Manipal Health Enterprises Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

fair value at acquisition date and includes the fair
value of any contingent consideration. However,
deferred tax asset or liability and any liability or
asset relating to employee benefit arrangements
arising from a business combination are
measured and recognised in accordance with the
requirements of Ind AS 12, Income Taxes and Ind
AS 19, Employee Benefits, respectively.

Where the consideration transferred exceeds the
fair value of the net identifiable assets acquired
and liabilities assumed, the excess is recorded
as goodwill. Alternatively, in case of a bargain
purchase wherein the consideration transferred
is lower than the fair value of the net identifiable
assets acquired and liabilities assumed,
the difference is recorded as a gain in Other
Comprehensive Income and accumulated in
equity as capital reserve. The costs of acquisition
excluding those relating to issue of equity or debt
securities are charged to the Statement of Profit
and Loss in the period in which they are incurred.

Common control transactions

Common control business combinations include
transactions, such as transfer of subsidiaries
or business, between entities within a group.
Business combinations involving entities or
businesses under common control are accounted
for using the pooling of interests method. Under
pooling of interest method, the assets and
liabilities of the combining entities are reflected at
their carrying amounts, the only adjustments that
are made are to harmonise accounting policies.
Financial information in the Standalone financial
statements in respect of prior years is restated
as if the business combination had occurred
from the beginning of the preceding year in the
financial statements, irrespective of the actual
date of the combination. However, if business
combination had occurred after that date, the
prior period information is restated only from that
date.

The difference, if any, between the amount
recorded as share capital issued plus any
additional consideration in the form of cash or
other assets and the amount of share capital of
the transferor is transferred to capital reserve and
presented separately from other General reserves
with disclosure of its nature and purpose in the
notes.

(b) Investment in subsidiaries and joint ventures

A subsidiary is an entity that is controlled by
another entity. A joint venture is a type of joint
arrangement whereby the parties that have joint
control of the arrangement/entity have rights to
the net assets of the joint venture. Joint control is
the contractually agreed sharing of control of an
arrangement, which exists only when decisions
about the relevant activities require unanimous
consent of the parties sharing control.

The investments in subsidiaries, associates and
Joint ventures are carried at cost as per IND
AS 27. Investment carried at cost is tested for
impairment as per IND AS 36. On disposal of
investment, the difference between its carrying
amount and net disposal proceeds is charged or
credited to the statement of profit and loss.

(c) Current versus non-current classification

Based on the time involved 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 for determining current and non¬
current classification of assets and liabilities in
the Standalone Balance sheet.

(d) Property plant and equipment

Property, plant and equipment is stated at
cost, net of accumulated depreciation and
accumulated impairment losses, if any. The
cost comprises purchase price, cost of replacing
part of the plant and equipment, borrowing
costs if the recognition criteria are met and
directly attributable cost of bringing the asset
to its location and condition necessary for the
intended use. Any trade discounts and rebates
are deducted in arriving at the purchase price.
When significant parts of plant and equipment
are required to be replaced at intervals, the

Company depreciates them separately based on
their specific useful lives. Likewise, when a major
inspection is performed, its cost is recognised in
the carrying amount of the plant and equipment
as a replacement if the recognition criteria are
satisfied. All other repair and maintenance costs
are recognised in statement of profit and loss as
incurred. The present value of the expected cost
for the decommissioning of an asset after its use
is included in the cost of the respective asset if
the recognition criteria for a provision are met.

An item of property, plant and equipment
and any significant part initially recognised is
derecognised upon disposal or when no future
economic benefits are expected from its use or
disposal. Any gain or loss arising on derecognition
of the asset (calculated as the difference between
the net disposal proceeds and the carrying
amount of the asset) is included in the statement
of profit and loss when the asset is derecognised.
Subsequent expenditure is capitalised only if
it is probable that the future economic benefits
associated with the expenditure will flow to
the Company and the cost of the item can be
measured reliably.

Property, plant and equipment under installation
or construction as at the balance sheet date
is shown as capital work-in-progress and the
related advances are shown as under Non current
assets.

