1.3.11 Provisions, Contingent Liabilities and Capital Commitments

Provisions are recognized when there is 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. Provisions
are reviewed at each balance sheet date and are adjusted to reflect the current best estimate.

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 recognized as a finance cost.

Contingent liabilities are possible obligations whose existence will only be confirmed by future events
not wholly within the control of the Company, or present obligations where it is not probable that an
outflow of resources will be required, or the amount of the obligation cannot be measured with
sufficient reliability. Information on contingent liability is disclosed in the Notes to the Financial
Statements.

Contingent assets are not recognized but disclosed when the inflow of economic benefits is probable.
However, when the realization of income is virtually certain, then the related asset is no longer a
contingent asset, but it is recognized as an asset.

1.3.12 Fair Value measurement

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 which can be accessed
by the Company for the asset or liability.

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.

The Company uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximizing the use of relevant observable inputs
and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorized 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 recognized in the financial statements on a recurring basis, the
Company determines whether transfers have occurred between levels in the hierarchy by re-assessing
categorization (based on the lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.

1.3.13 Financial Assets

Initial recognition and measurement

All financial assets are recognized 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 recognized on
the trade date, i.e., the date that the Company commits to purchase or sell the asset.

Subsequent measurement

Subsequent measurement is determined with reference to the classification of the respective financial
assets. Based on the business model for managing the financial assets and the contractual cash flow
characteristics of the financial asset, the Company classifies financial assets as subsequently measured
at amortized cost, fair value through other comprehensive income or fair value through profit and
loss.

Debt instruments at amortized cost

Debt instruments such as trade and other receivables, security deposits and loans given are measured
at the amortized 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.

After initial measurement, such financial assets are subsequently measured at amortized cost using
the effective interest rate (EIR) method. Amortized 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
amortization is included in finance income in the profit or loss. The losses arising from impairment are
recognized in the profit or loss.

Debt instruments at Fair value through Other Comprehensive Income (FVOCI)

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).

Debt instruments at Fair value through Profit or Loss (FVTPL)

FVTPL is a residual category for debt instruments excluding investments in subsidiary and associate
companies. Any debt instrument, which does not meet the criteria for categorization as at amortized
cost or as FVTOCI, is classified as at FVTPL.

After initial measurement, any fair value changes including any interest income, foreign exchange gain
and losses, impairment losses and other net gains and losses are 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 TDSL decides to classify the
same either as at FVTOCI or FVTPL. TDSL makes such election on an instrument-by-instrument basis.
The classification is made on initial recognition and is irrevocable.

Equity instruments included within the FVTPL category are measured at fair value with all changes
recognized in the Profit or loss.

De-recognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is primarily derecognized (i.e., removed from the Company'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 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:

• The Company has transferred substantially all the risks and rewards of the asset, or

• The Company has neither transferred nor retained substantially all the risks and rewards of
the asset, but has transferred control of the asset.

On de-recognition, any gains or losses on all debt instruments (other than debt instruments measured
at FVOCI) and equity instruments (measured at FVTPL) are recognized in the Statement of Profit and
Loss. Gains and losses in respect of debt instruments measured at FVOCI and that are accumulated in
OCI are reclassified to profit or loss on de-recognition. Gains or losses on equity instruments measured
at FVOCI that are recognized and accumulated in OCI are not reclassified to profit or loss on de¬
recognition.

1.3.14 Impairment of financial assets

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 amortized cost e.g., loans, debt
securities, deposits, trade receivables and bank balance.

b) Financial assets measured at fair value through other comprehensive income.

In case of other assets (listed as a) above, the company determines if there has been a significant
increase in credit risk of the financial asset since initial recognition. If the credit risk of such assets has
not increased significantly, an amount equal to 12-month ECL is measured and recognized as loss
allowance. However, if credit risk has increased significantly, an amount equal to lifetime ECL is
measured and recognized as loss allowance.

1.3.15 Financial Liabilities

Initial recognition and measurement

All financial liabilities are recognized 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
bank overdrafts, and 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 (FVTPL)

Financial liabilities at fair value through profit or loss include financial liabilities designated upon initial
recognition as at fair value through profit or 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. For
liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk is
recognized in OCI. These gains/ losses are not subsequently transferred to profit or loss. However, the
company may transfer the cumulative gain or loss within equity. All other changes in fair value of such
liability are recognized in the statement of profit or loss.

Financial Liabilities at amortized cost

Financial liabilities classified and measured at amortized cost such as loans and borrowings are initially
recognized at fair value, net of transaction cost incurred. After initial recognition, financial liabilities
are subsequently measured at amortized cost using the Effective interest rate (EIR) method. Gains and
losses are recognized in profit or 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 fees
or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the
statement of profit and loss.

