3 Summary of material accounting policies
The material accounting policies applied by the
Company in the preparation of its financial statements
are listed below. Such accounting policies have been
applied consistently to all the periods presented in these
standalone financial statements, unless otherwise stated.
3.1 Current versus non-current classification
The Company segregates assets and liabilities into
current and non-current categories for presentation
in the standalone balance sheet after considering its
normal operating cycle and other criteria set out in Ind
AS 1, "Presentation of Financial Statements'! For this
purpose, current assets and liabilities include the current
portion of non-current assets and liabilities respectively.
Deferred tax assets and liabilities are always classified
as non-current and Advance tax paid is classified as
non-current assets.
The operating cycle is the time between the acquisition
of assets for processing and their realization in cash and
cash equivalents. The Company has identified period up
to twelve months as its operating cycle.
3.2 Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of the
Company are measured using the currency of the
primary economic environment in which the entity
operates, i.e., the "functional currency". The financial
statements are presented in Indian rupee (INR),
which is functional and presentation currency of
the Company and all values are rounded to nearest
crores except when otherwise stated.
(ii) Transactions and balances
Transactions in foreign currencies are initially
recorded by the Company at their respective
functional currency spot rate at the date the
transaction first qualifies for recognition.
1) Monetary assets and liabilities denominated
in foreign currencies are translated at the
functional currency spot rates of exchange
at the reporting date. Exchange differences
arising on settlement or translation of
monetary items are recognised in standalone
statement of profit and loss.
2) Non-monetary items that are measured in
terms of historical cost in a foreign currency
are translated using the exchange rates at
the dates of the initial transactions. Non¬
monetary items measured at fair value in
a foreign currency are translated using the
exchange rates at the date when the fair value
is determined. The gain or loss arising on
translation of non-monetary items measured at
fair value is treated in line with the recognition
of the gain or loss on the change in fair value of
the item (i.e., translation differences on items
whose fair value gain or loss is recognised
in OCI or profit or loss are also recognised in
OCI or profit or loss, respectively).
3.3 Revenue recognition
income from general staffing and allied services
Revenue is recognised to the extent that it is probable
that the economic benefits will flow to the Company
and the revenue can be reliably measured. Revenue
is measured at the fair value of the consideration
received or receivable, taking into account contractually
defined terms of payment and excluding taxes or duties
collected on behalf of the government. The Company
has concluded that it is the principal in all of its revenue
arrangements since it is the primary obligor in all the
revenue arrangements as it has pricing latitude and is
also exposed to credit risks.
Contract balances
Unbilled revenue
Unbilled revenue is recognised for revenue earned from
services. Revenues in excess of invoicing are classified
as unbilled revenue. Upon raising of the invoice to the
customer, the amount recognised as Unbilled revenue is
reclassified to trade receivables.
Trade receivables
A receivable is recognised if an amount of consideration
that is unconditional (i.e., only the passage of time is
required before payment of the consideration is due).
Refer to accounting policies of financial assets in Note
3.9- Financial instruments - initial recognition and
subsequent measurement.
Contract liabilities
A contract liability is recognised if a payment is received
or a payment is due (whichever is earlier) from a customer
before the Company transfers the related goods or
services. Contract liabilities are recognised as revenue
when the Company performs under the contract (i.e.,
transfers control of the related services to the customer).
interest income
For all financial instruments measured at amortised cost,
interest income is recorded using the effective interest
rate (EIR). The EIR is the rate that exactly discounts
the estimated future cash receipts over the expected
life of the financial instrument or a shorter period,
where appropriate, to the net carrying amount of the
financial asset. When calculating the effective interest
rate, the Company estimates the expected cash flows
by considering all the contractual terms of the financial
instrument but does not consider the expected credit
losses. Interest income is included in Other income in
the standalone statement of profit and loss.
Dividend income
Dividend income is recognised when the Company's
right to receive the payment is established, which
is generally when Shareholders/ Board of Directors
approve the dividend.
3.4 Taxes
income tax
Tax expense comprises current tax expense
and deferred tax.
Income tax assets and liabilities are measured at the
amount expected to be recovered from or paid to the
taxation authorities. The tax rates and tax laws used
to compute the amount are those that are enacted
or substantively enacted, at the reporting date in the
countries where the Company operates and generates
taxable income.
Current income tax relating to items recognised outside
profit or loss is recognised outside profit or loss (either
in other comprehensive income (OCI)or in equity).