On transition to Ind AS (i.e. April 01, 2015), the
Company has elected to continue with the
carrying value of all Property, plant and equipment
measured as per the previous GAAP and use that
carrying value as the deemed cost of Property,
plant and equipment.

Depreciation is calculated on a straight-line basis
over the estimated useful lives of the assets as
follows:

Depreciation on additions (disposals) is provided
on a pro-rata basis i.e. from (upto) the date on
which asset is ready for use (disposed of).
Second hand assets are depreciated over the
estimated useful life as per technical estimates.
Leasehold land/Leasehold improvements/
Leasehold Building are depreciated over the
primary lease period or useful life, whichever is
shorter, on a straight-line basis.

The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.

Assets having the value upto '' 10,000 is fully
depreciated in the period/year of purchase.

The management had estimated, supported by
technical advice, the useful life of the category
of assets, which are lower than those indicated
in Schedule II to the Companies Act, 2013. The
management believes that these estimated useful
lives are realistic and reflect fair approximation of
the period over which the assets are likely to be
used.

(e) Intangible assets

Intangible assets acquired separately are
measured on initial recognition at cost. The
cost of intangible assets acquired in a business
combination is their fair value at the date
of acquisition. Following initial recognition,
intangible assets are carried at cost less
accumulated amortisation and accumulated
impairment losses, if any.

The useful lives of intangible assets are assessed
as either finite or indefinite.

Intangible assets with finite lives are amortised
over the useful economic life and assessed for
impairment whenever there is an indication
that the intangible asset may be impaired. The
amortisation period and the amortisation method
for an intangible asset with a finite useful life are
reviewed at least at the end of each reporting
period. Changes in the expected useful life or
the expected pattern of consumption of future
economic benefits embodied in the asset are
considered to modify the amortisation period
or method, as appropriate, and are treated
as changes in accounting estimates. The
amortisation expense on intangible assets with
finite lives is recognised in the statement of profit

and loss unless such expenditure forms part of
carrying value of another asset.

Intangible assets with indefinite useful lives are
not amortised, but are tested for impairment
annually, either individually or at the cash¬
generating unit level. The assessment of indefinite
life is reviewed annually to determine whether the
indefinite life continues to be supportable. If not,
the change in useful life from indefinite to finite is
made on a prospective basis.

Gains or losses arising from derecognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the
carrying amount of the asset and are recognised
in the statement of profit or loss when the asset
is derecognised.

Subsequent expenditure is capitalised only
when it increases the future economic benefits
embodied in the specific asset to which it relates.
All other expenditure, including expenditure on
internally generated goodwill and brands, is
recognised in profit or loss as incurred.

A summary of amortisation policies applied to
the Company’s intangible assets is as below:

(f) Impairment of non-financial assets

The Company assesses, at each reporting date,
whether there is an indication that an asset may
be impaired. If any indication exists, or when
annual impairment testing for an asset is required,
the Company estimates the asset’s recoverable
amount. An asset’s recoverable amount is the
higher of an asset’s or cash-generating unit’s
(CGU) fair value less costs of disposal and
its value in use. The recoverable amount is
determined for an individual asset, unless the
asset does not generate cash inflows that are
largely independent of those from other assets or
groups of assets. Where the carrying amount of
an asset or CGU exceeds its recoverable amount,
the asset is considered impaired and is written
down to its recoverable amount. This recognition
criteria is not applicable to non-financial assets
such as deferred tax assets and inventories.

In assessing value in use, the estimated future
cash flows are discounted to their present value
using a pre-tax discount rate that reflects current
market assessments of the time value of money
and the risks specific to the asset. In determining
fair value less costs of disposal, recent market
transactions are taken into account. If no such
transactions can be identified, an appropriate
valuation model is used.

The Company bases its impairment calculation
on detailed budgets and forecast calculations,
which are prepared separately for each of the
Company’s CGUs to which the individual assets
are allocated. These budgets and forecast
calculations generally cover a period of five
years. For longer periods, a long term growth rate
is calculated and applied to project future cash
flows till perpetuity.

