Pace Digitek Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

2. Material accounting policies

The material accounting policies applied by the
Company in the preparation of its standalone financial
statements are listed below. Such accounting policies
have been applied consistently to all the periods
presented in these standalone financial statements,
unless otherwise indicatedstated.

2.1. Property, plant and equipment

Land and buildings held for use in the production
or supply of goods or services, or for administrative
purposes, are stated in the balance sheet at cost
less accumulated depreciation and accumulated
impairment losses if any. Freehold land is
not depreciated.

All other items of property, plant and equipment are
stated at cost, less accumulated depreciation and
accumulated impairment losses, if any. Capital work
in progress is stated at cost, net of accumulated
impairment loss, if any. The cost comprises of
purchase price, taxes, duties, freight and other
incidental expenses directly attributable and related
to acquisition and installation of the concerned assets
and are further adjusted by the amount of input tax
credit availed wherever applicable.

Such cost includes the cost of replacing part of
the plant and equipment and borrowing costs for
long-term construction projects if the recognition
criteria are met. 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 profit or 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. The cost of a self-constructed item
of property, plant and equipment comprises the cost
of materials and direct labour, any other costs directly
attributable to bringing the item to working condition
for its intended use, and estimated costs of dismantling
and removing the item and restoring the site on which
it is located.

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
income statement when the asset is derecognised.

Capital work-in-progress includes cost of property,
plant and equipment under installation/ under
development as at the balance sheet date. 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.

Depreciation is calculated on a written down value
basis over the estimated useful life of the assets which
is in line with the useful life prescribed under Part C of
Schedule II of the Companies Act, 2013. The useful life
of the assets are given below:

2.2 Investment properties

Investment properties are measured initially at cost,
including transaction costs. Subsequent to initial
recognition, investment properties are stated at cost
less accumulated depreciation and accumulated
impairment loss, if any. The cost includes the cost
of replacing parts and borrowing costs for long¬
term construction projects if the recognition criteria
are met. When significant parts of the investment
property are required to be replaced at intervals, the
Company depreciates them separately based on their
specific useful lives.

All other repair and maintenance costs are recognised
in profit or loss as incurred. Though the Company
measures investment property using cost based
measurement, the fair value of investment property is
disclosed in notes. Fair values are determined based
on an annual evaluation performed by an accredited
external independent valuer . Investment properties
are derecognised either when they have been
disposed of or when they are permanently withdrawn
from use and no future economic benefit is expected
from their disposal. The difference between the net
disposal proceeds and the carrying amount of the
asset is recognised in profit or loss in the period of
derecognition.

Transfers are made to (or from) investment properties
only when there is a change in use. Transfer between
investment property and owner occupied property
do not change the carrying amount of the property
transferred and they do not change the cost of that
property for measurement or disclosure purpose.

2.3 Intangible assets

Intangible assets acquired separately are measured on
initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated
amortisation and accumulated impairment losses,
if any. Internally generated intangibles, excluding
capitalised development cost, are not capitalised and
the related expenditure is reflected in profit and loss
in the period in which the expenditure is incurred.

Cost comprises the purchase price and any attributable
cost of bringing the asset to its working condition for
its intended use. The useful lives of intangible assets
are assessed as either finite or indefinite. Intangible
assets with finite lives are amortised over their useful
economic lives 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 is
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 or loss
unless such expenditure forms part of carrying value
of another asset.

Intangible asset arising from a service concession
arrangement refer section 2.17 Service
Concession arrangements.

Intangible assets are amortised on a straight line basis
over their estimated useful life as under:

2.3 Impairment of non- financial assets

As at the end of each financial year, the carrying
amounts of PPE, investment property and intangible
assets are reviewed to determine whether there is
any indication that those assets have suffered an
impairment loss. If such indication exists, the PPE,
investment property and intangible assets are tested
for impairment so as to determine the impairment loss,
if any,intangible assets not available for use are tested
for impairment each year.

Impairment loss is recognised when the carrying
amount of an asset exceeds its recoverable amount.
Recoverable amount is determined:

(i) in the case of an individual asset, at the higher
of fair value less costs of disposal and the
value-in-use; and

(ii) in the case of a cash generating unit (the smallest
identifiable Company of assets that generates
independent cash flows), at the higher of the
cash generating unit''s fair value less costs of
disposal and the value-in-use.