Current tax items are recognised in correlation to the
underlying transaction either in OCI or directly in equity.
Management periodically evaluates positions taken
in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation
and considers whether it is probable that a taxation
authority will accept an uncertain tax treatment. The
Company reflects the effect of uncertainty for each
uncertain tax treatment by using either most likely
method or expected value method, depending on which
method predicts better resolution of the treatment.
Deferred tax
Deferred tax is provided using the balance sheet
approach on temporary differences between the tax
base of assets and liabilities and their carrying amounts
for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable
temporary differences, except:
When the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in a
transaction that is not a business combination and, at
the time of the transaction, affects neither the accounting
profit nor taxable profit or loss and does not give rise to
equal taxable and deductible temporary differences;
In respect of taxable temporary differences associated
with investments in subsidiaries and interests in joint
venture, when the timing of the reversal of the temporary
differences can be controlled and it is probable that
the temporary differences will not reverse in the
foreseeable future.
Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax
assets are recognised to the extent that it is probable
that taxable profit will be available against which the
deductible temporary differences, and the carry forward
of unused tax credits and unused tax losses can be
utilised, except:
- When the deferred tax asset relating to the
deductible temporary difference arises from
the initial recognition of an asset or liability in a
transaction that is not a business combination
and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss and
does not give rise to equal taxable and deductible
temporary differences;
- In respect of deductible temporary differences
associated with investments in subsidiaries and
interests in joint venture, deferred tax assets are
recognised only to the extent that it is probable
that the temporary differences will reverse in
the foreseeable future and taxable profit will be
available against which the temporary differences
can be utilised
The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that
it is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred tax asset
to be utilised. Unrecognised deferred tax assets are re¬
assessed at each reporting date and are recognised to
the extent that it has become probable that future taxable
profits will allow the deferred tax asset to be recovered.
In assessing the recoverability of deferred tax assets,
the Company relies on the same forecast assumptions
used elsewhere in the financial statements and in other
management reports.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the year when
the asset is realised, or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit
or loss is recognised outside profit or loss (either in
other comprehensive income or in equity). Deferred tax
items are recognised in correlation to the underlying
transaction either in OCI or directly in equity.
The Company offsets deferred tax assets and deferred
tax liabilities if and only if it has a legally enforceable
right to set off current tax assets and current tax liabilities
and the deferred tax assets and deferred tax liabilities
relate to income taxes levied by the same taxation
authority on either the same taxable entity which intends
either to settle current tax liabilities and assets on a net
basis, or to realise the assets and settle the liabilities
simultaneously, in each future period in which significant
amounts of deferred tax liabilities or assets are expected
to be settled or recovered.
Goods and Services Tax (GST) paid on acquisition of
assets or on incurring expenses:
Expenses and assets are recognised net of the amount
of GST, except:
- When the tax incurred on a purchase of assets
or services is not recoverable from the taxation
authority, in which case, the tax paid is recognised
as part of the cost of acquisition of the asset or as
part of the expense item, as applicable;
- When receivables and payables are stated with the
amount of tax included:
The net amount of tax recoverable from, or payable
to, the taxation authority is included as part of
other current/non-current assets/ liabilities in the
standalone balance sheet.
3.5 Leases
The Company assesses at contract inception whether
a contract is, or contains, a lease, i.e., if the contract
conveys the right to control the use of an identified asset
for a period of time in exchange for consideration.
The Company as a lessee
The Company applies a single recognition and
measurement approach for all leases, except for
short-term leases and leases of low-value assets. The
Company recognises lease liabilities to make lease
payments and right of use assets representing the right
to use the underlying assets.
i) Right of use assets
The Company recognises right of use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right of use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted
for any remeasurement of lease liabilities. The
cost of right of use assets includes the amount
of lease liabilities recognised, initial direct costs
incurred, and lease payments made at or before
the commencement date less any lease incentives
received. Right of use assets are depreciated
on a straight-line basis over the shorter of the
lease term and the estimated useful lives of the
assets, as follows:
Office premises : 1.5 - 9 years
Vehicles : 3 - 4 years
The right of use assets are also subject to
impairment. Refer to accounting policies in section
3.8 impairment of non-financial assets.
ii) Lease liabilities
At the commencement date of the lease, the Company
recognises lease liabilities measured at the present
value of lease payments to be made over the lease term.