For impairment testing, assets are grouped
together into the smallest group of assets that
generates cash inflows from continuing use
that are largely independent of the cash inflows
of other assets or CGUs. Goodwill arising from
a business combination is allocated to CGUs or
groups of CGUs that are expected to benefit from
the synergies of the combination.

Impairment losses of continuing operations,
including impairment of inventories, are
recognised in the statement of profit and loss.

For assets excluding goodwill, an assessment
is made at each reporting date to determine
whether there is an indication that previously
recognised impairment losses no longer exist
or have decreased. If such indication exists,
the Company estimates the asset’s or CGU’s
recoverable amount. A previously recognised
impairment loss is reversed only if there has been
a change in the assumptions used to determine
the asset’s recoverable amount since the last
impairment loss was recognised. The reversal
is limited so that the carrying amount of the
asset does not exceed its recoverable amount,
nor exceed the carrying amount that would have
been determined, net of depreciation, had no
impairment loss been recognised for the asset
in prior years. Such reversal is recognised in the
statement of profit and loss.

Goodwill and intangible assets with indefinite
useful life is tested for impairment annually and
when circumstances indicate that the carrying

value may be impaired. Impairment is determined
for goodwill by assessing the recoverable amount
of each CGU (or group of CGUs) to which the
goodwill relates. When the recoverable amount
of the CGU is less than its carrying amount, an
impairment loss is recognised. They are allocated
first to reduce the carrying amount of any
goodwill allocated to the CGU, and then to reduce
the carrying amounts of the assets in the CGU on
a pro rata basis. Impairment losses relating to
goodwill cannot be reversed in future years.

(g) Borrowing Costs

Borrowing costs directly attributable to 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 capitalised 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. Borrowing cost also includes exchange
differences to the extent regarded as an
adjustment to the borrowing costs.

(h) Leases

A contract is, or contains, a lease if the contract
conveys the right to control the use of an
identified asset for a period of time in exchange
for consideration.

Company as a lessee

The Company accounts for each lease component
within the contract as a lease separately from
non-lease components of the contract and
allocates the consideration in the contract to
each lease component on the basis of the relative
stand-alone price of the lease component and
the aggregate stand-alone price of the non-lease
components.

The Company recognises right-of-use asset
representing its right to use the underlying asset
for the lease term at the lease commencement
date. The cost of the right of-use asset measured
at inception shall comprise of the amount of
the initial measurement of the lease liability
adjusted for any lease payments made at or
before the commencement date less any lease
incentives received, plus any initial direct costs
incurred and an estimate of costs to be incurred
by the lessee in dismantling and removing the

underlying asset or restoring the underlying asset
or site on which it is located. The right-of-use
assets is subsequently measured at cost less
any accumulated depreciation, accumulated
impairment losses, if any and adjusted for any
re-measurement of the lease liability. The right-
of-use assets is depreciated using the straight¬
line method from the commencement date over
the shorter of lease term or useful life of right-
of-use asset. If ownership of the leased asset
transfers to the Company at the end of the
lease term or the cost reflects the exercise of a
purchase option, depreciation is calculated using
the estimated useful life of the asset. Right of-
use assets are tested for impairment whenever
there is any indication that their carrying amounts
may not be recoverable. Impairment loss, if any, is
recognised in the statement of profit and loss.

At the commencement date of the lease, the
Company recognises lease liabilities measured
at the present value of lease payments to be
made over the lease term. . The lease payments
are discounted using the interest rate implicit in
the lease, if that rate can be readily determined.
If that rate cannot be readily determined, the
Company uses incremental borrowing rate. The
lease payments shall include fixed payments,
variable lease payments, residual value
guarantees, exercise price of a purchase option
where the Company is reasonably certain to
exercise that option and payments of penalties
for terminating the lease, if the lease term reflects
the lessee exercising an option to terminate
the lease. The lease liability is subsequently re¬
measured by increasing the carrying amount to
reflect interest on the lease liability, reducing the
carrying amount to reflect the lease payments
made and re-measuring the carrying amount to
reflect any reassessment or lease modifications
or to reflect revised in-substance fixed lease
payments. The Company recognises the amount
of the re-measurement of lease liability due to
modification as an adjustment to the right-of-use
asset and statement of profit and loss depending
upon the nature of modification. Where the
carrying amount of the right-of-use asset is
reduced to zero and there is a further reduction
in the measurement of the lease liability, the
Company recognises any remaining amount of
the re-measurement in statement of profit and
loss.