(The amount of value-in-use is determined as the
present value of estimated future cash flows from
the continuing use of an asset, which may vary based
on the future performance of the entity and from its
disposal at the end of its useful life. For this purpose,
the discount rate (post-tax) is determined based on
the weighted average cost of capital of the company
suitably adjusted for risks specified to the estimated
cash flows of the asset).

If recoverable amount of an asset (or cash generating
unit) is estimated to be less than its carrying amount,
such deficit is recognised immediately in the
Statement of Profit and Loss as impairment loss and
the carrying amount of the asset (or cash generating
unit) is reduced to its recoverable amount. For this
purpose, the impairment loss recognised in respect
of a cash generating unit is allocated first to reduce
the carrying amount of any goodwill allocated to such
cash generating unit and then to reduce the carrying
amount of the other assets of the cash generating unit
on a pro-rata basis.

When an impairment loss recognised earlier is subject
to full or partial reversal, the carrying amount of the
asset (or cash generating unit), except impairment
loss allocated to goodwill, is increased to the
revised estimate of its recoverable amount, so that
the increased carrying amount does not exceed the
carrying amount that would have been determined
had no impairment loss is recognised for the asset
(or cash generating unit) in prior years. A reversal
of an impairment loss (other than impairment loss
allocated to goodwill) is recognised immediately in
the Statement of Profit and Loss.

2.4 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.

Initial recognition and measurement

(i) Financial Assets

Financial assets and/or financial liabilities are
recognised when the Company becomes party
to a contract embodying the related financial
instruments. All financial assets, financial
liabilities and financial guarantee contracts are
initially measured at fair value except for trade
receivables not containing a significant financing
component are initially measured at transaction
price. Transaction costs that are attributable to
the acquisition or issue of financial assets and
financial liabilities (other than financial assets and
financial liabilities at fair value through profit or
loss) are added to or deducted from, as the case
may be, the fair value of such financial assets or
liabilities on initial recognition. Transaction costs
directly attributable to the acquisition of financial
assets or financial liabilities at fair value through
profit or loss are recognized in profit or loss.

A financial asset and a financial liability is offset
and presented on net basis in the balance sheet
when there is a current legally enforceable right
to set-off the recognized amounts and it is
intended to either settle on net basis or to realize
the asset and settle the liability simultaneously.

Subsequent measurement

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

• Financial assets at amortised cost
(debt instruments)

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

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

• Financial assets at fair value through
profit or loss.

Financial assets at amortised cost (debt
instruments)

A financial asset is subsequently measured at
amortised cost, if it is held within a business
model whose objective is to hold the asset in
order to collect contractual cash flows and
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.

Financial assets at fair value through other
comprehensive income - equity

The Company measures all its equity investments
except for investment in subsidiaries and
associates, at fair value. Where the Company''s
management has opted to present fair value
gain and losses on equity investments in Other
Comprehensive Income, there is no subsequent
reclassification of fair value gains and losses to
the profit and loss. Dividend income from such
investments is recognized in the statement of profit
and loss as other income when the Company''s
right to receive payments is established.

Financial assets at fair value through other
comprehensive income - debt

A ''debt instrument'' is classified as at the FVTOCI
if both of the following criteria are met:

a) The objective of the business model is
achieved both by collecting contractual cash
flows and selling the financial assets, and

b) The asset''s contractual cash flows
represent SPPI.

Debt instruments included within the FVTOCI
category are measured initially as well as at each
reporting date at fair value. Fair value movements
are recognized in the Other Comprehensive
Income (OCI). However, the Company recognizes
interest income, impairment losses and reversals
and foreign exchange gain or loss in the statement
of profit and loss. On de-recognition of the asset,
cumulative gain or loss previously recognised in
OCI is reclassified from the equity to statement
of profit and loss. Interest earned while holding
FVTOCI debt instrument is reported as interest
income using the EIR method.

Financial assets at fair value through the
statement of profit and loss

A financial asset which is not classified in any
of the above categories, are subsequently fair
valued through the statement of profit and loss.

De-recognition

A financial asset is primarily derecognized when:

1. the right to receive cash flows from the asset
has expired, or

2. 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 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.

