N Provisions, contingent liabilities and contingent assets
Provisions
A provision is recognised when the Company has a present
obligation (legal or constructive) as a result of past events and
it is probable that an outflow of resources will be required to
settle the obligation in respect of which a reliable estimate can
be made. Provisions are determined based on the best estimate
required to settle the obligation at the balance sheet date and
measured using the present value of cash flows estimated to
settle the present obligations (when the effect of time value of
money is material). These are reviewed at each balance sheet
date and adjusted to reflect the current best estimates.
Contingent liabilities
A contingent liability is a possible obligation that arises from
past events and 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 enterprise.
Contingent liabilities are disclosed by way of note to the
standalone Ind AS financial statements.
Contingent Assets
A contingent asset is a possible asset that arises 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 enterprise.
Contingent assets are neither recognised nor disclosed in the
standalone Ind AS financial statements.
O 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.
(a) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as
subsequently measured at amortised cost, fair value
through other comprehensive income (OCI), and fair
value through profit or loss.
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.
All financial assets are recognised initially at fair value
plus, in the case of financial assets not recorded at fair
value through profit or loss, transaction costs that are
attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at fair value
through profit or loss are expensed in the Statement
of Profit and Loss. Purchases or sales of financial
assets that require delivery of assets within a time
frame established by regulation or convention in the
marketplace (regular way trades) are recognised on the
trade date, i.e., the date that the Company commits to
purchase or sell the asset. Trade receivables that do not
contain a significant financing component are measured
transaction price.
Subsequent measurement
Subsequent measurement of financial assets depends on
the Company's business model for managing the asset
and the cash flow characteristics of the asset. For the
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); and
- Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
A 'financial asset' is measured at the amortised cost if
both the following conditions are met:
a) The asset is held within a business model whose
objective is to hold assets for collecting contractual
cash flows, and
b) 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 amortised cost using the
effective interest rate (EIR) method. 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 amortisation is included
in finance income in the Statement of Profit and Loss.
The losses arising from impairment are recognised in
the Statement of Profit and Loss.
Interest Income
For all debt instruments measured either at amortised
cost or at fair value through other comprehensive
income, interest income is recorded using the effective
interest rate (EIR). EIR is the rate that exactly discounts
the estimated future cash payments or receipts over
the expected life of the financial instrument or a shorter
period, where appropriate, to the gross carrying amount
of the financial asset or to the amortised cost of a
financial liability. When calculating the effective interest
rate, the Company estimates the expected cash flows
by considering all the contractual terms of the financial
instrument (for example, prepayment, extension, call and
similar options) but does not consider the expected credit
losses. Interest income is included in finance income in
the Statement of Profit and Loss.
Financial assets at FVTOCI (debt instrument)
A 'financial asset' is classified as at the FVTOCI if both of
the following criteria are met:
a) The objective of the business model is achieved
both by collecting contractual cash flows and
selling the financial assets, and
b) The asset's contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category
are measured initially as well as at each reporting date
at fair value. Fair value movements are recognised in
the other comprehensive income (OCI). However, the
Company recognises interest income, impairment losses
and reversals and foreign exchange gain or loss in the
Statement of Profit and Loss. On derecognition of the
asset, cumulative gain or loss previously recognised in
OCI is reclassified from the equity to the Statement of
Profit and Loss. Interest earned whilst holding FVTOCI
debt instrument is reported as interest income using
the EIR method.
Financial assets designated at fair value through OCI
(equity instruments)
In the case of equity instruments which are not held for
trading and where the Company has taken irrevocable
election to present the subsequent changes in fair
value in other comprehensive income, these elected
investments are initially measured at fair value plus
transaction costs and subsequently, they are measured
at fair value with gains and losses arising from changes
in fair value recognised in other comprehensive income
and accumulated in the 'Equity instruments through
other comprehensive income' under the head 'Other
Equity'. The cumulative gain or loss is not reclassified
to profit or loss on disposal of the investments. The
Company makes such election on an instrument -by¬
instrument basis.
If the Company decides to classify an equity instrument
as at FVTOCI, then all fair value changes on the
instrument, excluding dividends, are recognised in OCI.
There is no recycling of the amounts from OCI to the
Statement of Profit and Loss, even on sale of investment.
However, the Company may transfer the cumulative gain
or loss within equity.
A financial asset is held for trading if:
• it has been acquired principally for the purpose of
selling it in the near term; or
• on initial recognition it is part of a portfolio of
identified financial instruments that the Company
manages together and has a recent actual pattern
of short-term profit-taking; or
• it is a derivative that is not designated and effective
as a hedging instrument or a financial guarantee.
Gains and losses on these financial assets are never
recycled to the Statement of Profit and Loss. Dividends
are recognised as other income in the 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 FVTPL (equity instruments)
Financial assets at fair value through profit or loss
are carried in the Balance Sheet at fair value with net
changes in fair value recognised in the Statement of
Profit and Loss.
