1. Other Significant Accounting Policies
1.1 Foreign Currencies
The functional currency of the Company is Indian Rupee (Rs.).
Income and expenses in foreign currencies are recorded at exchange rates prevailing on the date of the transaction. Foreign currency denominated
monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date and exchange gains and losses arising on
settlement and restatement are recognised in the statement of profit and loss.
Non-monetary assets and liabilities that are measured in terms of historical cost in foreign currencies are not retranslated.
Exchange differences on monetary items are recognised in the statement of profit and loss in the period in which they arise except for exchange
differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those
assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings.
1.2 Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current / non-current classification. An asset is treated as current
when it is:
- expected to be realised or intended to be sold or consumed in normal operating cycle,
- held primarily for the purpose of trading,
- expected to be realised within twelve months after the reporting period, or
- cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting
period.
All other assets are classified as non-current.
A liability is current when:
- it is expected to be settled in normal operating cycle,
- it is held primarily for the purpose of trading,
- it is due to be settled within twelve months after the reporting period, or
- there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The Company
classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company
has identified twelve months as its operating cycle.
1.3 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 and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
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 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 measured at fair value through profit or loss are recognised immediately in the statement of profit and loss.
1.4 Financial Assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are
purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market
place.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the
classification of the financial assets.
1.5 Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost using the effective interest rate method if these financial assets are held within a
business whose objective is to hold these assets in order to collect contractual cash flows and 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.
1.5.1 Financial assets at fair value through other comprehensive income (FVTOCI)
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective
is achieved by both collecting contractual cash flows and selling financial assets and 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.
On initial recognition, the Company makes an irrevocable election on an instrument-by-instrument basis to present the subsequent changes in fair
value in other comprehensive income pertaining to investments in equity instruments, other than equity investment which are held for trading.
Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and
accumulated in the ‘Reserve for equity instruments through other comprehensive income’. The cumulative gain or loss is not reclassified to
profit or loss on disposal of the investments.
1.5.2 Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent
changes in fair value in other comprehensive income for investments in equity instruments which are not held for trading.
Other financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through other
comprehensive income on initial recognition.
1.5.3 Investment in Subsidiaries, Jointly Controlled Entities and Associates
Investment in subsidiaries, jointly controlled entities and associates are measured at cost less impairment as per Ind AS 27 -Separate Financial
Statements.
Impairment of investments:
The Company reviews its carrying value of investments carried at cost annually, or more frequently when there is indication for impairment. If
the recoverable amount is less than its carrying amount, the impairment loss is accounted in the statement of profit and loss.
1.5.4 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 balance sheet) when:
- the right to receive cash flows from the asset have expired, or
- the Company has transferred its right 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 right 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.
1.5.5 Impairment of financial assets
The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires
expected credit losses to be measured through a loss allowance. The Company recognises lifetime expected losses for all contract assets and / or all
trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount
equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset
has increased significantly since initial recognition.
1.6 Financial liabilities and equity instruments
1.6.1 Classification as debt or equity
Debt and equity instruments issued by a 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.
1.6.2 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.
1.6.3 Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in
statement of profit and loss when the liabilities are derecognised as well as through the Effective Interest Rate (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.
1.6.4 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.
1.6.5 Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it
incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts
are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee.
Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the
amount recognised less cumulative amortisation.
1.7 Derivative financial instruments
The Company enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate risks, including foreign
exchange forward contracts.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their
fair value at the end of each reporting period. The resulting gain or loss is recognised in statement of profit and loss immediately.
1.8 Reclassification of financial assets and liabilities
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification
is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a
reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be
infrequent. The Company’s senior management determines change in the business model as a result of external or internal changes which are
significant to the Company’s operations. Such changes are evident to external parties. A change in the business model occurs when the Company
either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the
reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in
business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
1.9 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.
1.10 Leasing arrangement
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease.
The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement
conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
The Company as lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and
rewards incidental to ownership to the Company is classified as a finance lease.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain
ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term.
1.11 Standards issued but not yet effective
The amendments to standards that are issued, but not yet effective, up to the date of issuance of the Company’s financial statements are
disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.
Ind AS 116 - Leases
Ind AS 116 Leases was notified in March 2019 and it replaces Ind AS 17 Leases. Ind AS 116 is effective for annual periods beginning on or after
1st April, 2019. It sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account
for all leases under a single on-balance sheet model similar to the accounting for finance leases under Ind AS 17. Lessor accounting under Ind AS 116
is substantially unchanged from today’s accounting under Ind AS 17. Ind AS 116 requires lessees and lessors to make more extensive disclosures
than under Ind AS 17. The Company is in the process of evaluating the requirements of the standard and its impact on its financial statements.
Ind AS 12 - Income taxes (amendments relating to income tax consequences of dividend and uncertainty over income tax treatments)
The amendment relating to income tax consequences of dividend clarify that an entity shall recognise the income tax consequences of dividends in
profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or events. The
company does not expect any impact from this pronouncement. It is relevant to note that the amendment does not amend situations where the entity pays
a tax on dividend which is effectively a portion of dividends paid to taxation authorities on behalf of shareholders. Such amount paid or payable to
taxation authorities continues to be charged to equity as part of dividend in accordance with Ind AS 12.