The Company has elected not to apply the
requirements of Ind AS 116 Leases to short
term leases of all assets that have a lease term
of 12 months or less, except where it anticipates
renewals and leases for which the underlying
asset is of low value. The lease payments
associated with these leases are recognised as
an expense on a straight-line basis over the lease
term.

Company as a lessor

At the inception of the lease the Company
classifies each of its leases as either an operating
lease or a finance lease. The Company recognises
lease payments received under operating leases
as income on a straight-line basis over the lease
term. In case of a finance lease, finance income
is recognised over the lease term based on a
pattern reflecting a constant yearly rate of return
on the lessor’s net investment in the lease.

If an arrangement contains lease and non¬
lease components, the Company applies Ind AS
115 Revenue from contracts with customers to
allocate the consideration in the contract.

Asset retirement obligation

The Company had recognised certain asset
retirement costs which were classified as
leasehold improvement and provision for
decommissioning liability on the same.

Company as a lessor

The Company is not required to make any
adjustments on transition to Ind AS 116 for
leases in which it acts as a lessor, except for a
sub-lease. The Company accounted for its leases
in accordance with Ind AS 116 from the date of
initial application. The Company does not have
any significant impact on account of sub-lease
on the application of this standard.

(i) 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

Financial assets are classified, at initial recognition,
as subsequently measured at amortised cost, fair
value through other comprehensive income (OCI),
and fair value through profit or loss.

The classification of financial assets at initial
recognition depends on the financial asset’s
contractual cash flow characteristics and the
Company’s business model for managing them.
With the exception of trade receivables that do
not contain a significant financing component or
for which the Company has applied the practical
expedient, the Company initially measures a
financial asset at its fair value plus, in the case of
a financial asset not at fair value through profit or
loss, transaction costs. Trade receivables that do
not contain a significant financing component or
for which the Company has applied the practical
expedient are measured at the transaction
price determined under Ind AS 115. Refer to the
accounting policies in section (k) Revenue from
contracts with customers.

In order for a financial asset to be classified
and measured at amortised cost or fair value
through OCI, it needs to give rise to cash flows
that are ''solely payments of principal and interest
(SPPI)’ on the principal amount outstanding. This
assessment is referred to as the SPPI test and is
performed at an instrument level. Financial assets
with cash flows that are not SPPI are classified
and measured at fair value through profit or loss,
irrespective of the business model.

The Company’s business model for managing
financial assets refers to how it manages its
financial assets in order to generate cash flows.
The business model determines whether cash
flows will result from collecting contractual
cash flows, selling the financial assets, or both.
Financial assets classified and measured at
amortised cost are held within a business model
with the objective to hold financial assets in order
to collect contractual cash flows while financial
assets classified and measured at fair value
through OCI are held within a business model
with the objective of both holding to collect
contractual cash flows and selling.

Purchases or sales of financial assets that require
delivery of assets within a time frame established
by regulation or convention in the marketplace
(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:

i) Financial assets at amortised cost (debt
instruments)

ii) Financial assets at fair value through other
comprehensive income (FVTOCI) with
recycling of cumulative gains and losses
(debt instruments)

iii) Financial assets designated at fair value
through OCI with no recycling of cumulative
gains and losses upon derecognition (equity
instruments)

iv) Financial assets at fair value through profit
or loss

Financial assets at amortised cost (debt
instruments)

A ''financial asset’ 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.

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 profit or loss. The losses
arising from impairment are recognised in the
profit or loss. The Company’s financial assets
at amortised cost includes trade receivables,
and loan to an associate and loan to a director
included under other non-current financial
assets. For more information on receivables, refer
to Note 9.2.