In case of equity instruments which are held for trading
are initially measured at fair value plus transaction
costs and subsequently, they are measured at fair value
with gains and losses arising from changes in fair value
recognised in the Statement of Profit and Loss.
This category includes derivative instruments and
listed equity investments which the Company had not
irrevocably elected to classify at fair value through OCI.
Dividends on listed equity investments are recognised
in the Statement of Profit and Loss when the right of
payment has been established.
Investment in Subsidiaries and Associates
Investment in Subsidiaries and Associates is carried at
deemed cost in the standalone financial statements.
The Company reviews its carrying value of investments
carried at cost annually, or more frequently when
there is indication for impairment. If the recoverable
amount is less than its carrying amount, the impairment
loss is recorded in the Statement of Profit and Loss.
When an impairment loss subsequently reverses, the
carrying amount of the Investment is increased to the
revised estimate of its recoverable amount, so that the
increased carrying amount does not exceed the cost
of the Investment. A reversal of an impairment loss is
recognised immediately in P&L.
Derecognition
A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial
assets) is primarily derecognised 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.
Impairment of financial assets
The Company applies the expected credit loss model
for recognising impairment loss on financial assets
measured at amortised cost, debt instruments at FVTOCI
and other contractual rights to receive cash or other
financial asset.
Expected credit losses are the weighted average of credit
losses with the respective risks of default occurring as
the weights. Credit loss is the difference between all
contractual cash flows that are due to the Company in
accordance with the contract and all the cash flows that
the Company expects to receive (i.e. all cash shortfalls),
discounted at the original effective interest rate (or
credit-adjusted effective interest rate for purchased or
originated credit-impaired financial assets). The Company
estimates cash flows by considering all contractual terms
of the financial instrument (for example, prepayment,
extension, call and similar options) through the expected
life of that financial instrument.
The Company measures the loss allowance for a financial
instrument at an amount equal to the lifetime expected
credit losses if the credit risk on that financial instrument
has increased significantly since initial recognition. If the
credit risk on a financial instrument has not increased
significantly since initial recognition, the Company
measures the loss allowance for that financial instrument
at an amount equal to 12-month expected credit losses.
12-month expected credit losses are portion of the life¬
time expected credit losses and represent the lifetime
cash shortfalls that will result if default occurs within the
12 months after the reporting date and thus, are not cash
shortfalls that are predicted over the next 12 months.
For trade receivables, the Company follows "simplified
approach for recognition of impairment loss. The
application of simplified approach does not require the
Company to track changes in credit risk.
Further, for the purpose of measuring lifetime expected
credit loss allowance for trade receivables, the Company
has used a practical expedient as permitted under Ind
AS 109. This expected credit loss allowance is computed
based on a provision matrix which takes into account
historical credit loss experience and adjusted for
forward-looking information.
(b) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition,
as financial liabilities at fair value through profit or
loss, loans and borrowings, payables, or as derivatives
as hedging instruments in an effective hedge, as
appropriate. 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. The Company's financial liabilities
include trade and other payables, loans and borrowings
including derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss
(FVTPL) include financial liabilities held for trading and
financial liabilities designated upon initial recognition
as at FVTPL. Financial liabilities are classified as
held for trading if they are incurred for the purpose
of repurchasing in the near term. This category also
includes derivative financial instruments entered into
by the Company that are not designated as hedging
instruments in hedge relationships as defined by Ind AS
109 'Financial instruments'.
Gains or losses on liabilities held for trading are
recognised in the Statement of Profit and Loss.
Financial liabilities at amortised cost
After initial recognition, financial liabilities are
subsequently measured at amortised cost using the EIR
method. Gains and losses are recognised in the Statement
of Profit and Loss when the liabilities are derecognised as
well as through the EIR amortisation process. 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 amortisation is included
as finance costs in the Statement of Profit and Loss.
Derecognition
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
financial liability 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
Statement of Profit and Loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and
the net amount is reported in the Balance Sheet if
there is a currently 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.
P Earnings per share
Basic earnings per share are calculated by dividing the net
profit or loss for the year attributable to equity shareholders
by the weighted average number of equity shares outstanding
during the year.
For calculating diluted earnings per share, the net profit
or loss for the year attributable to equity shareholders
and the weighted average number of shares outstanding
during the year are adjusted for the effects of all dilutive
potential equity shares.
Treasury shares are reduced while computing basic and
diluted earnings per share.
Q Current versus non-current classification
The Company presents assets and liabilities in the balance
sheet based on current/ non-current classification. An asset is
treated as current when it is:
- Expected to be realised or intended to be sold or
consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after the
reporting period, or
- Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least twelve
months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the
reporting period, or
- There is no unconditional right to defer the settlement
of the liability for at least twelve months after the
reporting period
The terms of the liability that could, at the option of the
counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current
assets and liabilities.
Based on the nature of products/activities of the Company
and the normal time between acquisition of assets and
their realisation in cash or cash equivalents, the Company
has determined its operating cycle as 12 months for the
purpose of classification of its assets and liabilities as current
and non-current.