On derecognition of a financial asset in its entirety,
the difference between the carrying amount at
the date of derecognition and the consideration
received is recognised in profit or loss

Impairment of financial assets

In accordance with Ind AS 109, the Company uses
''Expected Credit Loss'' (ECL) model, for evaluating
impairment of financial assets other than those
measured at FVTPL.

Expected credit losses are measured through a
loss allowance at an amount equal to:

The 12-months expected credit losses (expected
credit losses that result from those default events
on the financial instrument that are possible
within 12 months after the reporting date); or

Full lifetime expected credit losses (expected
credit losses that result from all possible default
events over the life of the financial instrument)

Outstanding customer receivables are regularly
monitored. The Company periodically assesses
the financial reliability of customers, taking into
account the financial condition, current economic
trends, and analysis of historical data and ageing
of accounts receivable. The Company creates
allowance for unsecured receivables based on
historical credit loss experience, industry practice
and business environment in which the entity
operates and is adjusted for forward looking
information. Subsequently when the Company
is satisfied that no recovery of such losses
is possible, the financial asset is considered
irrecoverable and the amount charged to the
allowance account is then written off against the
carrying amount of the impaired financial asset.

(ii) Financial liabilities:

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 .

Subsequent measurement

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

(i) Financial liabilities at fair value through
statement of profit and loss

(ii) Financial liabilities at amortised cost (loans
and borrowings)

Financial liabilities at amortised cost (Loans and
borrowings)

After initial recognition, interest-bearing
borrowings are subsequently measured at
amortised cost using the Effective interest rate
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 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 Effective interest rate.
The Effective interest rate amortisation is included
as finance costs in the statement of profit and loss.

Trade Payables

These amounts represent liabilities for goods and
services provided to the Company prior to the end
of financial year which are unpaid. The amounts

are unsecured and are usually payable basis
varying trade term. Trade and other payables are
presented as current liabilities unless payment
is not due within 12 months after the reporting
period. They are recognised initially at fair value
and subsequently measured at amortised cost
using Effective interest rate method.

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 if incurred because the specified debtor
fails to make a payment when due in accordance
with the terms of a debt instrument. If material,
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
recognized less cumulative amortization

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

Financials 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.

2.5 Inventories

a) Basis of valuation:

Inventories are valued at lower of cost and net
realisable value. The comparison of cost and net
realisable value is made on an item-by-item basis.

b) Method of Valuation:

Costs incurred in bringing each product to its

present location and condition are accounted

for as follows:

i) Cost of raw materials has been determined
by using First in first out method and
comprises all costs of purchase, duties, taxes
(other than those subsequently recoverable
from tax authorities) and all other costs
incurred in bringing the inventories to their
present location and condition.

ii) Cost of finished goods and work-in-progress
includes direct labour and an appropriate
share of fixed and variable production
overheads. Fixed production overheads are
allocated on the basis of normal capacity of
production facilities. Cost is determined on
First in first out method

iii) Cost of traded goods has been determined
by using First in first out method and
comprises all costs of purchase, duties, taxes
(other than those subsequently recoverable
from tax authorities) and all other costs
incurred in bringing the inventories to their
present location and condition.

iv) Net realisable value is the estimated selling
price in the ordinary course of business,
less estimated costs of completion and
estimated costs necessary to make the
sale. The net realisable value of work-in¬
progress is determined with reference to the
selling prices of related finished products.
Raw materials and other supplies held for
use in the production of finished products
are not written down below cost except in
cases where material prices have declined
and it is estimated that the cost of the
finished products will exceed their net
realisable value.

v) Appropriate adjustments are made to the
carrying value of damaged, slow moving and
obsolete inventories based on management''s
current best estimate.

2.6 Taxes on Income

Tax on income for the current period is determined on
the basis of taxable income and tax credits computed
in accordance with the provisions of the Income Tax

Act,1961 and using estimates and judgments based
on the expected outcome of assessments/appeals
and the relevant rulings in the areas of allowances
and disallowances. The computation reflects the
effect of uncertainty for each item of allowance and
disallowance as appropriate either by

i. expected value method which sums the
probability-weighted amounts in a range of
possible outcomes or

ii. the most likely amount in a range of
possible outcomes

Deferred tax is recognised on temporary differences
between the carrying amounts of assets and liabilities
in the Company''s financial statements and the
corresponding tax bases used in computation of
taxable profit and quantified using the tax rates as
per laws enacted or substantively enacted as on the
Balance Sheet date

Deferred tax liabilities are generally recognised for all
taxable temporary differences including the temporary
differences associated with investments in subsidiaries
and associates, and interests in joint ventures, except
where the Company is able to control the reversal
of the temporary difference and it is probable that
the temporary difference will not reverse in the
foreseeable future.