The lease payments include fixed payments (including
in substance fixed payments) less any lease incentives
receivable, variable lease payments that depend on
an index or a rate, and amounts expected to be paid
under residual value guarantees. The lease payments
also include the exercise price of a purchase option
reasonably certain to be exercised by the Company
and payments of penalties for terminating the lease,
if the lease term reflects the Company exercising the
option to terminate. Variable lease payments that do
not depend on an index or a rate are recognised as
expenses in the period in which the event or condition
that triggers the payment occurs.
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.
iii) Short-term leases and leases of low-value assets
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 recognition
exemption to leases for which the underlying asset is
of 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.
3.6 Property, plant and equipment
Property, plant and equipment is stated at cost, net of
accumulated depreciation and accumulated impairment
losses, if any. Such cost includes the cost of replacing
part of the plant and equipment, if the recognition criteria
are met. All repair and maintenance costs are recognised
in standalone statement of profit and loss as incurred.
The Company, based on technical assessment made by
technical expert and management estimate, depreciates
certain items of 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.
An item of property, plant and equipment and
any significant part thereof initially recognised is
derecognised upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain
or loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds
and the carrying amount of the asset) is included in the
standalone statement of profit and loss when the asset
is derecognised. The residual value adopted for such
assets does not exceed five per cent of their original
cost, in accordance with Schedule II to the Companies
Act, 2013 (as amended).
The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.
Depreciation methods, estimated useful lives
Depreciation is calculated using the straight-line
method over the estimated useful lives of the plant and
equipment as given under Part C of Schedule II of the
Act as follows:
Leasehold improvements are depreciated over the
period of the lease or estimated useful life, whichever is
lower and ranges from 3-10 years.
3.7 Intangible assets
Intangible assets acquired separately are measured on
initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less any accumulated
amortization and accumulated impairment losses, if any.
Internally generated intangibles, excluding capitalised
development costs, are not capitalised and the related
expenditure is reflected in standalone statement of profit
and loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as
either finite or indefinite.
Intangible assets with finite lives are amortized over
the useful economic life and assessed for impairment
whenever there is an indication that the intangible
asset may be impaired. The amortization period and
the amortization method for an intangible asset with a
finite useful life are reviewed at least at the end of each
reporting period. Changes in the expected useful life or
the expected pattern of consumption of future economic
benefits embodied in the asset are considered to modify
the amortization period or method, as appropriate, and
are treated as changes in accounting estimates. The
amortization expense on intangible assets with finite
lives is recognised in the standalone statement of profit
and loss unless such expenditure forms part of carrying
value of another asset.
An intangible asset is derecognised upon disposal (i.e.,
at the date the recipient obtains control) or when no
future economic benefits are expected from its use or
disposal. Any gain or loss arising upon derecognition of
the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset)
is included in the standalone statement of profit and loss
when the asset is derecognised.
Research and development costs
Research costs are expensed as incurred. Development
expenditures on an individual project are recognised as
an intangible asset when the Company can demonstrate:
- The technical feasibility of completing the
intangible asset so that the asset will be available
for use or sale
- Its intention to complete and its ability and intention
to use or sell the asset
- How the asset will generate future economic benefits
- The availability of resources to complete the asset
- The ability to measure reliably the expenditure
during development
Following initial recognition of the development
expenditure as an asset, the asset is carried at cost
less any accumulated amortization and accumulated
impairment losses. Amortization of the asset begins
when development is complete, and the asset is available
for use. It is amortized over the period of expected
future benefit. Amortization expense is recognised in
the standalone statement of profit and loss unless such
expenditure forms part of carrying value of another asset.
During the period of development, the asset is tested for
impairment annually.
Amortization methods, estimated useful lives
Amortization is calculated using the straight¬
line method over the estimated useful lives of the
Intangibles as follows:
3.8 Impairment of non-financial assets
The Company assesses, at each reporting date,
whether there is an indication that any property, plant
& equipment, right of use assets and intangible assets
may be impaired. If any indication exists, or when
annual impairment testing for an asset is required, the
Company estimates the asset's recoverable amount. An
asset's recoverable amount is the higher of an asset's
or cash-generating unit's (CGU) fair value less costs of
disposal and its value in use. Recoverable amount is
determined for an individual asset, unless the asset does
not generate cash inflows that are largely independent
of those from other assets or groups of assets. When
the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired
and is written down to its recoverable amount.
