3.21. Provisions and Contingencies
A provision is recognized when an enterprise has a present obligation (legal or constructive) 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. Provisions are measured at the present value of management's best
estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used
to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the
risk specific to the liability. The expense relating to a provision is presented in the statement of profit and loss.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence
or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not
recognized because it is not probable that an outflow of resources will be required to settle the obligation. The Company does
not recognize a contingent liability but discloses its existence in the financial statements.
Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of
economic benefits. Contingent Assets are not recognized though are disclosed, where an inflow of economic benefits is
probable.
Provisions, contingent liabilities and contingent assets are reviewed at each reporting date.
3.22. 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
All financial assets are recognised initially at fair value, plus in the case of financial assets not recorded at fair value through
profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial asset. However, trade receivables
that do not contain a significant financing component are measured at transaction price.
Where the fair value of a financial asset at initial recognition is different from its transaction price, the difference between the
fair value and the transaction price is recognised as a gain or loss in the Statement of Profit and Loss at initial recognition if the
fair value is determined through a quoted market price in an active market for an identical asset (i.e. level 1 input) or through a
valuation technique that uses data from observable markets (i.e. level 2 input). In case the fair value is not determined using a
level 1 or level 2 input as mentioned above, the difference between the fair value and transaction price is deferred appropriately
and recognised as a gain or loss in the Statement of Profit and Loss only to the extent that such gain or loss arises due to a
change in factor that market participants take into account when pricing the financial asset.
Subsequent measurement: For subsequent measurement, the Company classifies a financial asset in accordance with the
below criteria:
• The Company's business model for managing the financial asset and
• The contractual cash flow characteristics of the financial asset.
Based on the above criteria, the Company classifies its financial assets into the following categories:
Financial assets measured at amortised cost
A financial asset is measured at the amortised cost if both the following conditions are met:
• The Company's business model objective for managing the financial asset is to hold financial assets in order to collect
contractual cash flows, and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
This category applies to cash and bank balances, trade receivables, loans and other financial assets of the Company. (Refer
Note 39 for further details). Such financial assets are subsequently measured at amortised cost using the effective interest
method. The effect of the amortisation under effective interest method is recognised as interest income over the relevant
period of the financial asset under other income in the Statement of Profit and Loss. The amortised cost of a financial asset is
also adjusted for loss allowance, if any.
Financial assets measured at fair value through other comprehensive income (FVTOCI)
• A financial asset is measured at FVTOCI if both of the following conditions are met:
• The Company's business model objective for managing the financial asset is achieved both by collecting contractual cash
flows and selling the financial assets, and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding
This category applies to certain investments in debt instruments (Refer Note 39 for further details). Such financial assets are
subsequently measured at fair value at each reporting date. Fair value changes are recognised in the Other Comprehensive
Income (OCI). However, the Company recognise interest income and impairment losses and its reversals in the Statement of
Profit and Loss. On derecognition of such financial assets, cumulative gain or loss previously recognised in OCI is reclassified
from equity to Statement of Profit and Loss.
On derecognition of such financial assets, cumulative gain or loss previously recognised in OCI is reclassified from equity to
Statement of Profit and Loss.
Further, the Company, through an irrevocable election at initial recognition, has measured certain investments in equity
instruments at FVTOCI (Refer Note 39 for further details). The Company has made such election on an instrument by instrument
basis. These equity instruments are neither held for trading nor are contingent consideration recognised under a business
combination.
Pursuant to such irrevocable election, subsequent changes in the fair value of such equity instruments are recognised in OCI.
However, the Company recognise dividend income from such instruments in the Statement of Profit and Loss when the right
to receive payment is established, it is probable that the economic benefits will flow to the Company and the amount can
be measured reliably. On derecognition of such financial assets, cumulative gain or loss previously recognised in OCI is not
reclassified from the equity to Statement of Profit and Loss. However, the Company may transfer such cumulative gain or loss
into retained earnings within equity.
Financial assets measured at fair value through profit or loss (FVTPL)
A financial asset is measured at FVTPL unless it is measured at amortised cost or at FVTOCI as explained above. This is a residual
category applied to all other investments of the Company excluding investments in subsidiary and associate companies (Refer
Note 39 for further details). Such financial assets are subsequently measured at fair value at each reporting date. Fair value
changes are recognised in the Statement of Profit and Loss.
Debt instruments at amortised cost
A 'debt instrument' is measured at the amortised cost if both the following conditions are met:
• The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
• Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest
(SPPI) on principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate
(EIR) method. The EIR amortisation is included in finance income in the Statement of Profit and Loss.
Equity investments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are
classified as at Fair Value Through Profit and Loss (FVTPL). For all other equity instruments, the Company makes an irrevocable
election to present in Other Comprehensive Income (OCI) subsequent changes in the fair value. The Company makes such
election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding
dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to Statement of Profit and Loss, even on
sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Derecognition
A financial asset is derecognised when the right to receive cash flows from the assets has expired, or has been transferred, and
the Company has transferred substantially all of the risks and rewards of ownership.
In cases where Company has neither transferred nor retained substantially all of the risks and rewards of the financial asset, but
retains control of the financial asset, the Company continues to recognize such financial asset to the extent of its continuing
involvement in the financial asset. In that case, the Company also recognise an associated liability. The financial asset and the
associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
On derecognition of a financial asset, (except as mentioned above for financial assets measured at FVTOCI), the difference
between the carrying amount and the consideration received is recognised in the Statement of Profit and Loss.