Deferred tax assets are generally recognised for all
taxable temporary differences to the extent that is
probable that taxable profits will be available against
which those deductible temporary differences can be
utilised. The carrying amount of deferred tax assets
is reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all
or part of the asset to be recovered.

The Company has applied mandatory exception of
recognising and disclosing information about deferred
tax assets and liabilities related to Pillar Two income
taxes as required by Ind AS 12 (as amended).

Transaction or event which is recognised outside profit
or loss, either in other comprehensive income or in
equity, is recorded along with the tax as applicable.

2.7 Revenue from contract with customers

Revenue from contracts with customers is recognised
when control of the goods or services are transferred
to the customer at an amount that reflects the
consideration to which the Company expects to be
entitled in exchange for those goods or services.

The transaction price is the amount of consideration
to which the Company expects to be entitled in
exchange for transferring promised goods or services
to a customer, excluding amount collected on behalf
of third parties and net of estimated liquidated
damages. The Company has generally concluded
that it is the principal in its revenue arrangements,
because it typically controls the goods or services
before transferring them to the customer. A receivable
is recognised when the control of the product is
transferred as the consideration is unconditional
and payment becomes due upon passage of time
as per the terms of contract with customers. The
Company collects GST or other indirect taxes, if any
on behalf of the government and, therefore, it is not
an economic benefit flowing to the Company. Hence,
it is excluded from revenue.

The Company derives revenues primarily from sale
of power infra items, and construction/project
related activity, engineering, procurement and
construction (EPC) and operation and maintenance of
telecommunication towers.

Revenue from sales of products

Revenue from sale of products is recognised at the point
in time when control of the goods is transferred to the
customer, generally on delivery of the goods and there
are no unfulfilled obligations. The Company considers,
whether there are other promises in the contract in
which their are separate performance obligations, to
which a portion of the transaction price needs to be
allocated. In determining the transaction price for the
sale of product, the Company considers the effects
of variable consideration, the existence of significant
financing components, non-cash consideration, and
consideration payable to the customer, if any.

Revenue from sales of services

The Company recognises revenue from sales of services
over time, because the customer simultaneously
receives and consumes the benefits provided by the
Company. Revenue from services-related activities is
recognised as and when services are rendered and on
the basis of contractual terms with the parties.

Warranty obligations

The Company generally provides for warranties for
general repair of defects that existed at the time of
sale. These warranties are assurance-type warranties
under Ind AS 115, which are accounted for under
Ind AS 37 (Provisions, Contingent Liabilities and
Contingent Assets).

Significant Financing Components

In respect of short-term advances from its customers,
using the practical expedient in Ind AS 115, the
Company is not required to adjust the promised
amount of consideration for the effects of a significant
financing component because it expects, at contract
inception, that the period between the transfer of the
promised good or service to the customer and when
the customer pays for that good or service will be
within normal operating cycle.

Revenue from construction/project related activity

Performance obligations with reference to
construction/project related activity are satisfied
over the period of time, and accordingly, revenue
from such contracts is recognized based on progress
of performance determined using input method with
reference to the cost incurred on contract and their
estimated total costs. Margin is not recognised until
the outcome of the contract is certain. Transaction
price is the amount of consideration to which the
Company expects to be entitled in exchange for
transferring goods or services to a customer excluding
amounts collected on behalf of a third party. Revenue,
measured at transaction price, is adjusted towards
liquidated damages, time value of money and price
variations, escalation, change in scope etc. wherever,
applicable. Variation in contract work and other
claims are included to the extent that the amount can
be measured reliably, and it is agreed with customer.

The Company evaluates whether each contract
consists of a single performance obligation or multiple
performance obligations. Due to the nature of the work
required to be performed on many of the performance
obligations, the estimation of total revenue and cost at
completion is subject to many variables and requires
significant judgement. The Company considers its
experience with similar transactions and expectations
regarding the contract in estimating the amount
of variable consideration to which it will be entitled
and determining whether the estimated variable
consideration should be constrained. The Company
includes estimated amounts in the transaction price
to the extent it is probable that a significant reversal
of cumulative revenue recognised will not occur
when the uncertainty associated with the variable
consideration is resolved.

