The Company creates a provision when there is a present obligation as a result of pastevents and it is probable that there will be outflow of resources and a reliable estimate ofthe obligation can be made of the amount of the obligation. Contingent liabilities are notrecognized but are disclosed in the notes to the financial statements. A disclosure for acontingent liability is made when there is a possible obligation or a present obligation inrespect of which the likelihood of outflow of resources is remote.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current bestestimate. If it is no longer probable that the outflow of resources would be required tosettle the obligation, the provision is reversed.
Contingent assets are neither recognized nor disclosed in the financial statements.
Fair value is the price that would be received to sell an asset or paid to transfer a liabilityin an orderly transaction between market participants at the measurement date. The fairvalue measurement is based on the presumption that the transaction to sell the asset ortransfer the liability takes place either in the principal market for the asset or liability, or inthe absence of a principal market, in the most advantageous market for the asset orliability. The principal or the most advantageous market must be accessible to theCompany.
The fair value of an asset or a liability is measured using the assumptions that marketparticipants would use when pricing the asset or liability, assuming that marketparticipants act in their economic best interest. A fair value measurement of a non¬financial asset takes into account a market participant's ability to generate economicbenefits by using the asset in its highest and best use or by selling it to another marketparticipant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and forwhich sufficient data are available to measure fair value, maximising the use of relevantobservable inputs and minimising the use of unobservable inputs. All assets and liabilitiesfor which fair value is measured or disclosed in the financial statements are categorizedwithin the fair value hierarchy, described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole: .
• Level 1 - quoted (unadjusted) market prices in active markets for identical assets o.
• Level 2 - inputs other than quoted prices included within Level 1 that aobservable for the asset or liability, either dirptli^rindirectly.
• Level 3 - inputs that are unobservable for tji^^^^^iability.
For assets and liabilities that are recognized hpLpenVvel*
recurring basis, the Company determines occurred betwee . -
in the hierarchy by re-assessing categorization at the end of each reporting period anddiscloses the same.
12. Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and afinancial liability or equity instrument of another entity. Financial instruments also includederivative contracts such as foreign currency foreign exchange forward contracts, interestrate swaps and currency options, and embedded derivatives in the host contract.
a. Financial Assets
TheCompany shall classify financial assets and subsequently measured at amortised cost,fair value through other comprehensive income (FVOCI) or fair value through profit or loss(FVTPL) on the basis of its business model for managing the financial assets and l econtractual cash flow characteristics of the financial asset.
Initial recognition and measurement: . , , t „„
All financial assets are recognised initially at fair value plus transaction costs thattributable to the acquisition of the financial asset, in the case of financial assets norecorded at fair value through profit or loss. Purchases or sales of financial assets thatrequire delivery of assets within a time frame established by regulation or c°^v®"t‘onthe market place (regular way trades) are recognised on the trade date, i.e., the date thatthe company commits to purchase or sell the asset.
Asse'ts't^aQUn0^ meet thCenteria for amortized cost or FVOCI are measured at fair valuethrough profit or loss. A gain or loss on a debt investment that is subsequently measuredat fai^value through profit or loss and is not part of a hedging relationship is recognized inStatement of Prom and Loss in the period in which it arises, u.^instruments that were designated at fair value or which are not held for ^ad'ng' fincome from these financial assets is included in 'Interest income using-the effective
interest rate method.
Fair value through other comprehensive income: the
Financial assets that are held for collection of contractual cash flows and or se !,ng theassets where the assets' cash flows represent solely payments of principal and 'nte e ,fnd that are not designated at FVPL are measured at fairvalue t,nrougt. »comprehensive income. Movements in the carrying amount are taken through hvuepexcept for the recognition of impairment gains or losses, interest revenue and foreigeSnae aainsandlosses on the instrument’s amortized cost which are recognized inprofit or loss. When the financial asset is derecognized, the cumulatr'* 9ra,nnreviouslv recoqnized in OCI is reclassified from equity to profit or loss. Interest mcofrom these financial assets is included in 'Interest income' using the effective interest rate
method.
Msetffhafat'e held for contractual cash flows where those cash <'°"5
payments of principal and interest CSPPI'). and that are "°l *\VuStTby W
measured at amortized cost. The carrying amount of these assets ^ Rusted Dy^^yexpected credit loss allowance recognized and measured. Interest incofinancial assets is recognized using the effective interest rate method.
Interest income: . lnz.rciI.t rP.Ye> to the cross carrying
Interest income is calculated by applying '
amount of financial assets.
Fguity instruments: Jilt ion of equity from the issuer's
oJfu.-aon to pay and
that evidence a residual interest in the issuer’s net assets. Ind AS 109 requires allinvestments in equity instruments and contracts on those instruments to be measured atfair value. -
The Company subsequently measures all quoted equity investments at fair value. Wherethe company's management has elected to present fair value gains and losses on equityinvestments in other comprehensive income, there is no subsequent reclassification forfair value gains and losses to profit or loss following the de-recognition of the investment.
The Company subsequently measures all un-quoted equity investments at cost based onthe requirements of Ind AS 109, where in some limited circumstances cost is a moreappropriate estimate of fair value, that may be the case if insufficient more recentinformation is available to measure the fair value or if there is a wide range of possible fairvalue measurements and cost represents the best estimate of the fair value within that
range.
Changes in the fair value of financial assets at fair value through profit or loss arerecognized in net gain/ loss on fair value changes in the statement of profit and loss^.Impairment losses (and reversal of impairment losses) on equity investments measured atFVOCI are not reported separately from other changes in fair value.