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 no such transactions can be identified, an
appropriate valuation model is used. These calculations
are corroborated by valuation multiples, quoted share
prices for publicly traded companies or other available
fair value indicators.
The Company bases its impairment calculation on
detailed budgets and forecast calculations, which are
prepared separately for each of the Company's CGUs to
which the individual assets are allocated. These budgets
and forecast calculations generally cover a period of five
years. For longer periods, a long-term growth rate is
calculated and applied to project future cash flows after
the fifth year. To estimate cash flow projections beyond
periods covered by the most recent budgets/forecasts,
the Company extrapolates cash flow projections in
the budget using a steady or declining growth rate for
subsequent years, unless an increasing rate can be
justified. In any case, this growth rate does not exceed
the long-term average growth rate for the products,
industries, or country or countries in which the Company
operates, or for the market in which the asset is used.
Impairment losses of continuing operations are
recognised in the standalone statement of profit and loss.
For assets excluding goodwill, an assessment is made
at each reporting date to determine whether there is
an indication that previously recognised impairment
losses no longer exist or have decreased. If such
indication exists, the Company estimates the asset's
or CGU's recoverable amount. A previously recognised
impairment loss is reversed only if there has been a
change in the assumptions used to determine the asset's
recoverable amount since the last impairment loss was
recognised. The reversal is limited so that the carrying
amount of the asset does not exceed its recoverable
amount, nor exceed the carrying amount that would
have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior
years. Such reversal is recognised in the standalone
statement of profit and loss unless the asset is carried at
a revalued amount, in which case, the reversal is treated
as a revaluation increase.
The Company assesses whether climate risks, including
physical risks and transition risks could have a significant
impact. If so, these risks are included in the cash-flow
forecasts in assessing value-in-use amounts.
3.9 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.
Initial recognition and measurement
Financial assets are classified, at initial recognition, and
subsequently measured at amortised cost, fair value
through other comprehensive income (OCI), and fair
value through profit or loss.
The classification of financial assets at initial recognition
depends on the financial asset's contractual cash flow
characteristics and the Company's business model for
managing them. With the exception of trade receivables
that do not contain a significant financing component
or for which the Company has applied the practical
expedient, the Company initially measures a financial
asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss, transaction
costs. Trade receivables that do not contain a significant
financing component or for which the Company has
applied the practical expedient are measured at the
transaction price determined under Ind AS 115.
In order for a financial asset to be classified and
measured at amortised cost or fair value through OCI, it
needs to give rise to cash flows that are 'solely payments
of principal and interest (SPPI)' on the principal amount
outstanding. This assessment is referred to as the SPPI
test and is performed at an instrument level. Financial
assets with cash flows that are not SPPI are classified
and measured at fair value through profit or loss,
irrespective of the business model.
The Company's business model for managing financial
assets refers to how it manages its financial assets
in order to generate cash flows. The business model
determines whether cash flows will result from collecting
contractual cash flows, selling the financial assets,
or both. Financial assets classified and measured at
amortised cost are held within a business model with
the objective to hold financial assets in order to collect
contractual cash flows while financial assets classified
and measured at fair value through OCI are held within
a business model with the objective of both holding to
collect contractual cash flows and selling.
Subsequent measurement
(i) Financial assets
For purposes of subsequent measurement,
financial assets are classified in four categories:
- Financial assets at amortised cost
(debt instruments).
- Financial assets at fair value through other
comprehensive income (FVTOCI) with
recycling of cumulative gains and losses
(debt instruments).
- Financial assets designated at fair value
through OCI with no recycling of cumulative
gains and losses upon derecognition
(equity instruments).
- Financial assets at fair value through
profit or loss.
Financial assets at amortised cost
A 'financial asset' is measured at the amortised
cost if both the following conditions are met:
- The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and
- 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.
This category is the most relevant to the Company.
After initial measurement, such financial assets
are subsequently measured at amortised cost
using the effective interest rate (EIR) method and
are subject to impairment as per the accounting
policy applicable to 'Impairment of financial assets!
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 amortization is included in other income in the
profit or loss. The losses arising from impairment
are recognised in the standalone statement of
profit and loss.
Financial assets at fair value through other
comprehensive income (FVOCI)
A 'financial asset' is classified as at the FVTOCI if
both of the following criteria are met:
- The objective of the business model is
achieved both by collecting contractual cash
flows and selling the financial assets, and
- The asset's contractual cash flows
represent solely payments of principal and
interest (SPPI).