Revenue from operation and maintenance

Revenue from operation & maintenance is recognized
as the proportion of the total period of services contract
that has elapsed at the end of the reporting period.

For contracts where the aggregate of contract cost
incurred to date plus recognized profits (or minus
recognized losses as the case may be) exceeds the
progress billing, the surplus is shown as contract asset
and termed as "Unbilled revenue". For contracts where
progress billing exceeds the aggregate of contract
costs incurred to-date plus recognized profits (or
minus recognized losses, as the case may be), the
surplus is shown as contract liability and termed as
"Excess of billing over revenue". Amounts received
before the related work is performed are disclosed in
the Balance Sheet as contract liability and termed as
"Advances from customer". The amounts billed on the
customer for work performed and are unconditionally
due for payment i.e. only passage of time is required
before payment falls due, are disclosed in the balance
sheet as trade receivables. The amount of retention
money held by the customers pending completion of
performance milestone is disclosed as part of contract
asset and is reclassified as trade receivables when it
becomes due for payment.

Revenue arising from a service concession arrangement
refer section 2.17 Service Concession arrangements.

Contract balances

- Contract assets

A contract asset is the right to consideration
in exchange for goods or services transferred
to a customer. If the Company performs by
transferring goods or services to a customer
before the customer pays consideration or before
payment is due, a contract asset is recognized for
the earned consideration that is conditional.

- 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
or has raised the invoice in advance. 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 under the contract
(i.e., transfers control of the related goods or
services to the customer).

Trade receivables

A trade receivable is recognised if 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 (Financial instruments -
initial recognition and subsequent measurement).

2.8 Other Income

Interest Income from bank deposits and loan

Interest income is accrued on a time proportion basis
by reference to the principal outstanding and the
effective interest rate.

Other items of income are accounted as and when
the right to receive arises and it is probable that the
economic benefits will flow to the Company and the
amount of income can be measured reliably.

2.9 Retirement and other employee benefits
Short-term obligations

Liabilities for wages and salaries, including non¬
monetary benefits that are expected to be settled
wholly within twelve months after the end of the period
in which the employees render the related service are
recognized in respect of employee service upto the
end of the reporting period and are measured at the
amount expected to be paid at undiscounted value
when the liabilities are settled. The liabilities are
presented as current employee benefit obligations in
the balance sheet.

Defined benefit plan - Gratuity

The Company provides for gratuity, a defined benefit
plan (the ''Gratuity Plan") covering eligible employees
in accordance with the Payment of Gratuity Act, 1972.

The liabilities with respect to defined benefit plan
are determined by actuarial valuation on projected
unit credit method on the balance sheet date, based
upon which the Company contributes to the defined
benefit scheme. The difference, if any, between the
actuarial valuation of the defined benefit scheme of
employees at the year end and the balance of funds
is provided for as assets/ (liability) in the books. Net
interest is calculated by applying the discount rate to
the net defined benefit liability or asset. The Company
recognises the following changes in the net defined
benefit obligation under Employee benefit expense in
statement of profit and loss:

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

ii) Net interest expense or income 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 other
comprehensive income in the period in which
they occur. Remeasurements are not reclassified
to profit or loss in subsequent periods.

Defined contribution plan - Provident fund,
employee state insurance and other defined
contribution plan

Retirement benefit in the form of provident funds,
employee state insurance and other defined
contribution plan is a defined contribution scheme.
The Company has no obligation, other than the
contribution payable to the these funds. The Company
recognises contribution payable through these
scheme as an expense, when an employee renders the
related services. If the contribution payable to scheme
for service received before the balance sheet date
exceeds the contribution already paid, the deficit
payable to the scheme is recognized as liability after
deducting the contribution already paid.

If the contribution already paid exceeds the contribution
due for services received before the balance sheet
date, then excesses recognized as an asset to the
extent that the prepayment will lead to, for example, a
reduction in future payment or a cash refund.

Other employee benefit - Compensated absence
Liability in respect of compensated absences
becoming due or expected to be availed after the
balance sheet date is estimated on the basis of an
actuarial valuation performed by an independent
actuary using the projected unit credit method.