R Derivative financial instruments and hedge accounting
Derivative financial instruments and hedge accounting
The Company uses derivative financial instruments such
as foreign currency forward contracts and option currency
contracts to hedge its foreign currency risks arising from
highly probable forecast transactions. The counterparty for
these contracts is generally a bank.
Derivatives not designated as hedging instruments
This category has derivative assets or liabilities which are not
designated as hedges.
Although the Company believes that these derivatives constitute
hedges from an economic perspective, they may not qualify for
hedge accounting under Ind AS 109. Any derivative that is either
not designated a hedge, or is so designated but is ineffective, is
recognised on Balance Sheet and measured initially at fair value.
Subsequent to initial recognition, derivatives are re-measured
at fair value, with changes in fair value being recognised in the
Statement of Profit and Loss. Derivatives are carried as financial
assets when the fair value is positive and as financial liabilities
when the fair value is negative.
Hedge Accounting
The derivatives that are designated as hedging instrument
under Ind AS 109 to mitigate risk arising out of foreign currency
transactions are accounted for as cash flow hedges. The
Company enters into hedging instruments in accordance with
policies as approved by the Board of Directors with written
principles which is consistent with the risk management
strategy of the Company.
The hedge instruments are designated and documented as
hedges at the inception of the contract. The effectiveness of
hedge instruments is assessed and measured at inception and
on an ongoing basis.
When a derivative is designated as a cash flow hedging
instrument, the effective portion of changes in the fair value
of the derivative is recognised in OCI, e.g., cash flow hedging
reserve and accumulated in the cash flow hedging reserve. Any
ineffective portion of changes in the fair value of the derivative
is recognised immediately in the Statement of Profit and
Loss. The amount accumulated is retained in cash flow hedge
reserve and reclassified to profit or loss in the same period or
periods during which the hedged item affects the Statement of
Profit and Loss. Under fair value hedge, the change in the fair
value of a hedging instrument is recognised in the Statement
of Profit and Loss. The change in the fair value of the hedged
item attributable to the risk hedged is recorded as part of the
carrying value of the hedged item and is also recognised in the
Statement of Profit and Loss.
If the hedging instrument no longer meets the criteria for
hedge accounting, then hedge accounting is discontinued
prospectively. If the hedging instrument is terminated or
exercised prior to its maturity/ contractual term, the cumulative
gain or loss on the hedging instrument recognised in cash
flow hedging reserve till the period the hedge was effective
remains in cash flow hedging reserve until the forecasted
transaction occurs. The cumulative gain or loss previously
recognised in the cash flow hedging reserve is reclassified to
the Statement of Profit and Loss upon the occurrence of the
related forecasted transaction. If the forecasted transaction is
no longer expected to occur, then the amount accumulated in
cash flow hedging reserve is reclassified immediately in the
Statement of Profit and Loss.
S Fair Value Measurement
The Company measures financial instruments, such as,
derivatives at fair value at each reporting date. 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, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or
disclosed in the standalone Ind AS 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 standalone
Ind AS 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.
The Company's management determines the policies and
procedures for both recurring fair value measurement, such
as derivative instruments and unquoted financial assets
measured at fair value, and for non-recurring measurement,
such as assets held for disposal in discontinued operation.
External valuers are involved for valuation of significant
assets, such as properties and unquoted financial assets, and
significant liabilities, such as contingent consideration, if any.
At each reporting date, the management analyses the
movements in the values of assets and liabilities which
are required to be re-measured or re-assessed as per
the Company's accounting policies. For this analysis, the
management verifies the major inputs applied in the latest
valuation by agreeing the information in the valuation
computation to contracts and other relevant documents.
The management, in conjunction with the Company's external
valuers, also compares the change in the fair value of each
asset and liability with relevant external sources to determine
whether the change is reasonable.
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.
This note summarises accounting policy for fair value. Other
fair value related disclosures are given in the relevant notes.
Cash and Cash Equivalents
Cash and cash equivalents in the 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 subject to an insignificant risk
of change 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.
U Dividend to equity holders of the Company
The Company recognises a liability to pay dividend to equity
holders of the Company when the distribution is authorised
and the distribution is no longer at the discretion of the
Company. As per the corporate laws in India a distribution is
authorised when it is approved by the shareholders, However,
Board of Directors of a company may declare interim dividend
during any financial year out of the surplus in the Statement
of Profit and Loss and out of the profits of the financial year
in which such interim dividend is sought to be declared. A
corresponding amount is recognised directly in equity.
V Foreign exchange gains and losses
The Company's functional and reporting currency is INR.
Exchange differences are dealt with as follows:
Foreign currency transactions are recorded at the exchange
rate that approximates the actual rate at the date of
transaction. Monetary items denominated in a foreign
currency are reported at the closing rate as at the date of
balance sheet. Non-monetary items, which are carried at fair
value denominated in foreign currency, are reported at the
exchange rate that existed when such values were determined,
otherwise on historical exchange rate that existed on the date
of transaction.