Gains and losses on equity investments at FVTPL are included in the Statement of Profitand Loss.
De-recognition: „ , ,
A financial asset (or, where applicable, a part of a financial asset or part of a company orsimilar financial assets) is primarily derecognised (i.e. removed from the company sbalance sheet) when:
a. The rights to receive cash flows from the asset have expired, or
b The company has transferred its rights to receive cash flows from the asset or hasassumed an obligation to pay the received cash flows in full without material delay to athird party under a 'pass-through' arrangement; and either (a) the company hastransferred substantially all the risks and rewards of the asset, or (b) the company hasneither transferred nor retained substantially all the risks and rewards of the asset, buthas transferred control of the asset. Ý
c. When the company has transferred its rights to receive cash flows from an asset or hasentered into a pass-through arrangement, it evaluates if and to what extent it hasretained the risks and rewards of ownership. When it has neither transferred norretained substantially all of the risks and rewards of the asset, nor transferred controlof the asset the company continues to recognise the transferred asset to the extent otthe company's continuing involvement, in that case, the company also recognises anassociated liability. The transferred asset and the associated liability are measured ona basis that reflects the rights and obligations that the company has retained,
d Continuing involvement that takes the form of a guarantee over the transferred asset ismeasured at the lower of the original carrying amount of the asset and the maximumamount of consideration that the company could be required to repay.
Impairment of financial assets: for
in accordance with Ind-AS 109, the Company applies expected credit loss (ECU mode! tormeasurement and recognition of impairment loss on the following financial assets Ý
credit risk exposure:
a. Financial assets that are debt instruments, and are measured at amortised cost e.g.,loans, debt securities, deposits, and bank balance:
The Company follows general approach for recognition of
for finances assets other than trade re^a^ In ^nera approach^ he financialasset is divided into 3 stages and the is recognized depending on the .
stage of the financial asset into consi
The loss under this approach is either based on the 12 months ECL or lifetime ECL. Allfinancial assets falling in stage 1 is performing and requires 12 months ECL, whereasfinancial assets in stage 2 where the credit risk has increased significantly postrecognition or financial assets in stage 3 which are credit impaired a lifetime ECL isrequired.
b. Financial Liabilities
Classification: . .
The Company classifies all financial liabilities as subsequently measuredat amortised cost,except for financial liabilities at fair value through profit or loss. Such liabilities, includingderivatives that are liabilities, shall be subsequently measured at fair value.
Initial recognition and measurement:
Financial liabilities are classified, at initial recognition, as financial liabilities at fair valuethrough profit or loss or amortised costs.
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measuredat amortised cost using the EIR method. Gains and losses are recognised in profit or losswhen the liabilities are derecognised as well as through the EiR amortisation process.
De-recognition: , .
A financial liability is derecognised when the obligation under the liability is discharged orcancelled or expires. When an existing financial liability is replaced by another from thesarne lender on substantially different terms, or the terms of an existing liability aresubstantially modified, such an exchange or modification is treated as the de-recognitionof the original liability and the recognition of a new liability. The difference in therespective carrying amounts is recognised in the statement of profit or loss.
Offsetting , .
Financial assets and financial liabilities are offset and the net amount is presented in thebalance sheet when, and when the company has a legally enforceable right to set off theamount and it intends either to settle them on net basis or to realize the asset and settlethe liability simultaneously.
Derivative financial instruments '
The company uses derivative financial instruments, such as forward currency contracts,interest rate swaps and forward commodity contracts, to hedge its foreign currency risksinterest rate risks and commodity price risks, respectively. Such derivative financialinstruments are initially recognized at fair value on the date on which a derivative contractis entered into and are subsequently re-measured at fair value. Derivatives are carried asfinancial assets when the fair value is positive and as financial liabilities when the fairvalue is negative.
13. Cash and cash equivalents
Cash and cash Equivalents in the Balance sheet comprise cash at banks and on hand andshort-term deposits with an original maturity of three or less month, which are subject toan insignificant risk of changes in value.
14. Cash Flow Statement
Cash flows are reported using the indirect method, where by profit before tax is adjustedfor the effects of transactions of a non-cash nature, any deferrals or accruals of past orfuture operating cash receipts or payments and item of income or expenses associated .with investing or financing cash flows. The cash flows from operating, investing andfinancing activities of the Company are
15. Earnings per share
Bas^earnfngs1 per-share ^calculated by thet profit d the
financ^al^year! - ^r. If any
and excluding treasury shares.
b. Diluted earnings per share , iri tho Hot-pr-mi nation of basic earnings
Diluted earnings per share adjusted the f|9ur®s us (^interest and other financing
per share to take into account the af er-.ncome tax effec of ^est a number of
3S.S?1C‘SWs^^ the conversion of all
dilutive potential equity shares,
16. Events after reporting date
Where events occurring after the balance sheet
existed at the end of the reporting perio , P sheet date of material size or
financial statements. Otherwise, events after the balance sneer oaie
nature are only disclosed.
Borrowing costs, if any, directly attributable to Mae «quisltion constor^uction
use^r saha c"apSS "anj. AlXrSS’ing “ expensed in the penod inwhich they are incurred.
18. Investment in subsidiaries and associates' Investments In subsidy and
{deenned cost) as per lnd AS 101 and Ý . am0unt of the investment is
nhsesesedna SnW^
betwee^ne^dirpcjsarproceed^amt'th^ca^ryi^g^atnounts^m^ecogt^ized in the Statementof Profit and Loss,
"Financial Instruments’.
Non-Performing Assets (NPA), if any, is recognized as per the prudential norms of NBFCRules and Regulations of Reserve Bank of India.
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