Actuarial gains and losses arising from past experience
and changes in actuarial assumptions are charged
to statement of profit and loss in the year in which
such gains or losses are determined. 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 for 12 months after the
reporting date.

2.10 Leases

Company as a lessee

The Company applies a single recognition and
measurement approach for all leases, except for
short-term leases and leases of low-value assets. The

Company recognises lease liabilities to make lease
payments and right-of-use assets representing the
right to use the underlying assets. For these short¬
term and low value leases, the Company recognises
the lease payments as an operating expense on a
straight-line basis over the term of the lease).

(i) Right-of-use assets

The Company recognises right-of-use assets at
the commencement date of the lease (i.e., the
date the underlying asset is available for use).
Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses,
and adjusted for any remeasurement of lease
liabilities. The cost of right-of-use assets includes
the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made
at or before the commencement date less any
lease incentives received. Right-of-use assets
are depreciated on a straight-line basis over
the shorter of the lease term and the estimated
useful lives of the underlying assets. 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. The right-of-use assets are also subject to
impairment. Refer to the accounting policies in
section ''Impairment of non-financial assets''.

(ii) Lease Liabilities

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 include
fixed payments (including in substance fixed
payments) less any lease incentives receivable,
variable lease payments that depend on an index
or a rate, and amounts expected to be paid under
residual value guarantees.

The lease payments also include the exercise
price of a purchase option reasonably certain to
be exercised by the Company and payments of
penalties for terminating the lease, if the lease
term reflects the Company exercising the option
to terminate. Variable lease payments that do
not depend on an index or a rate are recognised
as expenses (unless they are incurred to produce
inventories) in the period in which the event or
condition that triggers the payment occurs. In
calculating the present value of lease payments,
the Company uses its incremental borrowing
rate at the lease commencement date because

the interest rate implicit in the lease is not
readily determinable.

After the commencement date, the amount
of lease liabilities is increased to reflect the
accretion of interest and reduced for the
lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there
is a modification, a change in the lease term,
a change in the lease payments (e.g., changes
to future payments resulting from a change in
an index or rate used to determine such lease
payments) or a change in the assessment of an
option to purchase the underlying asset. Lease
payments are allocated between principal and
finance cost. The finance cost is charged to
statement of profit and loss over the lease period
so as to produce a constant periodic rate of
interest on the remaining balance of the liability
for each period. The Company''s lease liabilities
are included in other current and non-current
financial liabilities. Variable lease payments that
depend on sales are recognised in statement of
profit and loss in the period in which the condition
that triggers those payments occurs.

(iii) Short-term leases and leases of low-value
assets

The Company applies the short-term lease
recognition exemption to its short-term leases (i.e.,
those leases that have a lease term of 12 months
or less from the commencement date and do not
contain a purchase option). It also applies the
lease of low value assets recognition exemption
to leases that are considered to be low value.
Lease payments on short-term leases and leases
of low-value assets are recognised as expense on
a straight-line basis over the lease term.

(iv) Company as a lessor

Leases for which the Company is a lessor
is classified as finance or operating lease.
Leases in which the Company does not transfer
substantially all the risks and rewards incidental to
ownership of an asset are classified as operating
leases. Rental income arising is accounted for on
a straight-line basis over the lease terms. Initial
direct costs incurred in negotiating and arranging
an operating lease are added to the carrying
amount of the leased asset and recognised
over the lease term on the same basis as rental
income. Contingent rents are recognised as
revenue in the period in which they are earned.

2.11 Earnings Per Share

Basic earnings per share are calculated by dividing
the net profit or loss for the period attributable to
equity shareholders by the weighted average number
of equity shares outstanding during the period. The
weighted average number of equity shares outstanding
during the period 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 or loss for the period attributable to
equity shareholders and the weighted average number
of shares outstanding during the period are adjusted
for the effect of all potentially dilutive equity shares.

2.12 Borrowing Costs

Borrowing costs includes interest and other costs
incurred in connection with the borrowing of funds
and charged to Statement of profit and loss on the
basis of effective interest rate (EIR) method. Borrowing
cost also includes exchange differences to the extent
regarded as an adjustment to the borrowing cost.
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 (i.e. qualifying assets) are
capitalised as part of the cost of the respective asset.
All other borrowing costs are recognised as expense in
the period in which they occur.

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