Financial assets designated at fair value through
OCI (equity instruments)
Upon initial recognition, the Company can elect to
classify irrevocably its equity investments as equity
instruments designated at fair value through OCI
when they meet the definition of equity under Ind
AS 32 Financial Instruments: Presentation for the
issuer and are not held for trading. The classification
is determined on an instrument-by-instrument
basis. Equity investment which are held for trading
and contingent consideration recognised by an
acquirer in a business combination to which Ind AS
103 applies are classified as at FVTPL.
Gains and losses on these financial assets are never
recycled to profit or loss. Dividends are recognised
as other income in the standalone statement of
profit and loss when the right of payment has been
established, except when the Company benefits
from such proceeds as a recovery of part of the
cost of the financial asset, in which case, such
gains are recorded in OCI. Equity instruments
designated at fair value through OCI are not subject
to impairment assessment.
Financial assets at fair value through profit and
loss (FVTPL)
Financial assets in this category are those that are
held for trading and have been either designated
by management upon initial recognition or are
mandatorily required to be measured at fair
value under Ind AS 109 i.e. they do not meet the
criteria for classification as measured at amortised
cost or FVOCI. Management only designates an
instrument at FVTPL upon initial recognition, if the
designation eliminates, or significantly reduces,
the inconsistent treatment that would otherwise
arise from measuring the assets or liabilities or
recognising gains or losses on them on a different
basis. Such designation is determined on an
instrument-by-instrument basis.
Financial assets at fair value through profit or loss
are carried in the standalone balance sheet at fair
value with net changes in fair value recognised in
the standalone statement of profit and loss.
Interest earned on instruments designated at
FVTPL is accrued in interest income, using the
EIR, taking into account any discount/ premium
and qualifying transaction costs being an integral
part of instrument. Interest earned on assets
mandatorily required to be measured at FVTPL
is recorded using the contractual interest rate.
Dividend income on listed equity investments are
recognised in the standalone statement of profit
and loss as other income when the right of payment
has been established.
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 financial assets. The Company applies a
simplified approach in calculating ECL. Therefore,
the Company does not track changes in credit risk,
but instead recognises a loss allowance based on
lifetime ECLs at each reporting date. The Company
has established a provision matrix that is based on
its historical credit loss experience, adjusted for
forward-looking factors specific to the debtors and
the economic environment.
Derecognition of financial assets
A financial asset is primarily derecognised
(i.e. removed from the Company's standalone
balance sheet) 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.
(II) Financial Liabilities
Initial recognition, measurement and presentation
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
For purposes of subsequent measurement,
financial liabilities are classified in two categories:
• Financial liabilities at fair value
through profit or loss
• Financial liabilities at amortised cost (loans
and borrowings)
Financial liabilities at fair value through profit or loss
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 designated upon initial
recognition at fair value through profit or loss
are designated at initial date of recognition, and
only if the criteria in Ind AS 109 are satisfied. For
liabilities designated as FVTPL, fair value gains/
losses attributable to changes in own credit risk
are recognised in OCI. These gains/ losses are
not subsequently transferred to the standalone
statement of profit and loss. However, the
Company may transfer the cumulative gain or loss
within equity. All other changes in fair value of such
liability are recognised in the standalone statement
of profit and loss.
Financial liabilities at amortised cost (Borrowings)
After initial recognition, financial liabilities are
subsequently measured at amortised cost using
the effective interest rate (EIR) method. Gains and
losses are recognised in profit or loss when the
liabilities are derecognised as well as through the
EIR amortization process.
For trade and other payables maturing within one
year from the balance sheet date, the carrying
amounts approximate fair value due to the short
term maturity of these instruments.
Derecognition of financial liabilities
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
standalone statement of profit and loss.
(iii) Offsetting of financial instruments
Financial assets and financial liabilities are offset
and the net amount is reported in the standalone
balance sheet if there is 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.
(Iv) Fair value of financial instruments
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 liability, 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.
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.
Fair value hierarchy:
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 financial statements 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.
In determining the fair value of its financial
instruments, the Company uses a variety of
methods and assumptions that are based on
market conditions and risks existing at each
reporting date. The methods used to determine
fair value includes discounted cash flow analysis,
available quoted market prices and dealer quotes.
All methods of assessing fair value result from
general approximation of value and the same may
differ from the actual realised value.