The exchange difference arising on the settlement of monetary
items or on reporting these items at rates different from
the rates at which these were initially recorded/reported in
previous financial statements are recognised as income/
expense in the period in which they arise. Further, where
foreign currency liabilities have been incurred in connection
with property, plant and equipment, the exchange differences
arising on reinstatement, settlement thereof during the
construction period are adjusted in the cost of the concerned
property, plant and equipment to the extent of exchange
differences arising from foreign currency borrowings are
regarded as an adjustment to interest costs in accordance of
para 6 (e) as per Ind AS 23.
W Treasury shares
The Company has created an Employee Benefit Trust (EBT) for
providing share-based payment to its employees. The Company
uses EBT as a vehicle for distributing shares to employees
under the Employee Stock Purchase Scheme 2020. The EBT
buys shares of the Company from the market, for giving shares
to employees. The Company treats EBT as its extension and
shares held by EBT are treated as treasury shares.
Own equity instruments that are reacquired (treasury shares)
are recognised at cost and deducted from other equity. No
gain or loss is recognised in profit or loss on the purchase,
sale, issue or cancellation of the Company's own equity
instruments. Treasury shares are reduced while computing
basic and diluted earnings per share.
The Company transfers the excess of exercise price over
the cost of acquisition of treasury shares, net of tax, by EBT
to General Reserve. In the event of sale in open market,
the company transfers the excess of sale price over cost of
acquisition of treasury shares, net of tax, to Other Equity.
X Share-based Payments
Employees (including senior executives) of the Company
receive remuneration in the form of share-based payments,
whereby employees render services as consideration for
equity instruments (equity-settled transactions).
Equity-settled transactions
The cost of equity-settled transactions is determined by the fair
value at the date when the grant is made using an appropriate
valuation model. Further details are given in Note 42.
That cost is recognised, together with a corresponding
increase in share-based payment (SBP) reserves in equity,
over the period in which the performance and/or service
conditions are fulfilled in employee benefits expense. The
cumulative expense recognised for equity-settled transactions
at each reporting date until the vesting date reflects the extent
to which the vesting period has expired and the Company's
best estimate of the number of equity instruments that will
ultimately vest. The expense or credit in the Statement of Profit
and Loss for a period represents the movement in cumulative
expense recognised as at the beginning and end of that period
and is recognised in employee benefits expense.
Service and non-market performance conditions are not
taken into account when determining the grant date fair
value of awards, but the likelihood of the conditions being
met is assessed as part of the Company's best estimate of
the number of equity instruments that will ultimately vest.
Market performance conditions are reflected within the grant
date fair value. Any other conditions attached to an award, but
without an associated service requirement, are considered
to be non-vesting conditions. Non-vesting conditions are
reflected in the fair value of an award and lead to an immediate
expensing of an award unless there are also service and/or
performance conditions.
No expense is recognised for awards that do not ultimately vest
because non-market performance and/or service conditions
have not been met. Where awards include a market or non¬
vesting condition, the transactions are treated as vested
irrespective of whether the market or non-vesting condition is
satisfied, provided that all other performance and/or service
conditions are satisfied.
When the terms of an equity-settled award are modified, the
minimum expense recognised is the grant date fair value of
the unmodified award, provided the original vesting terms
of the award are met. An additional expense, measured as
at the date of modification, is recognised for any modification
that increases the total fair value of the share-based payment
transaction, or is otherwise beneficial to the employee. Where
an award is cancelled by the entity or by the counterparty, any
remaining element of the fair value of the award is expensed
immediately through profit or loss.
Y Climate - related matters
The Company considers climate-related matters in estimates
and assumptions, where appropriate. This assessment
includes a wide range of possible impacts on the Company due
to both physical and transition risks. Even though the Company
believes its business model and products will still be viable
after the transition to a low-carbon economy, climate-related
matters increase the uncertainty in estimates and assumptions
underpinning several items in the financial statements. Even
though climate-related risks might not currently have a
significant impact on measurement, the Company is closely
monitoring relevant changes and developments, such as new
climate-related legislation.
NOTE 2.2 SIGNIFICANT ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS
In the application of the Company's accounting policies, the
management of the Company is required to make judgements,
estimates and assumptions about the carrying amounts of assets
and liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects only
that period or in the period of the revision and future periods if the
revision affects both current and future periods.
