2.17 Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some
or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the
reimbursement is virtually certain. The expense relating to a provision is presented in the Statement of Profit and
Loss, net of any reimbursement.
These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
2.18 Contingent Asset/liability
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 Standalone Financial Statements.
Contingent assets are not recognised or disclosed in standalone financial statements since this may result in the
recognition of income that may never be realised. However, when the realisation of income is virtually certain,
then the related asset is not a contingent asset and is recognised.
2.19 Cash and cash equivalents
Cash and cash equivalents in the Balance Sheet and Cash Flow Statement comprise cash at banks and in hand and
short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of
changes in value.
2.20 Significant accounting judgements, estimates and assumptions
The preparation of the Standalone Financial Statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying
disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could
result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in
future periods.
Other disclosures relating to the Company’s exposure to risks and uncertainties includes:
• Capital management Note 44
• Financial risk management objectives and policies Note 43
The Company bases its assumptions and estimates on parameters available when the Standalone Financial
Statements are prepared. Existing circumstances and assumptions, if any, about future developments, however,
may change due to market changes or circumstances arising that are beyond the control of the Company. Such
changes are reflected in the assumptions when they occur. The judgements, estimates and assumptions
management has made which have the most significant effect on the amounts recognized in the Standalone
Financial Statements are as below.
Leases
The Company determines the lease term as non-cancellable term of the lease, together with any periods covered
by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to
terminate the lease, if it is reasonably certain not to be exercised. The Company applies judgement and considers
all relevant factors that create an economic incentive in evaluating whether it is reasonably certain to exercise the
option to renew or terminate the lease. After the commencement date, the Company reassesses the lease term if
there is a significant event or change in circumstances that is within its control and affects its ability to exercise
or not to exercise the option to renew or terminate. In calculating the present value of lease payments, the Company
uses internal rate of return for the assets which were earlier classified under finance lease and incremental
borrowing rate (IBR) for Right of use assets at the lease commencement date.
The IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with a
similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar
economic environment.
The IBR requires estimation when no observable rates are available or when they need to be adjusted to reflect
the terms and conditions of the lease. The Company estimates the IBR using observable inputs (such as market
interest rates), when available and makes entity-specific estimates, wherever required.
Provision for expected credit loss on trade receivables
The measurement of expected credit loss reflects a probability-weighted outcome, the time value of money and
the best available forward-looking information. The correlation between historical observed default rates, forecast
economic conditions and expected credit loss is a significant estimate. The amount of expected credit loss is
sensitive to changes in circumstances and forecasted economic conditions. The Company’s historical credit loss
experience and forecast of economic conditions may not be representative of the actual default in the future.
Defined benefit plans
The cost of the defined benefit plan and the present value of the obligation are determined using actuarial
valuation. An actuarial valuation involves various assumptions that may differ from actual developments in the
future. These include the determination of the discount rate, expected return, future salary increases and mortality
rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is
highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans
operated in India, the management considers the interest rates of government bonds where remaining maturity of
such bond correspond to expected term of defined benefit obligation. The mortality rate is based on publicly
available mortality tables. Those mortality tables tend to change only at interval in response to demographic
changes. Future salary increases are based on expected future inflation rates.
Share-based payments
Estimating fair value for share-based payment transactions requires determination of the most appropriate
valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires
determination of the most appropriate inputs to the valuation model including the expected life of the share option,
volatility and dividend yield and making assumptions about them. For cash-settled share-based payment
transactions, the liability needs to be remeasured at the end of each reporting period up to the date of settlement,
with any changes in fair value recognised in the profit or loss. This requires a reassessment of the estimates used
2.20 Significant accounting judgements, estimates and assumptions (continued)
at the end of each reporting period. The assumptions and models used for estimating fair value for share-based
payment transactions are disclosed in Note 41.
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the Standalone Financial Statements
cannot be measured based on quoted prices in active markets, their fair value is measured using internal valuation
techniques. The inputs to these models are taken from observable markets where possible, but where this is not
feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs
such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the
reported fair value of financial instruments.
2.21 New standards or amendments to the existing standards and other pronouncements
The Company applied for the first-time certain standards and amendments, which are effective for annual periods
beginning on or after April 01, 2024. The Company has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective.
(i) Ind AS 117 Insurance Contracts
The Ministry of corporate Affairs (MCA) notified the Ind AS 117, Insurance Contracts, vide notification dated
August 12, 2024, under the Companies (Indian Accounting Standards) Amendment Rules, 2024, which is
effective from annual reporting periods beginning on or after April 01,2024.
Ind AS 117 Insurance Contracts is a comprehensive new accounting standard for insurance contracts covering
recognition and measurement, presentation and disclosure. Ind AS 117 replaces Ind AS 104 Insurance Contracts.
Ind AS 117 applies to all types of insurance contracts, regardless of the type of entities that issue them as well as
to certain guarantees and financial instruments with discretionary participation features; a few scope exceptions
will apply. Ind AS 117 is based on a general model, supplemented by:
• A specific adaptation for contracts with direct participation features (the variable fee approach)
• A simplified approach (the premium allocation approach) mainly for short-duration contracts
The application of Ind AS 117 had no impact on the Standalone Financial Statements as the Company has not
entered any contracts in the nature of insurance contracts covered under Ind AS 117.
(ii) Amendment to Ind AS 116 Leases - Lease Liability in a Sale and Leaseback
The MCA notified the Companies (Indian Accounting Standards) Second Amendment Rules, 2024, which
amend Ind AS 116, Leases, with respect to Lease Liability in a Sale and Leaseback.
The amendment specifies the requirements that a seller-lessee uses in measuring the lease liability arising in a
sale and leaseback transaction, to ensure the seller-lessee does not recognise any amount of the gain or loss that
relates to the right of use it retains. The amendment is effective for annual reporting periods beginning on or after
April 01,2024, and must be applied retrospectively to sale and leaseback transactions entered into after the date
of initial application of Ind AS 116. The amendment does not have a material impact on the Standalone Financial
Statements.
2.22 Standards issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of
issuance of the Standalone Financial Statements are disclosed below. The Company will adopt this new and
amended standard, when it becomes effective.
(i) Amendment to Ind AS 21 The Effects of Changes in Foreign Exchange Rates
On May 07, 2025, The Ministry of Corporate Affairs notified the Companies (Indian Accounting Standards)
Amendment Rules, 2025, which amend Ind AS 21 The Effects of Changes in Foreign Exchange Rates, to specify
how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange
rate when exchangeability is lacking. The amendments also require disclosure of information that enables users
of its Standalone Financial Statements to understand how the currency not being exchangeable into the other
currency affects, or is expected to affect, the entity’s financial performance, financial position and cash flows.
The amendments are effective for annual reporting periods beginning on or after April 01, 2025. When applying
the amendments, an entity cannot restate comparative information. The amendment does not have a material
impact on the Standalone Financial Statements.
|