Impairment of financial assets
The Company applies expected credit losses (ECL) model for measurement and recognition of loss allowance on the following:
a) Trade receivables
b) Financial assets measured at amortised cost (other than trade receivables)
c) Financial assets measured at fair value through other comprehensive income (FVTOCI)-in case of debt instruments
In case of trade receivables, the Company follows a simplified approach wherein an amount equal to lifetime ECL is measured
and recognised as loss allowance. In case of other financial assets, the Company determines if there has been a significant
increase in credit risk of the financial asset since initial recognition. If the credit risk of such assets has not increased
significantly, an amount equal to 12-month ECL is measured and recognised as loss allowance. However, if credit risk has
increased significantly, an amount equal to lifetime ECL is measured and recognised as loss allowance.
Subsequently, if the credit quality of the financial asset improves such that there is no longer a significant increase in credit risk
since initial recognition, the Company reverts to recognizing impairment loss allowance based on 12 months ECL.
ECL are measured in a manner that they reflect unbiased and probability weighted amounts determined by a range of outcomes,
taking into account the time value of money and other reasonable information available as a result of past events, current
conditions and forecasts of future economic conditions. As a practical expedient, the Company uses a provision matrix to
measure lifetime ECL on its portfolio of trade receivables. The provision matrix is prepared based on historically observed
default rates over the expected life of trade receivables and is adjusted for forward-looking estimates. At each reporting date,
the historically observed default rates and changes in the forward-looking estimates are updated.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the Statement
of Profit and Loss.
Financial liabilities
Initial recognition and measurement
The Company recognise a financial liability in its balance sheet when it becomes party to the contractual provisions of the
instrument. All financial liabilities are recognised initially at fair value minus, in the case of financial liabilities not recorded at
fair value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial liability.
Where the fair value of a financial liability at initial recognition is different from its transaction price, the difference between the
fair value and the transaction price is recognised as a gain or loss in the Statement of Profit and Loss at initial recognition if the
fair value is determined through a quoted market price in an active market for an identical asset (i.e. level 1 input) or through a
valuation technique that uses data from observable markets (i.e. level 2 input). In case the fair value is not determined using a
level 1 or level 2 input as mentioned above, the difference between the fair value and transaction price is deferred appropriately
and recognised as a gain or loss in the Statement of Profit and Loss only to the extent that such gain or loss arises due to a
change in factor that market participants take into account when pricing the financial liability.
Subsequent measurement:
All financial liabilities of the Company are subsequently measured at amortised cost using the effective interest method (Refer
Note 39 for further details). The cumulative amortisation using the effective interest method of the difference between the
initial recognition amount and the maturity amount is added to the initial recognition value (net of principal repayments, if any)
of the financial liability over the relevant period of the financial liability to arrive at the amortised cost at each reporting date.
The corresponding effect of the amortisation under effective interest method is recognised as interest expense under finance
cost in the Statement of Profit and Loss.
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 between the carrying amount of the financial liability derecognised
and the consideration paid is recognised in the Statement of Profit and Loss.
Offsetting of financial assets and financial liabilities:
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet wherever there is a
currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis or to realise
the asset and settle the liability simultaneously.
Derivative financial instruments
The Company enters into derivative financial instruments, primarily forward currency contracts, with external counterparties
to manage its exposure to foreign exchange risks arising from foreign currency denominated financial assets and liabilities.
These derivative contracts are not designated in a formal hedge relationship as defined under Ind AS 109. Accordingly, such
instruments are measured at fair value through profit or loss (FVTPL), and any gains or losses arising from changes in fair value
are recognised in the Statement of Profit and Loss.
3.23. Fair Value measurement
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes place either:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most advantageous market for the asset or liability
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in
its highest and best use.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the
fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a
whole:
• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable
• Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is
significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the
nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
3.24. Exceptional Items
An ordinary item of income or expense which by its size, nature, occurrence or incidence requires a disclosure in order to
improve understanding of the performance of the Company is treated as an exceptional item in the Statement of Profit and
Loss account.
3.25. Events after reporting date
Where events occurring after the balance sheet date provide evidence of conditions that existed at the end of the reporting
period, the impact of such events is adjusted within the Financial Statements. Otherwise, events after the balance sheet date
of material size or nature are only disclosed.
3.26. Recent accounting pronouncements
Ministry of Corporate Affairs ("MCA”) notifies new standards or amendments to the existing standards under Companies (Indian
Accounting Standards) Rules as issued from time to time. During the year ended March 31, 2025, MCA has notified Ind AS 117 -
Insurance Contracts and amendments to Ind As 116 - Leases, relating to sale and lease back transactions, applicable from April
1, 2024. The Company has assessed that there is no significant impact on its financial statements. On May 9, 2025, MCA notifies
the amendments to Ind AS 21 - Effects of Changes in Foreign Exchange Rates. These amendments aim to provide clearer
guidance on assessing currency exchangeability and estimating exchange rates when currencies are not readily exchangeable.
The amendments are effective for annual periods beginning on or after April 1, 2025. The Company is currently assessing the
probable impact of these amendments on its financial statements.
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