid because it has the contract) of meeting
the obligations under the contract exceed the
economic benefits expected to be received under it.
The unavoidable costs under a contract reflect the
least net cost of exiting from the contract, which is the
lower of the cost of fulfilling it and any compensation
or penalties arising from failure to fulfil it. If the
Company has a contract that is onerous, the present
obligation under the contract is recognised and
measured as a provision. However, before a separate
provision for an onerous contract is established, the
Company recognises any impairment loss that has
occurred on assets dedicated to that contract.

2.3 Significant accounting estimates and assumptions

The preparation of these financial statements in
conformity with the recognition and measurement
principles of Ind AS requires the management of
the Company to make estimates and assumptions
that affect the reported balances of assets and
liabilities, disclosures relating to contingent liabilities
as at the date of the financial statements and the
reported amounts of income and expense for the
periods presented.

The estimates and judgments used in the preparation
of the said financial statements are continuously
evaluated by the Company, and are based on
historical experience and various other assumptions
and factors (including expectations of future events),
that may have a financial impact on the Company
and that are believed to be reasonable under existing
circumstances. The estimates and underlying
assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the
revision affects only that period, or in the period of the
revision and future periods if the revision affects both
current and future periods.

In the following areas, the management of the
Company has made critical judgments and estimates.

i. Useful lives of property, plant and equipment
('PPE')

The Company reviews the useful life of property,
plant and equipment at the end of each reporting
period. After considering market conditions,
industry practice, technological developments
and other factors, the Company determined
that the current useful lives of its PPE remain
appropriate. However, changes in economic
conditions of the markets, competition and
technology, among others, are unpredictable
and they may significantly impact the useful lives

of PPE and therefore the depreciation charges
(Refer note 3(3)).

ii. Expected Credit Loss on Trade receivable

Trade receivables do not carry any interest and
are stated at their nominal value as reduced by
provision for impairment. The Company uses a
provision matrix to determine impairment loss
allowance on the portfolio of trade receivables.
The provision matrix is based on its historically
observed default rates over the expected life of
the trade receivable and is adjusted for forward
looking estimates. Individual trade receivables
are written off when management deems them
not to be collectible (Refer note 11).