Financial assets at fair value through profit or
loss

Financial assets at fair value through profit or
loss are carried in the balance sheet at fair value
with net changes in fair value recognised in the
statement of profit and loss.

This category includes quoted investments in
mutual funds of the Company. These investments
are restated to its fair value at the end of every
financial year. Unrealised gain/loss on such

restatement and realised gain or loss on sale of
investments in mutual funds are recognised in
the standalone 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:

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

ii) 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
The Company recognises an allowance for
expected credit losses (ECLs) for all debt
instruments not held at fair value through profit
or loss. ECLs are based on the difference between
the contractual cash flows due in accordance
with the contract and all the cash flows that the
Company expects to receive, discounted at an
approximation of the original effective interest

rate. The expected cash flows will include cash
flows from the sale of collateral held or other
credit enhancements that are integral to the
contractual terms.

ECLs are recognised in two stages. For credit
exposures for which there has not been a
significant increase in credit risk since initial
recognition, ECLs are provided for credit losses
that result from default events that are possible
within the next 12-months (a 12-month ECL). For
those credit exposures for which there has been
a significant increase in credit risk since initial
recognition, a loss allowance is required for credit
losses expected over the remaining life of the
exposure, irrespective of the timing of the default
(a lifetime ECL).

For trade receivables and other financial assets,
the Company applies a simplified approach in
calculating ECLs. Therefore, the Company does
not track changes in credit risk, but instead
recognises a loss allowance based on lifetime
ECLs at each reporting date. The Company has
established a provision matrix that is based on
its historical credit loss experience, adjusted for
forward-looking factors specific to the debtors
and the economic environment.

In certain cases, the Company may also consider
a financial asset to be in default when internal or
external information indicates that the Company
is unlikely to receive the outstanding contractual
amounts in full before taking into account any
credit enhancements held by the Company.
A financial asset is written off when there is
no reasonable expectation of recovering the
contractual cash flows.

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 bank overdrafts, financial guarantee
contracts and derivative financial instruments.

Subsequent measurement

For purposes of subsequent measurement,
financial liabilities are classified in two categories:

• Financial liabilities at fair value through
profit or loss

• Financial liabilities at amortised cost
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. Separated embedded
derivatives are also classified as held for trading
unless they are designated as effective hedging
instruments.

Gains or losses on liabilities held for trading are
recognised in the profit or loss.

Financial liabilities designated upon initial
recognition at fair value through profit or loss
are designated as such 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 are recognised in OCI. These
gains/losses are not subsequently transferred
to P&L. However, the Company may transfer
the cumulative gain or loss within equity. All
other changes in fair value of such liability are
recognised in the statement of profit and loss.
The Company has not designated any financial
liability as at fair value through profit or loss.
Financial liabilities at amortised cost
This is the category most relevant to the Company.
After initial recognition, interest-bearing loans
and borrowings are subsequently measured at
amortised cost using the EIR method. Gains and
losses are recognised in profit or 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.
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, when
appropriate, the cumulative amount of income
recognised in accordance with the principles of
Ind AS 115.

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 standalone
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.

(j) Inventories

Inventories of pharmacy items and medical
consumables are valued at lower of cost or net
realisable value. The comparison of cost and
net realisable value is made on an item-by-Item
basis. Cost of these inventories comprises of all
costs of purchase and other costs incurred in
bringing the inventories to their present location
after adjusting for Goods and Services Tax (GST)
wherever applicable, applying the first in first out
basis.

Rental Income

Rental Income is recognised on an accrual
basis and over the year of tenancy.

Contract balances

Trade receivables

Unbilled revenue represents the Company’s
right to an amount of consideration that
is unconditional (i.e., only the passage of
time is required before payment of the
consideration is due). Refer to accounting
policies of financial assets in section (i)
Financial instruments - initial recognition
and subsequent measurement.

Contract liabilities

A contract liability is the obligation to transfer
goods or services to a customer for which
the Company has received consideration (or
an amount of consideration is due) from the
customer. If a customer pays consideration
before the Company transfers goods or
services to the customer, a contract liability
is recognised when the payment is made or
the payment is due (whichever is earlier).
Contract liabilities are recognised as revenue
when the Company performs its obligation
under the contract.

