3.12 Provisions, Contingent Liabilities and Contingent Assets:
Provision is recognized when the Company has a present obligation (legal or constructive) as a
result of past events and it is probable that the outflow of resources will be required to settle the
obligation and in respect of which reliable estimates can be made.
A disclosure for contingent liability is made when there is a possible obligation, that may, but
probably will not require an outflow of resources. When there is a possible obligation or a present
obligation in respect of which the likelihood of outflow of resources is remote, no provision/
disclosure is made. The Company does not recognize a contingent liability but discloses its
existence in the financial statements.
Contingent assets are not recognized in the financial statements. Provisions and contingencies are
reviewed at each balance sheet date and adjusted to reflect the correct management estimates.
If the effect of the time value of money is material, provisions are discounted using a current pre¬
tax rate that reflects, using a current pre-tax rate that reflects, when appropriate, the risks specific
to the liability. Commitments include the amount of purchase order (net of advances) issued to
parties for completion of assets. Provisions, contingent liabilities, contingent assets and
commitments are renewed at each balance sheet date.
3.13 Cash and Cash Equivalents
Cash and cash equivalent comprise cash on hand and demand deposits with banks which are short¬
term, highly liquid investments that are readily convertible into known amounts of cash and which
are subject to insignificant risk of changes in value.
3.14 Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a
result of a past event, and 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.
If the effect of the time value of money is material, provisions are discounted using a current pre¬
tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used,
the increase in the provision due to the passage of time is recognized as a finance cost.
3.15 Government Subsidies
The Company recognizes government subsidies / grant as per the criteria given under Ind AS 20.
i. Government subsidies are recognized when there is reasonable assurance that the same
will be received.
ii. Revenue subsidies (for expenses that are already incurred) are reduced from the respective
expenditure presented in the profit and loss account.
iii. Capital subsidies relating to specific fixed assets are recognized in statement of profit and
loss on a systematic basis over the useful life of the assets.
3.16 Exceptional items
Certain occasions, the size, type or incidence of an item of income or expense, pertaining to the
ordinary activities of the Company is such that its disclosure improves the understanding of the
performance of the Company, such income or expense is classified as an exceptional item and
accordingly, disclosed in the notes accompanying to the financial statements.
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