Investor Presentaiton
108
8)
When the grant or subsidy relates to revenue, it is recognised
as income on a systematic basis in the Statement of Profit
and Loss over the periods necessary to match them with the
related costs, which they are intended to compensate. Where
the grant relates to an asset, it is recognised as income in equal
amounts over the expected useful life of the related asset or by
deducting the grant in arriving at the carrying amount of the
assets. Where the assets have been fully depreciated with no
future related cost, the grant is recognised in profit or loss.
When loans or similar assistance are provided by governments
or related institutions, with an interest rate below the current
applicable market rate, the effect of this favourable interest
is regarded as a government grant. The loan or assistance
is initially recognised and measured at fair value and the
government grant is measured as the difference between the
initial carrying value of the loan and the proceeds received.
The loan is subsequently measured as per the accounting
policy applicable to financial liabilities in respect of loans/
assistance received subsequent to the date of transition.
Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognised when there is a present legal
or constructive obligation as a result of a past event and it
is probable (i.e. more likely than not) 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. Such provisions are determined
based on management estimate of the amount required to
settle the obligation at the balance sheet date. When the
Company expects some or all of a provision to be reimbursed,
the reimbursement is recognised as a standalone asset only
when the reimbursement is virtually certain.
If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects,
the risks specific to the liability. When discounting is used,
the increase in the provision due to the passage of time is
recognised as a finance cost.
Present obligations arising under onerous contracts are
recognised and measured as provisions. An onerous
9)
contract is considered to exist when a contract under which
the unavoidable costs of meeting the obligations exceed
the economic benefits expected to be received from it.
Unavoidable cost is determined based on cost that are directly
attributable to having and executing the contracts.
Contingent liabilities are disclosed on the basis of judgment
of management / independent experts. These are reviewed at
each balance sheet date and are adjusted to reflect the current
management estimate.
Provisions for warranty-related costs are recognised when the
product is sold to the customer. Initial recognition is based on
scientific basis as per past trends of such claims. The initial
estimate of warranty-related costs is revised annually.
Contingent Assets are not recognised, however, disclosed
in Financial Statement when inflow of economic benefits is
probable.
Foreign Currency Transactions:
The Financial Statements of Company are presented in INR,
which is also the functional currency. In preparing the financial
statements, transactions in currencies other than the entity's
functional currency are recognised at the rates of exchange
prevailing at the dates of the transactions. At the end of each
reporting period, monetary items denominated in foreign
currencies are translated at the rates prevailing at that date.
Non-monetary items denominated in foreign currency are
reported at the exchange rate ruling on the date of transaction.
10) Share Capital and Securities Premium:
Ordinary shares are classified as equity, incremental costs
directly attributable to the issue of new shares are shown in
equity as a deduction net of tax from the proceeds. Par value
of the equity share is recorded as share capital and the amount
received in excess of the par value is classified as securities
premium.
11) Dividend Distribution to Equity Shareholders:
The Company recognises a liability to make cash distributions
to equity holders when the distribution is authorized and the
distribution is no longer at the discretion of the Company.View entire presentation