(ii) Other income

Interest Income

For all debt instruments measured at
amortised cost, interest income is recorded
using the effective interest rate (EIR). EIR is
the rate that exactly discounts the estimated
future cash payments or receipts over the
expected life of the financial instrument or a
shorter year, where appropriate, to the gross
carrying amount of the financial asset or
to the amortised cost of a financial liability.
When calculating the effective interest rate,
the Company estimates the expected cash
flows by considering all the contractual
terms of the financial instrument (for
example, prepayment, extension) but does
not consider the expected credit losses.
Interest income is included in other income
in the statement of profit and loss.

Dividend income

Dividend income is recognised when the
Company’s right to receive dividend is
established by the reporting date.

(l) Foreign currencies

Items included in the Standalone financial
statements of the Company are measured
using the currency of the primary economic
environment in which the entity operates (i.e.
the "functional currency"). The Company’s
Standalone financial statements are presented in
Indian Rupees (''), which is also the Company’s
functional currency.

Transactions and balances
Foreign currency transactions are recorded on
initial recognition in the functional currency using
the exchange rate prevailing at the date of the
transaction. However, for practical reasons, the
Company uses an average rate if the average
approximates the actual rate at the date of the
transaction.

Monetary assets and liabilities denominated in
foreign currencies are translated at the functional
currency spot rates of exchange at the reporting
date.

Exchange differences arising on the settlement or
translation of monetary items are recognised in
the statement of profit or loss.

(m) Retirement and other employee benefits
Defined contribution plan

Retirement benefit in the form of Provident
Fund and Pension Fund are defined contribution
schemes. The Company recognises contribution
payable to the schemes as an expense, when
an employee renders the related service. The
Company has no obligation, other than the
contribution payable to the fund.

Defined benefit plan - gratuity

The Company operates a defined benefit plan for
its employees for gratuity. The costs of providing
benefits under this plan is determined on the
basis of actuarial valuation at each year end
using the projected unit credit method.

Remeasurements, comprising of actuarial
gains and losses, excluding amounts included
in net interest on the net defined benefit liability
(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 the
statement of profit and loss in subsequent years.

Past service costs are recognised in the statement
of profit or loss on the earlier of:

- The date of the plan amendment or
curtailment and

- The date that the Company recognises
related restructuring costs

Interest is calculated by applying the discount
rate to the defined benefit liability. The Company
recognises the following changes in the defined
benefit obligation as an expense in the statement
of profit and loss:

(i) Service costs comprising current service
costs, past-service costs, gains and
losses on curtailments and non-routine
settlements; and

(ii) Interest expense

Other long-term employee benefits -
compensated absences

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. The Company presents the entire leave
as a current liability in the balance sheet, since it
does not have an unconditional right to defer its
settlement beyond 12 months after the reporting
date.

The Company recognises termination benefit as
a liability and an expense when the Company has
a present obligation as a result of 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. If the termination
benefits fall due more than 12 months after the
balance sheet date, they are measured at present
value of future cash flows using the discount rate
determined by reference to market yields at the
balance sheet date on government bonds.

(n) TaxesCurrent income tax

Current income tax assets and liabilities are
measured at the amount expected to be
recovered from or paid to the taxation authorities
in accordance with the Income Tax Act, 1961
enacted in India. The tax rates and tax laws
used to compute the amounts are those that
are enacted or substantively enacted, at the
reporting date. Current income tax relating to
items recognised outside the statement of profit
and loss is recognised outside the statement of
profit and loss (either in OCI 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:

- where 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.

- In respect of taxable temporary differences
associated with investments in subsidiaries,
associates and 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

- In respect of deductible temporary
differences associated with investments in
subsidiaries, associates and interests in joint
ventures, deferred tax assets are recognised
only to the extent that it is probable that the
temporary differences will reverse in the
foreseeable future and taxable profit will
be available against which the temporary
differences can be utilised.

