11 Provision and Contingencies
A provision is recognised when the company has a present obligation as a result of past event
and it is probable than an outflow of resources will be required to settle the obligation, in
respect of which a reliable estimate can be made. Provisions (excluding retirement benefits
and compensated absences) are not discounted to its present value and are determined
based on best estimate required to settle the obligation at the Balance Sheet date. These are
reviewed at each Balance Sheetdate adjusted to reflect the current best estimates.
Contingent Liabilities are 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 ora 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.
Contingent Liabilities are not recognised in the financial statements. A contingent asset is
neither recognised nordisclosed in the financial statements.
12 Tax Expenses
Income Tax expense comprises Current and Deferred Income Tax. Income tax expense is
recogn ized in net profit in the Statement of Profit and Loss except to the extent that it relates to
items recognized directly in equity, in which case it is recognized in Other Comprehensive
Income.
Deferred income tax assets and liabilities are recognized for all temporary differencesarising
between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. Deferred tax assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit will be realized.
The company offsets current tax assets and current tax liabilities, where it has a legally
enforceable right to set off the recognized amounts and where it intends either to settle on a
net basis, or to realize the asset and settle the liability simultaneously.
Minimum Alternative Tax [MAT] paid in accordance with the tax laws, which gives rise to future
economic benefits in the form of adjustment of future income tax liability, is considered as an
asset if there is convincing evidence that the company will pay normal income tax in future
periods. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable
that future economic benefits associated with it flow to the company and the asset can be
measured reliably.
13 Earnings Per Share
Basic earnings per equity share is computed by dividing the Net Profit attributable to the equity
holders of the company by the weighted average number of equity shares outstanding during
the period. Diluted earnings per equity share i s computed by dividing the Net Profit attributable
to the equity holders of the company by the weighted average number of equity shares
considered for deriving basic earnings per equity share and also the weighted average
number of equity shares that could have been issued upon conversion of all dilutive potential
equity shares.
14 Leases
Leases under which the company assumes substantially all the risks and rewards of
ownership are classified as finance leases. When acquired, such assets are capitalized at fair
value or present value of the minimum lease payments at the inception of the lease, whichever
is lower. Lease payments under operating leases are recognized as an expense on a straight
line basis in Net Profit in the Statement of Profit and Loss over the lease term.
15 Employee Benefits
i) Short Term Employee Benefits
Short-term employee benefits include performance incentive, salaries & wages, bonus
and leave travel allowance. The undiscounted amount of short-term employee benefits
expected to be paid in exchange for the services rendered by employees are
recognized as an expenses during the year when the employees render the services.
ii) LongTerm Employee Benefits
The liability for gratuity & leave encashment is determined using Projected Unit Credit
[PUC] Method and is accounted for on the basis of actuarial valuation in Accordance
with INDAS-19. The company recognizes the net obligation of a defined benefit plan in
its balance sheet as an asset or Liability. Actuarial Gains and Losses through re¬
measurements of the net defined benefit liability/(asset) are recognized in Other
Comprehensive Income.
15 Fair Value Measurement
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.
The fair value of an asset or a liability is measured using the assumptions that market
participants would use when pricing the asset or liability, assuming that market participants act
in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's
ability to generate economic benefits by using the asset in its highest and best use or by selling
it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, maximizing the use of relevant
observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial
statements are categorized 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 recognized in the financial statements on a recurring basis,
the Company determines whether transfers have occurred between levels in the hierarchy by
re-assessing categorization (based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period or each case.
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.
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