Judgements
In the process of applying the Company's accounting policies,
management has made the following judgements, which have the
most significant effect on the amounts recognised in the Standalone
financial statements:
Determining the lease term of contracts with renewal and
termination options - Company as lessee
The Company determines the lease term as the 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 has several lease contracts that include extension and
termination options. The Company applies judgement in evaluating
whether it is reasonably certain whether or not to exercise the
option to renew or terminate the lease. That is, it considers all
relevant factors that create an economic incentive for it to exercise
either the renewal or termination. 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 to
terminate. (refer note 40)
Estimates and assumptions
The following are the areas of estimation uncertainty and critical
judgements that the management has made in the process of
applying the Company's accounting policies and that have the most
significant effect on the amounts recognised in the standalone Ind
AS financial statements: -
Useful lives of depreciable tangible assets and Intangible assets
Management reviews the useful lives of depreciable assets at each
reporting date. As at March 31, 2026 management assessed that
the useful lives represent the expected utility of the assets to the
Company. Further, there is no significant change in the useful lives
as compared to previous year.
The intangible assets are amortised over the estimated useful life.
The estimated useful life and amortisation method are reviewed at
the end of each reporting period, with the effect of any changes in
estimate being accounted for on a prospective basis.
Defined benefit plans
The cost of the defined benefit plan and other post-employment
benefits and the present value of such obligation are determined
using actuarial valuations. An actuarial valuation involves making
various assumptions that may differ from actual developments in the
future. These include the determination of the discount rate, future
salary increases, mortality rates and future pension increases.
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. (refer note 34)
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash
generating unit exceeds its recoverable amount, which is the higher
of its fair value less costs of disposal and its value in use. The fair
value less costs of disposal calculation is based on available data
from binding sales transactions, conducted at arm's length, for
similar assets or observable market prices less incremental costs
for disposing of the asset. The value in use calculation is based
on a DCF model. The cash flows are derived from the budget for
determined period and do not include restructuring activities that the
Company is not yet committed to or significant future investments
that will enhance the asset's performance of the CGU being tested.
The recoverable amount is sensitive to the discount rate used for the
DCF model as well as the expected future cash-inflows, the growth
rate used for extrapolation purposes and the impact of general
economic environment (including competitors).
Leases - Estimating the incremental borrowing rate
The Company cannot readily determine the interest rate implicit in
the lease, therefore, it uses its incremental borrowing rate (IBR)
to measure lease liabilities. 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 therefore reflects what the Company 'would have to pay',
which 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. (refer note 40)
Leases - Estimating the period of lease contracts with related
parties
In case of lease contracts with related parties, there exist economic
incentive for the Company to continue using the leased premises
for a period longer than the 11 months. The period of expected
lease in these cases is a matter of estimation by the management.
The estimate of lease period impacts the recognition of ROU asset,
lease liability and its impact in the Statement of Profit and Loss.
The lease terms in the arrangements with related parties have
been determined considering the period for which management
has an economic incentive to use the leased asset (i.e. reasonably
certain to use the asset for the said period of economic incentive).
Such assessment of incremental period is based on management
assessment of various factors including the remaining useful life
of the asset as on the date of transition. The management has
assessed period of arrangements with related parties as higher of
lease period mentioned in the agreement or 10 years as at April 01,
2019. (refer note 40)
NOTE 2.3 NEW AND AMENDED STANDARDS
The Company applied for the first-time certain standards and
amendments, which are effective for annual periods beginning
on or after 1 April 2025. The Company has not early adopted any
standard, interpretation or amendment that has been issued but is
not yet effective.
(i) Amendments to Ind AS 21 - Lack of exchangeability
The Ministry of Corporate Affairs (MCA) 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
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 1 April 2025. When applying the
amendments, an entity cannot restate comparative information.
The amendments do not have a material impact on the
Company's financial statements.
(ii) Amendments to Ind AS 1 - Classification of Liabilities as
Current or Non-current and Non-current Liabilities with
Covenants
In August 2025, the MCA notified amendments to paragraphs
69 to 76 of Ind AS 1 to specify the requirements for classifying
liabilities as current or non-current. The amendments clarify:
• What is meant by a right to defer settlement
• That a right to defer must exist at the end of the
reporting period
• That classification is unaffected by the likelihood that an
entity will exercise its deferral right
• That only if an embedded derivative in a convertible
liability is itself an equity instrument would the terms of
a liability not impact its classification
In addition, a requirement has been introduced to require
disclosure when a liability arising from a loan agreement
is classified as non-current and the entity's right to defer
settlement is contingent on compliance with future covenants
within twelve months.
If there is a breach of a material covenant of a long term loan
arrangement on or before the end of the reporting period,
resulting in the liability becoming payable on demand as at
the reporting date, and the lender agrees—after the reporting
period but before the financial statements are approved for
issue—not to demand repayment for at least 12 months
as a consequence of the breach, this shall be treated as an
adjusting event. Accordingly, the entity is not required to
classify the liability as current. The amendments are effective
for annual reporting periods beginning on or after 1 April 2025
retrospectively in accordance with Ind AS 8.
The amendments do not have a material impact on the
Company's financial statements.
(iii) Amendments to Ind AS 7 and Ind AS 107 - Supplier Finance
Arrangements
In August 2025, the MCA notified amendments to Ind
AS 7 Statement of Cash Flows and Ind AS 107 Financial
Instruments: Disclosures to clarify the characteristics
of supplier finance arrangements and require additional
disclosure of such arrangements. The disclosure requirements
in the amendments are intended to assist users of financial
statements in understanding the effects of supplier finance
arrangements on an entity's liabilities, cash flows and
exposure to liquidity risk.