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
the statement of profit or loss is recognised
outside the statement of profit or loss (either in
OCI or in equity). Deferred tax items are recognised
in correlation to the underlying transaction either
in OCI or directly in equity.

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 to the same taxation authority.

Goods and Services Tax (GST) paid on acquisition
of assets or on incurring expenses
Expenses and assets are recognised net of the
amount of GST paid, except:

When the tax incurred on a purchase of assets
or services is not recoverable from the taxation
authority, in which case, the tax paid is recognised
as part of the cost of acquisition of the asset or as
part of the expense item, as applicable
When receivables and payables are stated with
the amount of tax included, the net amount of
tax recoverable from, or payable to, the taxation
authority is included as part of receivables or
payables in the balance sheet.

(o) Share-based payments (‘ESOP'')*

Employees (including senior executives and
directors) of the Company receive remuneration
in the form of share-based payments, whereby
employees render services as consideration for
equity instruments (equity-settled transactions).
Equity-settled transactions
The cost of equity-settled transactions is
determined by the fair value at the date when
the grant is made using an appropriate valuation
model. That cost is recognised, together with
a corresponding increase in share option
outstanding account in equity, over the period in
which the performance and/or service conditions
are fulfilled in employee benefits expense. The
cumulative expense recognised for equity-
settled transactions at each reporting date until
the vesting date reflects the extent to which the
vesting period has expired and the Company’s
best estimate of the number of equity instruments
that will ultimately vest. The statement of profit
and loss expense or credit for a period represents
the movement in cumulative expense recognised
as at the beginning and end of that period and is
recognised in employee benefits expense.

Service and non-market performance conditions
are not taken into account when determining the
grant date fair value of awards, but the likelihood
of the conditions being met is assessed as part
of the Company’s best estimate of the number
of equity instruments that will ultimately vest.
Market performance conditions are reflected
within the grant date fair value. Any other
conditions attached to an award, but without an
associated service requirement, are considered
to be non-vesting conditions. Non-vesting
conditions are reflected in the fair value of an
award and lead to an immediate expensing of
an award unless there are also service and/or
performance conditions.

The vesting needs to be done as per defined in
the Grant Letter. There will be two categories of
the vesting rights:

Time options - This will be vested on time basis
subject to meeting the terms and conditions
mentioned in the Employment Letter.

Performance options - The performance options
vesting will be done on achievement of the
performance figures as per the budget approved
by the board of the previous year of the Company.
In case, the same has not been achieved there
will be no grant under this for that year. However,
there will be a catch up period of one year wherein
if the shortfall of the previous year is made up,
then the options will be vested of the previous
year.

No expense is recognised for awards that do not
ultimately vest because non-market performance
and/or service conditions have not been met.
Where awards include a market or non-vesting
condition, the transactions are treated as vested
irrespective of whether the market or non¬
vesting condition is satisfied, provided that all
other performance and/or service conditions are
satisfied.

In case, the amount of the liability recognised
on the date of modification is greater than the
amount previously recognised as an increase in
equity, the Company is following the accounting
policy to recognise such excess as an expense
in the statement of profit or loss at the date of
modification.

The dilutive effect of outstanding options is
reflected as additional share dilution in the
computation of diluted earnings per share.* Refer
note 32

(p) Earnings Per Share (EPS)

Basic EPS amounts are calculated by dividing
the net profit/(loss) for the year attributable to
equity shareholders (after deducting preference
dividends and attributable taxes) by the weighted
average number of equity shares outstanding
during the year. The weighted average number
of equity shares outstanding during the year
is adjusted for events such as bonus issue,
bonus element in a rights issue, share split, and
reverse share split (consolidation of shares)
that have changed the number of equity shares
outstanding, without a corresponding change in
resources.

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

Basic earnings per share is computed using
the weighted average number of equity shares
outstanding during the period adjusted for
treasury shares held. Diluted earnings per
share is computed using the weighted-average
number of equity and dilutive equivalent shares
outstanding during the period, using the treasury
stock method for options and warrants, except
where the results would be antidilutive.