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• Annual Report 2018-19
Shaping the future of software driven business
the effective portion of the resultant loss / (gain) is debited / (credited) to the hedge reserve under other comprehensive
income and the ineffective portion is recognized to the statement of profit and loss. Derivative financial instruments
are carried as forward contract receivable when the fair value is positive and as forward contract payable when the fair
value is negative.
Changes in the fair value of derivative instruments that do not qualify for hedge accounting are recognized in the
statement of profit and loss as they arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold, or terminated, or exercised, or no
longer qualifies for hedge accounting. Any cumulative gain or loss on the hedging instrument recognized under other
comprehensive income under other comprehensive income is transferred to the statement of profit and loss when the
forecasted transaction occurs or affects profit or loss or when a hedged transaction is no longer expected to occur.
Derecognition
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the
consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive
income and accumulated in equity, if any, is recognised in profit or loss.
ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to issue of
financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are deducted
from the fair value of the financial liabilities on initial recognition. Transaction costs directly attributable to the issue
of financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Subsequent measurement
For the purpose of subsequent measurement, financial liabilities are classified as:
- Financial liabilities at amortized cost
Financial liabilities such as loans and borrowings are subsequently measured at amortized cost using the effective
interest rate method. The change in measurements are recognized as finance costs in the statement of profit and
loss.
- Financial liabilities at fair value through profit or loss (FVTPL)
Financial liabilities include financial liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through profit or loss if the recognition criteria as per Ind AS 109 – “Financial Instruments”
are satisfied. Gains or losses on liabilities held for trading are recognized in statement of profit and loss. Fair value
gains or losses on liabilities designated as FVTPL attributable to changes in own credit risk are recognized in other
comprehensive income. All other changes in fair value of liabilities designated as FVTPL are recognized in the
statement of profit and loss. The Company has not designated any financial liability as at FVTPL.
Derecognition
The Company derecognizes financial liabilities when the Company’s obligations are discharged, cancelled or have
expired. The difference between the carrying amount of the financial liability derecognized and the consideration
paid and payable is recognised in profit or loss.
iii) Impairment
i) Financial assets
The Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on
financial assets measured at amortized cost and financial assets that are debts instruments and are measured at
fair value through other comprehensive income (FVTOCI). ECL is the difference between contractual cash flows
that are due and the cash flows that the Company expects to receive, discounted at the original effective interest
rate.
Notes forming part of financial statements (Contd.)