Provisions, Contingent Liabilities and Contingent Assets

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
embodying economic benefits will be required to settle
the obligation, in respect of which a reliable estimate
can be made of the amount of obligation. Provisions
(excluding gratuity and compensated absences) are
determined based on management’s estimate required
to settle the obligation at the Balance Sheet date. In
case the time value of money is material, provisions are
discounted using a current pre-tax rate that reflects the
risks specific to the liability. When discounting is used,
the increase in the provision due to the passage of time is
recognised as a finance cost. These are reviewed at each
Balance Sheet date and adjusted to reflect the current
management estimates.

Contingent liabilities are disclosed in respect of possible
obligations that arise from past events, whose existence
would be confirmed by the occurrence or non-occurrence
of one or more uncertain future events not wholly within
the control of the Company. A contingent liability also
arises, in rare cases, where a liability cannot be recognised
because it cannot be measured reliably.

Contingent assets are disclosed where an inflow of
economic resources is probable.

xxiii. Commitments

Commitments are future liabilities for contractual
expenditure, classified and disclosed as estimated
amount of contracts remaining to be executed on capital
account and not provided for.

xxiv. Exceptional Items

When items of income and expense within profit or
loss from ordinary activities are of such size, nature
or incidence that their disclosure is relevant to explain
the performance of the enterprise for the period, the
nature and amount of such material items are disclosed
separately as exceptional items.

xxv. Recent accounting pronouncements

The Ministry of Corporate Affairs (MCA) notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules
as issued from time to time. On 31 March 2023, MCA
amended the Companies (Indian Accounting Standards)
Amendment Rules, 2023, as below:

Amendment to Ind AS 1, Presentation of Financial
Statements

This amendment requires the companies to disclose their
material accounting policies rather than their significant
accounting policies. Accounting policy information,
together with other information, is material when it can
reasonably be expected to influence decisions of primary
users of financial statements.

Amendment to Ind AS 8, Accounting Policies,
Changes in Accounting Estimates and Errors

The amedments replace the definition of a change in
accounting estimates with a definition of accounting
estimates. Under the new definition, accounting estimates
are “monetary amounts in financial statements that are
subject to measurement uncertainty”. The amendments

clarify the distinction between changes in accounting
estimates and changes in accounting policies and
the correction of errors. Also, they clarify how entities
use measurement techniques and inputs to develop
accounting estimates.

Amendment to Ind AS 12, Income Taxes

The amendments clarify how companies account
for deferred tax on transactions such as leases and
decommissioning obligations. The amendment has
narrowed the scope of the initial recognition exemption
so that it does not apply to transactions that give rise to
equal and offsetting temporary differences. Accordingly,
companies will need to recognise a deferred tax asset
and a deferred tax liability for temporary differences
arising on transactions such as initial recognition of a
lease and a decommissioning provision.

These amendments shall come into force with effect from
1 April 2023. The Company is assessing the potential
effect of the amendments on its financial statements. The
Company will adopt these amendments, if applicable,
from applicability date.