The amendment to Appendix C of Ind AS 12 specifies that the amendment is to be applied to the determination of taxable profit (tax loss), tax
bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. It outlines the
following: (1) the entity has to use judgement, to determine whether each tax treatment should be considered separately or whether some can be
considered together. The decision should be based on the approach which provides better predictions of the resolution of the uncertainty (2) the
entity is to assume that the taxation authority will have full knowledge of all relevant information while examining any amount (3) entity has to
consider the probability of the relevant taxation authority accepting the tax treatment and the determination of taxable profit (tax loss), tax bases,
unused tax losses, unused tax credits and tax rates would depend upon the probability. The Company does not expect any significant impact of the
amendment on its financial statements.
Ind AS 109 - Prepayment Features with Negative Compensation
The amendments relate to the existing requirements in Ind AS 109 regarding termination rights in order to allow measurement at amortised cost
(or, depending on the business model, at fair value through other comprehensive income) even in the case of negative compensation payments. The
Company does not expect this amendment to have any impact on its financial statements.
Ind AS 19 - Plan Amendment, Curtailment or Settlement
The amendments clarify that if a plan amendment, curtailment or settlement occurs, it is mandatory that the current service cost and the net
interest for the period after the re-measurement are determined using the assumptions used for the remeasurement. In addition, amendments have been
included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling. The Company does not
expect this amendment to have any significant impact on its financial statements.
Ind AS 23 - Borrowing Costs
The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that
borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings. The Company does
not expect any impact from this amendment.
Ind AS 28 - Long-term Interests in Associates and Joint Ventures
The amendments clarify that an entity applies Ind AS 109 Financial Instruments, to long-term interests in an associate or joint venture that form
part of the net investment in the associate or joint venture but to which the equity method is not applied. The company does not currently have any
such long-term interests in associates and joint ventures.
Ind AS 103 - Business Combinations and Ind AS 111 - Joint Arrangements
The amendments to Ind AS 103 relating to re-measurement clarify that when an entity obtains control of a business that is a joint operation, it
re-measures previously held interests in that business. The amendments to Ind AS 111 clarify that when an entity obtains joint control of a business
that is a joint operation, the entity does not re-measure previously held interests in that business. The Company will apply the pronouncement if and
when it obtains control / joint control of a business that is a joint operation.
1.12 Dividend distribution to equity shareholders of the Company
The Company recognises a liability to make dividend distributions to its equity holders when the distribution is authorised and the distribution
is no longer at its discretion. 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.
In case of Interim Dividend, the liability is recognised on its declaration by the Board of Directors.
1.13 Changes in accounting policies and disclosures
(a) Revenue from delayed payment charges
Delayed payment charges were hitherto recognised only when they are realised/recovered. With effect from 1st April, 2018, the Company has revised
its accounting policy to recognise Delayed Payment Charges (DPC) on accrual basis based on contractual terms and an assessment of certainty of
realisation. Management believes that this policy results in the financial statements providing reliable and more relevant information about the
effects of transaction on the Company’s financial position and performance. The revision in accounting policy has been applied retrospectively
and does not have any significant impact on current year and previous year statement of profit and loss and retained earnings as at 1st April,
2017.
New and amended standards and interpretations
The Company applied for the first time certain amendments to the standards, which are effective for annual periods beginning on or after 1st
April, 2018. The nature and the impact of each amendment is described below:
(b) Ind AS 20 Accounting for Government Grants and Disclosure
In accordance with the amendment in Ind AS 20 “Accounting for Government Grants and Disclosure” the Company has changed its
accounting policy of recognizing the grant as a reduction from the carrying amount of the asset instead of recognizing the grant as deferred income.
Management believes that this policy results in the financial statements providing reliable and more relevant information about the effects of
transaction on the Company’s financial position and performance. The revision in accounting policy has been applied retrospectively and does not
have any significant impact on retained earnings as at 1st April, 2017 and profit of the Company.
(c) Ind AS 115 Revenue from Contracts with Customers
Ind AS 115 supersedes Ind AS 11 Construction Contracts, Ind AS 18 Revenue and related interpretations and it applies, with limited exceptions, to
all revenue arising from contracts with its customers. Ind AS 115 establishes a five-step model to account for revenue arising from contracts with
customers and requires that revenue be recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange
for transferring goods or services to a customer.
The Company adopted Ind AS 115 using the full retrospective method of adoption. Ind AS 115 requires entities to exercise judgement, taking into
consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also
specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the
standard requires relevant disclosures.
On adoption of Ind AS 115, amount recoverable from consumers are considered as contract assets accordingly, the Company has classified amount
recoverable from consumers from other financial assets to other assets for the previous year ended March 31, 2018. Also, liabilities towards consumers
are considered as contract liabilities and accordingly, has been classified from other financial liabilities to other liabilities for the year ended
March 31, 2018.
