Provisions, contingent liabilities and contingent assets

Provisions are recognised when the Company has a
present obligation (legal or constructive) as a result of
a past event, 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. The expense
relating to a provision is presented in the Statement
of Profit and Loss net of any reimbursement.

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 recognised
as a finance cost. Provisions are reviewed at each
balance sheet and adjusted to reflect the current best
estimates.

Contingent liabilities

A contingent liability is a possible obligation that arises
from past events whose existence will be confirmed
by the occurrence or non-occurrence of one or
more uncertain future events beyond the control
of the Company or a present obligation that is not
recognized because it is not probable that an 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 recognized
because it cannot be measured reliably. The Company
does not recognize a contingent liability but discloses
its existence in the financial statements.

Contingent Assets

A contingent asset is not recognised unless it becomes
virtually certain that an inflow of economic benefits
will arise. When an inflow of economic benefits is
probable, contingent assets are disclosed in the
financial statements.

Contingent liabilities and contingent assets are
reviewed at each balance sheet date.

(l) Retirement and other employee benefits

Provident Fund and Employee State Insurance is
a defined contribution scheme established under
a State Plan. The contributions to the scheme are
charged to the Statement of Profit and Loss in the
year when employee rendered related services.

The Company has a defined benefit gratuity plan.
Every employee who has completed five years or more
of service gets a gratuity on post-employment at 15
days salary (last drawn salary) for each completed
year of service as per the rules of the Company. The
aforesaid liability is provided for on the basis of an
actuarial valuation on projected unit credit method
made at the end of the financial year. The scheme is
funded with an insurance Company in the form of a
qualifying insurance policy.

The Company has other long-term employee benefits
in the nature of leave encashment. The liability in
respect of leave encashment is provided for on the
basis of an actuarial valuation on projected unit credit
method made at the end of the financial year. The
aforesaid leave encashment is unfunded.

Re-measurement, comprising of actuarial gains and
losses, the effect of asset ceiling, excluding amounts
included in the net interest on the net defined benefit
liability and the return on plan assets (excluding
amounts included in net interest on the net defined
benefit liability), are recognised immediately in OCI in
the period in which they occur. Re-measurements are
not reclassified to profit or loss in subsequent periods.

(m) 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.

Financial assets

Initial recognition and measurement

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. All trade receivables do not contain a
significant financing component and are measured at
transaction price.

Subsequent measurement

For purposes of subsequent measurement, financial
assets are classified in four categories:

a) Debt instruments at amortised cost

b) Debt instruments at fair value through other
comprehensive income (FVTOCI)

c) Debt instruments, derivatives and equity
instruments at fair value through profit or loss
(FVTPL)

d) Equity instruments measured at fair value through
other comprehensive income (FVTOCI)

Debt instruments at amortised cost

A 'debt instrument' 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 other income in the Statement of Profit
and Loss. The losses arising from impairment are
recognised in the Statement of Profit and Loss.
This category generally applies to trade receivables,
security deposits & other receivables.

Debt instrument at FVTOCI

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, 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
recognized in the other comprehensive income (OCI).
However, the Company recognizes interest income,
impairment losses & 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 EIR method.

Debt instrument at 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 allowed only if doing so reduces or eliminates a
measurement or recognition inconsistency (referred
to as 'accounting mismatch'). The Company has
designated certain debt instrument as at FVTPL.

Debt instruments included within the FVTPL category
are measured at fair value with all changes recognized
in the Statement of Profit and Loss.

Equity investments

All equity investments in scope of Ind AS 109 are
measured at fair value. Equity instruments which
are held for trading are classified as at FVTPL. For all
other equity instruments, the Company may make an
irrevocable election to present in other comprehensive
income subsequent changes in the fair value. The
Company makes such election on an instrument-by¬
instrument basis. The classification is made on initial
recognition and is irrevocable.

If the Company decides to classify an equity instrument
as at FVTOCI, then all fair value changes on the
instrument, excluding dividends, are recognized in
the OCI. There is no recycling of the amounts from
OCI to profit and loss, even on sale of investment.
However, the Company may transfer the cumulative
gain or loss within equity.

Equity instruments included within the FVTPL
category are measured at fair value with all changes
recognized in the Statement of Profit and Loss.

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 (i.e. removed from
the Company's consolidated balance sheet) when:

a) The rights to receive cash flows from the asset
have expired, or

b) 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.

Impairment of financial assets

In accordance with Ind AS 109, the Company applies
expected credit loss (ECL) model for measurement
and recognition of impairment loss on the following
financial assets and credit risk exposure:

a) Financial assets that are debt instruments, and
are measured at amortised cost e.g., loans, debt
securities, deposits, trade receivables and bank
balance

b) Financial assets that are debt instruments and are
measured as at FVTOCI

c) Trade receivables or any contractual right to
receive cash or another financial asset that result
from transactions that are within the scope of Ind
AS 115

The Company follows 'simplified approach' for
recognition of impairment loss allowance on Trade
and other receivables.

The application of simplified approach does not
require the Company to track changes in credit risk.
Rather, it recognises impairment loss allowance based

on lifetime ECLs at each reporting date, right from its
initial recognition.

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 entity reverts to recognising impairment loss
allowance based on 12-month ECL.

Lifetime ECL are the expected credit losses resulting
from all possible default events over the expected
life of a financial instrument. The 12-month ECL is a
portion of the lifetime ECL which results from default
events that are possible within 12 months after the
reporting date.