The amendments do not have a material impact on the
Company's financial statements.
(iv) International Tax Reform — Pillar Two Model Rules -
Amendments to Ind AS 12
In August 2025, the MCA notified amendments to Ind AS 12
Income Taxes in response to the OECD's BEPS Pillar Two
rules and include:
• A mandatory temporary exception to the recognition and
disclosure of deferred taxes arising from the jurisdictional
implementation of the Pillar Two model rules; and
• Disclosure requirements for affected entities to help
users of the financial statements better understand an
entity's exposure to Pillar Two income taxes arising from
that legislation, particularly before its effective date.
The mandatory temporary exception - the use of which is
required to be disclosed - applies immediately. The remaining
disclosure requirements apply for annual reporting periods
beginning on or after 1 April 2025, but not for any interim
periods ending on or before 31 March 2026.
The amendments had no impact on the Company's standalone
financial statements as the Company is not in scope of the
Pillar Two model rules.
NOTE 2.4 STANDARDS NOTIFIED BUT NOT YET EFFECTIVE
The new and amended standards that are notified by the Ministry
of Corporate Affairs (MCA), but not yet effective, up to the date of
issuance of the Company's financial statements are disclosed below.
The Company will adopt these amendments to the standards, when
they become effective.
(i) Amendments to Ind AS 1 - Classification of Liabilities as
Current or Non-current and Non-current Liabilities with
Covenants
In accordance with Ind AS 1 currently applicable, breach of an
immaterial covenant is ignored deciding in current vs. non¬
current classification of liabilities. Also, in case of breach of
a material covenant of a non-current loan on or before the
reporting date, the entity can obtain waiver from the lender
after the reporting date and continue to classify the loan as
non-current liability.
In accordance with changes to Ind AS 1 already notified by
the MCA, the above relaxations to classify loan as non-current
liability will not be available from FY 2026-27 onward and need
to be applied retrospectively. Consequently:
• A breach of either material or immaterial covenant will
trigger current classification of liability.
• To continue classifying loan as non-current liability,
entities will need to obtain waiver from the breach on or
before the reporting date.
The Company is currently assessing the impact the amendments
will have on its standalone financial statements.
Cash credit/export packing credit/working capital loans from banks
Cash credit/export packing credit/working capital loans from banks are secured by hypothecation of trade receivables, raw materials, semi
finished, finished goods and consumable stores.
The interest rates for cash credit/export packing credit/working capital loans from banks range from 5.85% to 8.75% per annum (Previous
year 5.05% to 8.90% per annum).
The Company has been sanctioned working capital limits from banks during the year on the basis of security of current assets of the Company.
The revised quarterly returns/statements filed by the Company for each quarter with such banks are in agreement with the books of accounts
of the Company. (Refer note 41).
•Represents :
Demand and penalty for service tax under reverse charge basis on commission paid to non-executive Directors for the financial year 2014-15
to 2016-17. During the previous year, the Company had filed an appeal before CESTAT Ludhiana.
‘‘Represents:
(i) Rs. 6.1 million (Previous year Rs. 6.1 million) being penalties under Section 271(1)(c) of Income Tax Act, 1961 levied for assessment
years 2004-2005 and 2006-2007.
NOTE 31 - CONTINGENT LIABILITIES (TO THE EXTENT NOT PROVIDED FOR) (Contd..)
(ii) Other disputed demands of Rs. 575.2 million pertaining to assessment year 2015-2016, 2016-2017, 2017-18, 2018-19,2019-2020, 2020-21
, 2021-22, 2022-23, 2023-24 & 2024-25 (Previous year Rs. 381.9 million pertaining to assessment year , 2015-16, 2016-17, 2017-18, 2019¬
20, 2020-21 & 2022-23 ).
These matters are subject to legal proceedings in the ordinary course of business. The Company has assessed that it is only possible, but not
probable, that outflow of economic resources will be required.
There are numerous interpretative issues relating to the Supreme Court (SC) judgement on PF dated 28th February, 2019. As a matter of
caution, the Company has applied the judgement on a prospective basis from the date of the SC order. The Company will update its provision
for the period prior to the Supreme Court judgement, on receiving further clarity on the subject.
and retirement age of the employee and the gratuity benefit is payable on termination/retirement of the employee. There is no maximum
limit for the payment of gratuity benefit. The present value of obligation is determined based on an actuarial valuation as at the reporting
date using the Projected Unit Credit Method.
The fund has the form of an irrevocable trust and it is governed by Board of Trustees. The Board of trustees is responsible for the
administration of the plan assets and for the definition of investment strategy. The scheme is funded with qualifying insurance policies.
The Company is contributing to trust towards the payment of premium of such gratuity schemes.
