L Provisions, Contingent liabilities and Contingent assets
The Company recognises provisions when there is present obligation as a result of past
event and it is probable that there will be an outflow of resources and reliable estimate can
be made of the amount of the obligation. If the effect of the time value of money is material,
provisions are determined by discounting the expected future cash flows to net present
value using an appropriate pre-tax discount rate that reflects current market assessments
of the time value of money and, where appropriate, the risks specific to the liability.
Unwinding of the discount is recognised in the Statement of Profit and Loss as a finance
cost. Provisions are reviewed at each reporting date and are adjusted to the reflect the
current best estimate.
A present obligation that arises from past events where it is either not probable that an
outflow of resources will be required to settle or a reliable estimate of the amount cannot be
made, is disclosed as a contingent liability. Contingent Liabilities are also disclosed when
there is a possible obligation arising from past events, the existence of which will be
confirmed only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the Company.
Contingent assets are not recognized in Standalone financial statements since this may
result in the recognition of income that may never be realised.
M Financial instruments
A financial instrument is any contract that gives rise to a Financial Asset of one entity and
Financial liability or equity instrument of another entity.
Financial Assets(i) Initial measurement and recognition :
The Company recognizes financial assets when it becomes a party to the contractual
provisions of the instrument. All financial assets are recognized at fairvalue on initial
recognition. Transaction costs that are directly attributable to the acquisition of financial
assets that are not at fair value through profit or loss, are added to the fair value on initial
recognition. Transaction costs of financial assets carried at fair value through profit and
loss are expensed in the statement of profit and loss. Regular way purchase and sale of
financial assets are accounted for at trade date.
(ii) Subsequent measurement :
(a) 'Debt instruments at amortized cost - A ‘debt instrument' is measured at the amortized cost
if both the following conditions are met:
(i) The asset is held within a business model whose objective is to hold assets for collecting
contractual cash flows, and
(ii) Contractual terms of the asset give rise on specified dates to cash flows that are solely
payments of principal and interest (SPPI) on the principal amount outstanding."
After initial measurement, such financial assets are subsequently measured at amortized
cost using the effective interest rate (EIR) method.
(b) Equity investments - All equity investments in scope of Ind-AS 109 are measured at fair
value. Equity instruments which are held for trading are generally classified as at fair value
through profit and loss (FVTPL). For all other equity instruments, the Company decides to
classify the same either as at fair value through other comprehensive income (FVOCI) or
fair value through profit and loss (FVTPL). The Company makes such election on an
instrument by instrument basis. The classificationis made on initial recognition and is
irrevocable.
(c) Mutual funds - All mutual funds in scope of Ind-AS 109 are measured at fair value through
profit and loss (FVTPL).
Financial Liabilities:
(i) Initial measurement and recognition
The Company recognizes financial liabilities when it becomes a party to the contractual
provisions of the instrument. All financial liabilities are recognized at fair value on initial
recognition. Transaction costs that are directly attributable to the issue of financial
liabilities, that are not at fair value through profit or loss, are reduced from the fair value on
initial recognition. Transaction costs that are directly attributable to the issue of financial
liabilities at fair value through profit and loss are expensed in the statement of profit and
loss.
(ii) Subsequent measurement
These liabilities include borrowings and deposits. After initial recognition, interest-bearing
loans and borrowings are subsequently measured at amortized cost using the effective
interest rate (EIR) method. Gains and losses are recognized in the statement of profit and
loss when the liabilities are de-recognized as well as through the EIR amortization process.
Amortized 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 as
finance costs in the statement of profit and loss.
Derecognition - Financial assets
A Financial asset is primarily derecognised when the right to receive the contractual cash
flows in a transaction in which substantially all of the risks and rewards of ownership of the
financial asset are transferred or in which the Company neither transfers nor retains
substantially all of the risks and rewards of ownership and does not retain control of the
financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its
balance sheet, but retains either all or substantially all of the risks and rewards of the
transferred assets, the transferred assets are not derecognised.
Derecognition - Financial liabilities
The Company derecognises a financial liability when its contractual obligations are
discharged or cancelled, or expired.
The Company also derecognises a financial liability when its terms are modified and the
cash flows under the modified terms are substantially different. In this case, a new financial
liability based on the modified terms is recognised at fair value. The difference between the
carrying amount of the financial liability extinguished and the new financial liability with
modified terms is recognised in profit or loss.
Financial Instruments Offsetting
Financial assets and financial liabilities are offset and the net amount reported in the
balance sheet if there is a currently and legally enforceable right to set off the amounts and
it intends either to settle them on a net basis or to realise the asset and settle the liability
simultaneously.
N Rounding off amounts
All amounts disclosed in the financial statements and notes have been rounded off to the
nearest lakhs as per the requirement of Schedule III, unless otherwise stated.
O Dividend distribution
Dividends paid (including income tax thereon) is recognised in the period in which the
interim dividends are approved by the Board of Directors, or in respect of the final dividend
when approved by shareholders.
Q Standards or Amendments issued but not effective
Classification of Liabilities as Current or Non-current and Non-current Liabilities with
Covenants - Amendments to Ind AS 1:
This amendment also includes specific provisions that will take effect for reporting periods
beginning on or after 1 April 2026, as outlined below.
Under the existing Ind AS 1, where there is a breach of a material provision of a long-term
loan arrangement on or before the end of the reporting period with the effect that the liability
becomes payable on demand on the reporting date, the entity does not classify the liability
as current, if the lender agreed, after the reporting period and before the approval of the
financial statements for issue, not to demand payment as a consequence of the breach.
However, the amended requirements stipulate that entities will no longer be permitted to
consider lender waivers that are granted after the reporting date but before the financial
statements are approved for the purpose of classification of loans. This amendment is
required to be applied retrospectively in accordance with Ind AS 8.
The company does not expect this amendment to have an impact on its operations or
standalone financial statements."
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