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. Revenue is recognised as and
when each distinct performance obligation is satisfied.
The Company evaluates its exposure to significant risks
and reward associated with the revenue arrangements
in order to determine its position of a principal or an
agent in this regard.

The Company assesses its revenue arrangements
in order to determine if it is acting as a principal or
as an agent by determining whether it has primary
obligation basis pricing latitude and exposure to
credit / inventory risks associated with the sale of
goods / rendering of services. In the said assessment,
both the legal form and substance of the agreement
are reviewed to determine each party's role in
the transaction.

Service revenues mainly pertain to usage, subscription
and activation charges for voice, data, messaging and
value added 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. Subscription 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 which is grouped under trade receivable
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
certain customers, and associated acquisition costs
are amortised over the period of agreement/ lock in
period since the date of activation of service.

Deferred contract costs are incremental costs of
obtaining a contract which are recognized as contract
assets and amortized 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 calls and
SMS originating in its network to other operators.

Accordingly, interconnect revenues are recognized as
those on calls originating in another telecom operator
network and terminating in the Company's network.
Interconnect cost is recognized 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 recognized 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, the cost of replacing part of the plant and
equipment 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 de-recognised 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' residual values
and 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.

The useful lives have been determined based on
technical evaluation done by the management's expert
which are lower than those 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 amortization 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. The
estimated useful lives of right-of-use assets are
determined on the same basis as those of property,
plant and equipment. 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.

I ndefeasible Right to Use ('IRU') taken for optical
fiber and ducts, by the Company are capitalized as
intangible assets 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.

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.

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. Re-measurements as
a result of experience adjustments and changes
in actuarial assumptions are recognised in profit
or loss.

(iii) Compensated absences

Liability for compensated absences is in accordance
with the rules of the Company. Short term compensated
absences are provided based on actuarial valuation
obtained at the end of each year as per the Projected
Unit Credit Method.

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 pa rticipants 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.

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

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 ('FVTPL'), 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

• Financial assets at amortized 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 amortized 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 realize 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 amortized
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 recognizing

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 de-recognised (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 or contract revenue 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 designated upon initial recognition
at fair value through profit or loss are designated at the
initial date of recognition, and 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 de-recognised.

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 de-recognised 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 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 recognized in other comprehensive
income and accumulated under the heading of cash
flow hedging reserve. The gain or loss relating to the
ineffective portion is recognized immediately in profit
or loss.

Amounts previously recognized 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 recognized in other comprehensive
income and accumulated in equity at that time
remains in equity and is recognized 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
recognized immediately in profit or loss.

i) 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.

j) 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 recognized
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 recognized because
it cannot be measured reliably. The Company does

not recognize 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.

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 recognized 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).