(VII) Actuarial risks
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:
Interest rate risk
The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit
obligation will tend to increase.
Salary Inflation risk
Higher than expected increases in salary will increase the defined benefit obligation.
Demographic risk
This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability
and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon
the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in
the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long
service employee.
Furthermore, in presenting the above sensitivity analysis the present value of the defined benefit obligations has been calculated
using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the
defined benefit obligation liability recognised in the standalone Ind AS financial statements.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
The sensitivity analysis above have been determined based on reasonably possible changes of the respective assumption
occurring at the end of the reporting period, while holding all other assumptions constant.
NOTE 39 - SEGMENT INFORMATION
I Segment accounting policies:
a. Product and Services from which reportable segment derive their revenues (Primary Business Segments)
Based on the nature and class of product and services , their customers and assessment of differential risks and returns and
financial reporting results reviewed by Chief Operating Decision Maker (CODM) , the Company has identified the following business
segments which comprises of.
- Yarn
- Towel
- Bedsheets
- Paper and Chemicals
b. Geographical segments (secondary business segments)
The geographical segments considered and reviewed by Chief Operating Decision Maker for disclosure are based on markets,
broadly as under:
India
USA
Rest of the world
c. Segment accounting policies
Segment accounting policies: In addition to the significant accounting policies applicable to the business segment as set out in note
2, the accounting policies in relation to segment accounting are as under:
i. Segment assets and liabilities:
Segment assets include all operating assets used by a segment and consist principally of cash, debtors, inventories, right of
use assets and property, plant and equipment including capital work in progress, net of allowances and provisions, which
are reported as direct offset in the balance sheet. Segment liabilities include all operating liabilities and consist principally
of creditors and accrued liabilities.
ii Segment revenue and expenses:
Joint revenue and expenses of segments are allocated amongst them on reasonable basis. All other segment revenue and
expenses are directly attributable to the segments.
iii Inter segment sales:
Inter segment sales are accounted for at cost plus appropriate margin (transfer price) and are eliminated in consolidation.
iv Segment results :
Segment results represent the profit before tax earned by each segment without allocation of central administration costs,
other non operating income as well as finance costs. Operating profit amounts are evaluated regularly by the Chief Operating
Decision Maker in deciding how to allocate resources and in assessing performance.
For maturity analysis of lease liability, refer note 44 Financial risk management framework and policies under maturities of financial liabilities.
The Company had total cash outflows for leases of Rs. 102.7 million (previous year: Rs. 92.2 million). There are no future cash outflows
relating to leases that have not yet commenced.
There are no leases having variable lease payments. The Company has not entered into any residual value contracts during the year. There
are no sale and leaseback transactions during the year.
Extension and termination options are included in a number of leases. These are used to maximise operational flexibility in terms of managing
the assets used in the Company's operations. The majority of extension and termination options held are exercisable only by the Company
and not by the respective lessor.
Payments associated with short-term leases are recognised on a straight-line basis as an expense in the Statement of Profit and Loss. Short¬
term leases are leases with a lease term of 12 months or less.
NOTE 42 -EMPLOYEES1 STOCK OPTION PLANS
The Board of Directors and the Shareholders of the Company had approved a Scheme called as "Trident Limited Employee Stock Options
Scheme - 2020 (" ESOS Scheme") and "Trident Limited Employee Stock Purchase Scheme - 2020" (" ESPS Scheme") in their meeting held on
July 9, 2020 and May 16, 2020 respectively. Pursuant to the ESOS Scheme, the Company has constituted Trident Limited Employees Welfare
Trust ('Trust') to acquire, hold and allocate/transfer equity shares of the Company to eligible employees (as defined in the ESOS and ESPS
scheme) from time to time on the terms and conditions specified under the ESOS Scheme and ESPS Scheme.
The said trust had purchased, during the financial year 2020-21, Company's equity shares aggregated to 100,000,000 equity shares from
the secondary open market at cost of Rs. 7.50 per share for which the Company had given loan to trust amounting to Rs. 751.0 million. The
financial statements of the Trust have been included in the standalone Ind AS financial statements of the Company in accordance with the
requirements of Ind AS and cost of such treasury shares has been presented as a deduction in other equity. Such number of equity shares
(which are lying with trust) have been reduced while computing basic and diluted earnings per share.
Trident Employees Stock Options Scheme, 2020
The Company had granted 66,00,000 stock options under the ESOS Scheme on November 12, 2022. Each option granted and vested under the
Scheme shall entitle to the holder to acquire 1 equity share of Re. 1 each.
NOTE 44 - FINANCIAL INSTRUMENTS
Capital management
For the purpose of Company's capital management, capital includes issued equity capital and all reserves attributable to equity holders
of the Company.
The Company's capital management objectives are:
- to ensure the Company's ability to continue as a going concern
- to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
The Company manages capital risk in order to maximise shareholders' profit by maintaining sound/optimal capital structure through
monitoring of financial ratios, such as net debt-to-equity ratio on a monthly basis and implements capital structure improvement plan when
necessary. There is no change in the overall capital risk management strategy of the Company compared to last year.
