a present obligation that arises from past events but is not recognised because: it is not probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation; or the amount of the obligation cannot be measured with suff icient reliability. Contingent assets are neither recognized nor disclosed, unless infl ow of economic benefi ts is probable. However, when realization of income is virtually certain, related asset is recognized. q. Employee benefits Short term benefits Short Term Employee Benefi ts are accounted for in the period during which the services have been rendered. Post-employment benefits and other long term employee benefits Provident Fund: Retirement benefi t in the form of provident fund is a defi ned contribution scheme. The contributions to the provident fund administered by the Central Government under the Provident Fund Act, 1952, are charged to the consolidated statement of profi t and loss for the year in which the contributions are due. The Group has no obligation, other than the contribution payable to the provident fund. If the contribution payable to the scheme for service received before the consolidated balance sheet date exceeds the contribution already paid, the defi cit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the consolidated balance sheet date, then excess is recognized as an asset to the extent that the prepayment will lead to a reduction in future payment. Gratuity: The Group operates a defi ned benefi t gratuity plan in India, which requires contributions to be made to a separately administered fund. The cost of providing benefi ts under the defi ned benefi t plan is determined using the projected unit credit method. Remeasurements, comprising mainly of actuarial gains and losses, are recognised immediately in the consolidated balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassifi ed to the consolidated statement of profi t and loss in subsequent periods. Leave Encashment: The Group operates a longterm leave encashment plan in India. Accrued liability for leave encashment including sick leave is determined on actuarial valuation basis using Projected Unit Credit (PUC) Method at the end of the year and provided completely in profi t and loss account as per Ind AS - 19 “Employee Benefi ts”. r. Financial instruments A fi nancial instrument is any contract that gives rise to a fi nancial asset of one entity and a fi nancial liability or equity instrument of another entity. Financial assets Initial recognition and measurement All fi nancial assets, excluding trade receivables are recognised initially at fair value plus, in the case of fi nancial assets not recorded at fair value through profi t or loss, transaction costs that are attributable to the acquisition of the fi nancial asset. Trade receivables that do not contain a signifi cant fi nancing component are measured at transaction price. Subsequent measurement For purposes of subsequent measurement, fi nancial assets are classifi ed in four categories: Debt instruments at amortised cost Debt instruments at fair value through other comprehensive income (FVTOCI) Debt instruments, derivatives and equity instruments at fair value through profi t or loss (FVTPL) Equity instruments measured at FVTOCI and FVTPL Debt instruments at amortised cost A ‘debt instrument’ 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 fl ows, and b) Contractual terms of the asset give rise on specifi ed dates to cash fl ows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. After initial measurement, such fi nancial assets are subsequently measured at amortised cost using the eff ective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount 265 Consolidated | Financial Statements
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