ECL 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 entity
expects to receive (i.e., all cash shortfalls), discounted
at the original EIR. When estimating the cash flows,
an entity is required to consider:

a) All contractual terms of the financial instrument
(including prepayment, extension, call and similar
options) over the expected life of the financial
instrument. However, in rare cases when the
expected life of the financial instrument cannot
be estimated reliably, then the entity is required
to use the remaining contractual term of the
financial instrument.

b) Cash flows from the sale of collateral held or
other credit enhancements that are integral to
the contractual terms.

c) Financial assets measured as at amortised
cost, contractual revenue receivables and lease
receivables: ECL is presented as an allowance,
i.e., as an integral part of the measurement of
those assets in the balance sheet. The allowance
reduces the net carrying amount. Until the asset
meets write-off criteria, the company does not
reduce impairment allowance from the gross
carrying amount.

As a practical expedient, the Company uses a provision
matrix to determine impairment loss allowance on
portfolio of its trade receivables. The provision matrix
is based on its historically observed default rates

over the expected life of the trade receivables 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. On that basis, the Company
estimates the following provision matrix at the
reporting date:

(n) 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
designated 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 cash
credits and derivative financial instruments.

Subsequent measurement

The measurement of financial liabilities depends on
their classification, as described below:

Loans and borrowings

After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised
cost using the EIR method. Gains and losses are
recognised in 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.

This category generally applies to borrowings. For
more information, refer note 15 and 18.

Financial liabilities at fair value through profit
or loss

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.

Gains or losses on liabilities held for trading are
recognised 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 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.

(o) Derivative financial instruments

Initial recognition and subsequent measurement

The Company uses derivative financial instruments,
such as interest rate swaps, currency swaps, options
and forward contracts to hedge its interest rate
and foreign currency risks. Such derivative financial
instruments are initially recognised at fair value on
the date on which a derivative contract is entered
into and are subsequently re-measured at fair value.
Derivatives are carried as financial assets when the
fair value is positive and as financial liabilities when
the fair value is negative.

Any gains or losses arising from changes in the fair
value of derivatives are taken directly to Statement of
Profit and Loss.

(p) Cash and cash equivalents

Cash and cash equivalent in the balance sheet
comprise cash at banks and on 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.

For the purpose of the 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.

(q) Dividend

The Company recognises a liability to make cash
distributions to equity holders 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. A corresponding
amount is recognised directly in equity.

(r) Taxes

Current income tax

Current income tax assets and liabilities are measured
at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax
laws used to compute the amount are those that are
enacted or substantively enacted, at the reporting
date in the countries where the Company operates
and generates taxable income.

Current income tax relating to items recognised
outside profit or loss is recognised outside profit or loss
(either in other comprehensive income or in equity).
Current tax items are recognised in correlation to
the underlying transaction either in OCI or directly in
equity. Management periodically evaluates positions
taken in the tax returns with respect to situations
in which applicable tax regulations are subject to
interpretation and establishes provisions where
appropriate.

Deferred tax

Deferred tax is provided using the liability method
on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable
temporary differences, except:

a) When the deferred tax liability arises from the
initial recognition of goodwill or an asset or
liability in a transaction that is not a business
combination and, at the time of the transaction,
affects neither the accounting profit nor taxable
profit or loss

b) In respect of taxable temporary differences
associated with interests in joint ventures, when
the timing of the reversal of the temporary
differences can be controlled and it is probable
that the temporary differences will not reverse in
the foreseeable future

Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax
assets are recognised to the extent that it is probable
that taxable profit will be available against which
the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses
can be utilised except:

- When the deferred tax asset relating to the
deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that
is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor
taxable profit or loss

The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that
it is no longer probable that sufficient taxable profit
will be available to allow all or part of the deferred
tax asset to be utilised. Unrecognised deferred tax
assets are re-assessed at each reporting date and are
recognised to the extent that it has become probable
that future taxable profits will allow the deferred tax
asset to be recovered.

Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the year when
the asset is realised or the liability is settled, based on
tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.

Deferred tax relating to items recognised outside
Statement of Profit and Loss is recognised outside
Statement of Profit and Loss (in other comprehensive
income). Deferred tax items are recognised in

correlation to the underlying transaction either in
Statement of Profit and Loss or in OCI.

Deferred tax assets and deferred tax liabilities are
offset if a legally enforceable right exists to set off
current tax assets against current tax liabilities and
the deferred taxes relate to the same taxable entity
and the same taxation authority.

(s) Government grants

Government grants are recognised where there is
reasonable assurance that the grant will be received
and all attached conditions will be complied with.
When the grant relates to an expense item, it is
recognised as income on a systematic basis over the
periods that the related costs, for which it is intended
to compensate, are expensed. When the grant
relates to an asset, it is recognised as income in equal
amounts over the expected useful life of the related
assets.

(t) Earnings per share

Basic earnings per share are calculated by dividing the
net profit or loss for the period attributable to equity
shareholders after deducting preference dividend and
attributable taxes by the weighted average number
of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per
share, the net profit or loss for the period attributable
to equity shareholders and the weighted average
number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity
shares.

(u) Segment reporting

Based on "Management Approach" as defined in Ind
AS 108 -Operating Segments, the Chief Operating
Decision Maker (CODM) evaluates the Company's
performance and allocates the resources based on
an analysis of various performance indicators by
business segments. Inter segment sales and transfers
are reflected at market prices. The Company has
identified the Managing Director as the CODM
who assesses the financial performance and makes
strategic decisions. Refer note 37 for segment
information presented.