NOTE 50 - The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail
(edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software except that, audit trail
feature is enabled from December 16, 2025 for direct database changes . Further no instance of audit trail feature being tampered with was
noted in respect of accounting softwareto the extent it was enabled. Additionally, the audit trail of relevant prior years have been preserved
by the company as per the statutory requirement for record retention to the extent it was enabled and recorded in those respective year.
NOTE 51 - The Government of India, vide Notification dated November 21, 2025, has notified the Code on Wages, 2019, the Industrial
Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020 (collectively
referred to as "the Labour Codes"), which consolidate and replace existing multiple labour legislations. In accordance with Ind AS 19 —
Employee benefits, changes to employee benefit plans amounting to Rs. 44.9 million, resulting from the new labour codes are treated as plan
amendments, requiring immediate recognition of the past service cost as expense in the statement of profit and loss for the year ended March
31,2026 in accordance with Ind AS 19 — Employee benefits.
NOTE 52 - In the month of October 2023, the Income Tax Department ('department') conducted a search under Section 132 of the Income Tax Act,
1961 at certain locations of Company including its manufacturing and Indian subsidiaries and residence of few of its employees/key managerial
personnel. During the search proceedings, the Company provided necessary information and responses to the department. Also, the department
has taken certain documents, few laptops and data backups for further investigation. The business and operations of the Company continued
without any disruptions. The department continued with its post search proceedings for various assessment years during the FY 2025-26 with
aggregate demand (including interest) of Rs. 481.6 million. The department has concluded the assessment proceedings for all the relevant
assessment years from FY 2015-16 to FY 2024-25 and the Company has received the consequential assessment orders. The Company has filed
appeals, wherever additions are made, against the said orders before learned Commissioner of Income Tax (Appeals). The company has received
appellate order from learned Commissioner (Appeals) for AY 2021-22 and the same has been majorly decided in its favour and the management
is hopeful of getting favourable orders for other years also. Based on the foregoing, management is of the view that no material adjustments
are required to these standalone financial statements. During the current year, the Company has deposited Rs. 133.2 million under protest in
connection with dispute with Income Tax authorities for the AY 2018-19, 2019-20, 2020-21,2021-22, 2022-23, 2023-24 & 2024-25.
NOTE 57 - The management has evaluated the likely impact of prevailing uncertainties relating to reciprocal tariffs and geopolitical tensions
involving the US and Iran and believes that there are no material impacts on the financial statements of the Company for the year ended
March 31, 2026. However, the management will continue to monitor the situation from the perspective of potential impact on the operations
of the company.
NOTE 58 - Subsequent Events
There are no other material adjusting or non-adjusting subsequent events, except as already disclosed in these standalone financial statements.
NOTE 59 - The Company had constituted Trident Limited Employees Welfare Trust ('Trust') to acquire, hold and allocate/transfer equity
shares of the Company to eligible employees of the employee share purchase scheme from time to time on the terms and conditions
specified under the Scheme. During the year ended March 31, 2024, the Company had obtained approval of shareholders of the Company for
implementation of (i) Trident Limited General Employee Benefits Scheme - 2023 and (ii) utilisation of proceeds from sale of unappropriated
62,328,640 Equity Shares from Trident Limited Employee Stock Purchase Scheme - 2020, utilisation of excess funds lying with the Trust and
funds which Trust may receive from various sources in future for Trident Limited General Employee Benefits Scheme - 2023. The Company
has also obtained an expert opinion on compliance in this regard. During current year, the trust sold 1,50,72,214 shares (previous year:
4,79,73,426 shares) in the open market and recorded a profit of Rs. 307.2 million (net of tax Rs. 54.3 million) (previous year: Rs. 841.6 million
(net of tax Rs. 131.7 million) which was recorded in other equity.
NOTE 60 - Regroupings/ Reclassifications have been made in the comparative financial information of financial statements, wherever
required, in order to bring them in line with the accounting policies and classification as per the financial statements for the year ended March
31, 2026 prepared in accordance with Schedule III of Companies Act, 2013, requirements of AS 1 - 'Presentation of financial statements' and
other applicable AS principles.
NOTE 61 - Other Statutory Information
(i) The Company does not have any benami property, where any proceeding has been initiated or pending against the Company for holding
any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.
(ii) The Company does not have any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of
the Companies Act, 1956.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has not traded or invested in crypto currency or virtual currency during the financial year.
(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries)
with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company
(Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding
(whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding
Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
NOTE 61 - Other Statutory Information (Contd..)
(vii) The Company does not have any such transaction which is not recorded in the books of account that has been surrendered or disclosed
as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant
provisions of the Income Tax Act, 1961.
(viii) The Company has not been declared wilful defaulter by any bank or financial insitution or government or any government authority.
(ix) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies
(Restriction in number of Layers) Rules, 2017.
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