Provisions And Contigent Liabilty
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. When
the Company expects some or all of a provision to be
reimbursed, for example, under an insurance contract,
the reimbursement is recognised as a separate asset,
but only when the reimbursement is virtually certain.
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.
l. 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 recognised
because it is not probable that an outflow of resources
will be required to settle the obligation. A contingent
liability also arises in extreme 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.
m. Retirement and other employee benefits
Current employee benefits
Employee benefits payable wholly within twelve months
of availing employee services are classified as current
employee benefits. These benefits include salaries and
wages, bonus and ex-gratia. The undiscounted amount
of current employee benefits such as salaries and
wages, bonus and ex-gratia to be paid in exchange
of employee services are recognized in the period in
which the employee renders the related service.
Post-employment benefits
Defined contribution plans:
A defined contribution plan is a post-employment
benefit plan under which an entity pays specified
contributions to a separate entity and has no obligation
to pay any further amounts. The Indian subsidiaries
makes specified monthly contributions towards
Provident Fund and Employees State Insurance
Corporation ('ESIC'). The contribution of these Indian
subsidiaries is recognized as an expense in the
Statement of Profit and Loss during the period in which
employee renders the related service. There are no
other obligations other than the contribution payable
to the Provident Fund and Employee State Insurance
Scheme.
Defined benefit plan:
Gratuity liability, wherever applicable, is provided for on
the basis of an actuarial valuation done as per projected
unit credit method, carried out by an independent
actuary at the end of the year. The Companys'gratuity
benefit scheme is a defined benefit plan.
Accumulated leave, which is expected to be utilised
within the next 12 months, is treated as short-term
employee benefit. The Company measures the
expected cost of such absences as the additional
amount that it expects to pay as a result of the unused
entitlement that has accumulated at the reporting
date.
The Company treats accumulated leave expected to
be carried forward beyond twelve months, as long¬
term employee benefit for measurement purposes.
Such long-term compensated absences are
provided for based on the actuarial valuation using
the projected unit credit method at the year end. The
Company presents the leave as a short-term provision
in the balance sheet to the extent it does not have an
unconditional right to defer its settlement for 12 months
after the reporting date. Where Company has the
unconditional legal and contractual right to defer the
settlement for a period beyond 12 months, the same is
presented as long-term provision.
Remeasurements, comprising of actuarial gains
and losses, the effect of the asset ceiling, excluding
amounts included in 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 the
balance sheet with a corresponding debit or credit to
retained earnings through OCI in the period in which
they occur. Remeasurements are not reclassified to
Statement of Profit and Loss in subsequent periods.
n. 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.
Purchases or sales of financial assets that require
delivery of assets within a time frame established by
regulation or convention in the market place (regular
way trades) are recognised on the trade date, i.e., the
date that the Company commits to purchase or sell the
asset.
Subsequent measurement
For purposes of subsequent measurement, financial
assets are classified in four categories:
- Debt instruments at amortised cost
- Debt instruments at fair value through other
comprehensive income (FVTOCI)
- Debt instruments, derivatives and equity
instruments at fair value through profit or loss
(fvtpl)
- Equity instruments measured at fair value through
other comprehensive income (FVTOCI)
For purposes of subsequent measurement, financial
assets are classified in four categories:
i. Debt instruments at amortised cost
A 'debt instrument' is measured at the amortised
cost if both the following conditions are met -
- The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and
- 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.
This category is the most relevant to the Company.
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. This category generally applies
to trade and other receivables.
ii. Debt instrument at FVTOCI
A 'debt instrument' is classified as at the FVTOCI if
both of the following criteria are met:
- The objective of the business model is
achieved both by collecting contractual cash
flows and selling the financial assets, and
- 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 the Statement
of Profit and Loss. Interest earned whilst FVTOCI
debt instrument is reported as interest income
using the EIR method.
iii. 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 not designated any
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.
iv. 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.
Equity investments made by the Company in joint
ventures are carried at cost.
Derecognition
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 a Companys's balance sheet)
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 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
In accordance with Ind AS 109, the Company
applies expected credit loss (ECL) model for
measurement and recognition of impairment
loss on the financial assets which are not fair
valued through Statement of Profit and Loss. Loss
allowance for trade receivables with no significant
financing component is measured at an amount
equal to lifetime ECL at each reporting date, right
from its initial recognition. For all other financial
assets, expected credit losses are measured at
an amount equal to the 12-month ECL, unless
there has been a significant increase in credit
risk from initial recognition in which case those
are measured at lifetime ECL. 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.
ECL impairment loss allowance (or reversal)
recognized during the period is recognized as
income/ expense in the Statement of Profit and
Loss. This amount is reflected under the head
'other expenses' in the Statement of Profit and Loss.
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.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial
recognition, as financial liabilities at fair value
through Statement of Profit and 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 Companys's financial liabilities include trade
and other payables, loans and borrowings.
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.
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.
o. 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.
p. Segment Reporting
The Company operates in a single business i.e
Container Freight Stations hence there are no other
reportable segment.
q. Cash dividend and non-cash distribution to equity
holders of the parent
The Company recognises a liability to make cash or
non-cash distributions to equity holders of the parent
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.
Non-cash distributions are measured at the fair value
of the assets to be distributed with fair value re¬
measurement recognised directly in equity.
Upon distribution of non-cash assets, any difference
between the carrying amount of the liability and the
carrying amount of the assets distributed is recognised
in the Statement of Profit and Loss.
r. Earnings per equity share
Basic earnings per share (EPS) amounts is calculated
by dividing the profit for the period attributable to
equity holders by the weighted average number of
equity shares outstanding during the period.
For the purpose of calculating diluted earnings per
share, the net profit of 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.
The number of equity shares and potentially dilutive
equity shares are adjusted retrospectively for all periods
presented for any share splits and bonus shares issues
including for changes effected prior to the approval of
the financial statements by the Board of Directors.
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