3.10 Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its
intended use or sale (qualifying asset) are capitalised
as part of the cost of the asset. All other borrowing
costs are expensed in the period in which they occur.
Borrowing costs consist of interest and other costs
that an entity incurs in connection with the borrowing
of funds. Borrowing cost also includes exchange
differences to the extent regarded as an adjustment to
the borrowing costs.
3.11 Treasury shares
The Company has created an Employee Benefit Trust
('EBT') for providing share-based payment to its
employees. The promoters/ directors of the Company, in
prior years had contributed certain equity shares free of
cost to EBT, which are issued to employees in accordance
with the Company's Employee stock option plan.
The Company treats EBT as its extension and shares
held by EBT are treated as treasury shares carried at
nil value. Share options exercised during the reporting
period are adjusted against treasury shares.
Own equity instruments that are reacquired (treasury
shares) are recognised at cost and deducted from
equity. No gain or loss is recognised in the standalone
statement of profit and loss on the purchase, sale, issue
or cancellation of the Company's own equity instruments.
Any difference between the carrying amount and the
consideration, if reissued, is recognised in reserve.
3.12 Cash and cash equivalents
Cash and cash equivalents in the standalone balance
sheet comprise cash at banks and on hand and short¬
term deposits with an original maturity of three months
or less, that are readily convertible to a known amount
of cash and which are subject to an insignificant risk of
changes in value.
For the purpose of the Standalone statement of cash
flows, cash and cash equivalents consist of cash and
short-term deposits, as defined above, net of outstanding
bank overdrafts as they are considered an integral part
of the Company's cash management.
3.13 Retirement and other employee benefits
(a) Defined benefit plan
Gratuity obligations
Gratuity, which is a defined benefit plan, is accrued
based on an independent actuarial valuation, done
on projected unit credit method as at the balance
sheet date. The Company recognizes the net
obligation of a defined benefit plan in its standalone
balance sheet as an asset or liability.
Remeasurement gains and losses arising from
experience adjustments and changes in actuarial
assumptions are recognised in the period in which
they occur in other comprehensive income and is
transferred to retained earnings in the standalone
statement of changes in equity in the standalone
balance sheet. Such accumulated re-measurements
are not reclassified to the standalone statement of
profit and loss in subsequent periods.
Past service costs are recognised in profit or loss
on the earlier of :
a) The date of the plan amendment or
curtailment, and
b) The date that the Company recognises related
restructuring costs.
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
standalone statement of profit and loss:
- Service costs comprising current service
costs, past-service costs, gains and losses on
curtailments and non-routine settlements; and
- Net interest expense or income.
Compensated absences
Accumulated leave, which is expected to be utilised
within the next 12 months, is treated as short-term
employee benefits. The Company measures the
expected cost of such absences as the additional
amount that it expects to pay as a result of the
unused entitlement that has accumulated at the
reporting date. The Company presents the entire
accumulated leave as a current liability in the
standalone balance sheet, since it does not have
an unconditional right to defer its settlement for 12
months after the reporting date. Such long-term
compensated absences are provided for based
on the actuarial valuation using the projected unit
credit method at each balance sheet date.
(b) Defined contribution plan
Contribution to Government Provident Fund
The Company pays provident fund contributions
to publicly administered provident funds as per
applicable regulations. The Company has no further
payment obligations once the contributions have
been paid. The contributions are accounted for as
defined contribution plans and the contributions
are recognised as employee benefit expense
when they are due.
(c) Share-based payments
Employees of the Company receive remuneration
in the form of employee option plan / stock
appreciation rights plan of the Company (equity
settled instruments) for rendering services over a
defined vesting period. Equity instruments granted
are measured by reference to the fair value of the
instrument at the date of grant. The expense is
recognised in the standalone statement of profit
and loss with a corresponding increase in equity
over the period that the employees unconditionally
becomes entitled to the award. The equity
instruments generally vest in a graded manner over
the vesting period i.e. the period over which all the
specified vesting conditions are to be satisfied. The
fair value determined at the grant date is expensed
over the vesting period of the respective tranches of
such grants (accelerated amortization). At the end
of each period, the entity revises its estimates of the
number of options that are expected to vest based
on the non-market vesting and service conditions.
It recognises the impact of the revision to original
estimates, if any, in the standalone statement of
profit and loss, with a corresponding adjustment
to equity. The stock option compensation expense/
share based payment expense is determined based
on the Company's estimate of equity instruments
that will eventually vest.
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