De-recognition

A financial liability is derecognized 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 de-recognition of the original liability and the recognition
of a new liability. The difference in the respective carrying amounts is recognized in the statement of
profit or loss.

Derivative financial instruments

The Company uses derivative financial instruments to manage the commodity price risk and exposure
on account of fluctuation in interest rate and foreign exchange rates. Such ssderivative financial
instruments are initially recognized at fair value on the date on which a derivative contract is entered
into and are subsequently measured at fair value with changes being recognized in 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.

Any gains or losses arising from changes in the fair value of derivatives are taken through profit and
loss.

Borrowings

Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortized cost. Any differences between the proceeds (net of transaction
costs) and the redemption amount is recognized in Profit or loss over the period of the borrowing
using the effective interest method. Fees paid on the establishment of loan facilities are recognized as
transaction costs of the loan to the extent that it is probable that some or all of the facilities will be
drawn down. In this case, the fee is deferred until the drawdown occurs.

The borrowings are removed from the Balance sheet when the obligation specified in the contract is
discharged, cancelled or expired. The difference between the carrying amount of the financial liability
that has been extinguished or transferred to another party and the consideration paid including any
noncash asset transferred or liabilities assumed, is recognized in profit or loss as other gains/(losses).

Borrowings are classified as current liabilities unless the group has an unconditional right to defer
settlement of the liability of at least 12 months after the reporting period. Where there is a breach of
a material provision of a long-term loan arrangement on or before the end of the reporting period
with the effect that the liability becomes payable on demand on the reporting date, the entity does
not classify the liability as current, if the lender agreed, after the reporting period and before the
approval of the financial statement for issue, not to demand payment as a consequence of the breach.

1.3.16 Borrowing Cost

Borrowing costs directly attributable to the construction or production of a qualifying asset are
capitalized during the period of time that is required for the acquisition, construction or production
of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale
are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in
which they occur. Borrowing costs consist of interest and other costs that an entity incurs in
connection with the borrowing of funds.

1.3.17 Offsetting of financial instruments

Financial assets and financial liabilities are offset, and the net amount is reported in the standalone
balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there
is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
The legally enforceable right must not be contingent on future events and must be enforceable in the
normal course of business and in the event of default, insolvency or bankruptcy of the company, or
the counterparty.

1.3.18 Taxes on Income
Current and Deferred Tax

Current tax is the amount of tax payable determined in accordance with the applicable tax rates and
provisions of the Income Tax Act, 1961 and other applicable tax laws.

Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the
Balance sheet and the corresponding tax bases used in the computation of taxable profit and are
accounted for using the liability method. Deferred tax liabilities are generally recognized for all taxable
temporary differences, and deferred tax assets are generally recognized for all deductible temporary
differences, carry forward tax losses and allowances to the extent that it is probable that future taxable
profits will be available against which those deductible temporary differences, carry forward tax losses
and allowances can be utilized. Deferred tax assets and liabilities are measured at the applicable tax
rates. Deferred tax assets and deferred tax liabilities are off set, and presented as net.

Current and deferred taxes relating to items directly recognized in reserves are recognized in reserves
and not in the Statement of Profit and Loss.

Minimum Alternative Tax

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic
benefits in the form of adjustment to future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as
deferred tax asset in the Balance Sheet when it is probable that future economic benefit associated
with it will flow to the Company.

1.3.19 Earnings per share

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax
effect of extraordinary items, if any) by the weighted average number of equity shares outstanding
during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax
(including the post-tax effect of extraordinary items, if any) as adjusted for dividend, interest and other
charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity
shares, by the weighted average number of equity shares considered for deriving basic earnings per
share and the weighted average number of equity shares which could have been issued on the
conversion of all dilutive potential equity shares.

Potential equity shares are deemed to be dilutive only if their conversion to equity shares would
decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares
are deemed to be converted as at the beginning of the period, unless they have been issued at a later
date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been
actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential
equity shares are determined independently for each period presented. The number of equity shares
and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus
shares, as appropriate.

1.3.20 Cash and Cash equivalents

For the purpose of presentation in statement of cash flows, cash and cash equivalents includes cash
on hand, deposit held at call with financial institution, other short term, highly liquid investments with
original maturities of 3 months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.

1.3.21 Cash Flows

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items
and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from operating, investing and financing
activities of the Company are segregated based on the available information.

For the purpose of presentation in the statement of Cash Flow, cash and cash equivalent include cash
on hand, deposits held at call with banks and financial institutions, other short term highly liquid
investment with original maturity of 3 months or less that are readily convertible to the known amount
of cash in which are subject to insignificant risk of change in value.

1.3.22 Segment Reporting

Operating segments are reported in consistent manner with the internal reporting provided to the
Chief Operating Decision Maker (CODM) of the Company. The CODM is responsible for allocating
resources and assessing performance of the Company.