k "Provisions, contingent liabilities and contingent assets
The Company recognizes provisions when a present obligation (legal or constructive) as a result of a past event
exists and it is probable that an outflow of resources embodying economic benefits will be required to settle such
obligation and the amount of such obligation can be reliably estimated.
The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the risks and uncertainities surrounding the
obligation. When a provision is measured using the cash flow estimated to settle the present obligation, its carrying
amount is the present value of those cash flows (when the effect of the time value of money is material).
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the
occurance or non-occurance of one or more uncertain future events beyond the control of the Company or a present
obligation that is not recognised because it is not probable that the 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
recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but
discloses its existence in the financial statements.
Contingent assets are not recognised in the financial statements, however they are disclosed where the inflow of
economic benefits is probable. When the realisation of income is virtually certain, then the related asset is no longer
a contingent asset and is recognised as an asset.
Present obligations arising under onerous contracts are recognized and measured as provisions. An onerous
contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the
obligations under the contract exceed the economic benefits to be received from the contracts.
1 Financial instruments
Financial instruments is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.
(i) Initial recognition
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and
financial liabilities at fair value through profit and loss) are added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair value through profit and loss are recognised immediately
in the statement of profit and loss.
(ii) Financial assets
(I) Classification of financial assets
Financial assets are classified into the following specified categories: amortised cost, financial assets ‘at fair value
through profit and loss' (FVTPL), ‘Fair value through other comprehensive income' (FVTOCI). The classification
depends on the Company's business model for managing the financial assets and the contractual terms of cash
flows.
(II) Subsequent measurement
Debt Instrument - amortised cost
Debt instruments that meet the following conditions are subsequently measured at amortised cost:
(a) if the asset is held within a business model whose objective is to hold the asset in order to collect contractual
cash flows and
(b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Fair value through other comprehensive income (F VTOCI)
A ‘debt instrument’ 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.
(b) The asset’s contractual cash flows represent solely payments of principal and interest.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at
fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company
recognizes 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 statement of profit and loss. Interest earned whilst holding FVTOCI debt instrument is reported as
interest income using the effective interest rate method.
Fair value through Profit and Loss (FVTPL):
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for
categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to
designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However,
such election is considered only if doing so reduces or eliminates a measurement or recognition inconsistency
(referred to as ‘accounting mismatch’).
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the
statement of profit and loss.
(Ill) Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is
primarily derecognised (i.e. removed from the Company’s statement of financial position) 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
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass¬
through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When
it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred
control of the asset, the Company continues to recognise the transferred asset to the extent of the Company’s
continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset
and the associated liability are measured on a basis that reflects the rights and obligations that the Company has
retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of
the original carrying amount of the asset and the maximum amount of consideration that the Company could be
required to repay.
(IV) Effective interest method
The effective interest method is a method of calculating the amozrtized cost of a debt instrument and of allocating
interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimating
future cash receipts (including all fees and points paid or received that form an integral part of the effective interest
rate, transaction costs and other premium or discounts) through the expected life of the debt instrument, or, where
appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as
at FVTPL. Interest income is recognized in profit or loss and is included in the " "Other income"" line item.
(V) Impairment of financial assets
The Company assesses impairment based on expected credit losses (ECL) model to the following:
• Financial assets measured at amortised cost;
• Financial assets measured at fair value through other comprehensive income (FVTOCI) Expected credit losses
are measured through a loss allowance at an amount equal to:
• the 12-month expected credit losses (expected credit losses that result from those default events on the financial
instrument that are possible within 12 months after the reporting date); or
• full lifetime expected credit losses (expected credit losses that result from all possible default events over the
life of the financial instrument). The Company follows ‘simplified approach’ for recognition of impairment
loss allowance on:
• Trade receivables or contract revenue receivables; and • All lease receivables
Under the simplified approach, the Company does not track changes in credit risk. Rather, it recognises impairment
loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables.
The provision matrix is based on its historically observed default rates over the expected life of the trade receivable
and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are
updated and changes in the forward-looking estimates are analysed.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that
whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not
increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased
significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that
there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to
recognising impairment loss allowance based on 12-month ECL.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis
of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant
increases in credit risk to be identified on a timely basis.
(iii) Financial liabilities and equity instruments (I) Classification of debt or equity
Debt or equity instruments issued by the Company are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangements and the definitions of a financial liability and an
equity instrument.
Equity instruments:
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of
its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue
costs.
Repurchase of the Company's own equity instruments is recognised and deducted directly in equity. No gain or loss
is recognised on the purchase, sale, issue or cancellation of the Company's own equity instruments.
(II) Subsequent measurement
Financial liabilities measured at amortised cost:
Financial liabilities are subsequently measured at amortized cost using the effective interest rate (EIR) method.
Gains and losses are recognized in statement of profit and loss when the liabilities are derecognized as well as
through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium
on acquisition and fee or costs that are an integral part of the EIR. The EIR amortization is included in finance costs
in the statement of profit and loss.
Financial liabilities measured at fair value through profit and loss (FVTPL):
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value through profit or loss.
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. Separated embedded
derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial
date of recognition, and only if the criteria in Ind AS 109 are satisfied.
(III) Derecognition of financial liabilities
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 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.
(IV) Fair value measurement
The Company measures financial instruments such as debts and certain investments, at fair value at each balance
sheet 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 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)marketpricesinactivemarketsforidenticalassetsorliabilities.
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 balance sheet 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.
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.
m Cash and cash equivalents
Cash and cash equivalents in the balance sheet 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.
n Leases
Company as a lessee
The Company’s lease asset classes primarily consist of leases for land and buildings. The Company assesses
whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess
whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the
contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from
use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a corresponding
lease liability for all lease arrangements in which it is a lessee, except for leases with a term of 12 months or less
(short-term leases) and low value leases. For these short- term and low-value leases, the Company recognizes the
lease payments as an operating expense on a straight-line basis over the term of the lease.. The ROU assets are
initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments
made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They
are subsequently measured at cost less accumulated depreciation and impairment losses. ROU assets are
depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of
the underlying asset. ROU assets are evaluated for recoverability whenever events or changes in circumstances
indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable
amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset
basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such
cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs. The
lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease
payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the
incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a
corresponding adjustment to the related ROU asset if the Company changes its assessment of whether it will
exercise an extension or a termination option.
"Company as a lessor
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the
lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance
lease. All other leases are classified as operating leases.
For operating leases, rental income is recognized on a straight line basis over the term of the relevant lease,
o Earnings per share
Basic earnings per share is computed and disclosed using the weighted average number of equity shares outstanding
during the period. Dilutive earnings per share is computed and disclosed using the weighted average number of
equity and dilutive equity equivalent shares outstanding during the period, except when the results are anti-dilutive.
3 Key accounting judgements and estimates
The preparation of the Company’s financial statements requires the 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.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date,
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are described below:
(i) Useful lives ofproperty, plant and equipment
The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This
reassessment may result in change in depreciation expense in future periods.
(ii) Allowance for uncollectible trade receivables
Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate
allowances for estimated irrecoverable amounts. Estimated irrecoverable amounts are based on the ageing of the
receivable balances and historical experience. Additionally, a large number of minor receivables is grouped into
homogeneous groups and assessed for impairment collectively. Individual trade receivables are written off when
management deems them not to be collectible.
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