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Notes forming part of consolidated onancial statements (Contd.)
Annual Report 2016-17
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- Financial assets at fair value through other comprehensive income (FVTOCI)
Financial assets that are held within a business model whose objective is achieved both by collecting
contractual cash pows and selling the onancial assets and the assets’ contractual cash pows represent solely
payments of principal and interest on the principal amount outstanding are subsequently measured at fair
value. Fair value movements are recognized in other comprehensive income.
- Financial assets at fair value through proot or loss (FVTPL)
Any onancial asset which does not meet the criteria for categorization as onancial assets at amortized cost or
as FVTOCI, is classioed as onancial asset at FVTP/. Financial assets except derivative contracts included within
the FVTP/ category are subsequently measured at fair value with all changes recognized in the statement of
proot and loss.
- Forward exchange contracts not intended for trading or speculation purposes, classioed as derivative
onancial instruments
As per the accounting principles laid down in Ind AS 109 – “Financial Instruments” relating to cash pow hedges,
derivative onancial instruments which qualify for cash pow hedge accounting are fair valued at balance sheet
date and 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 proot and loss.
Derivative onancial 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 proot and loss as they arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold, or terminated, or exercised,
or no longer qualioes for hedge accounting. Any cumulative gain or loss on the hedging instrument recognized
under other comprehensive income is transferred to the statement of proot and loss when the forecasted
transaction occurs or affects proot or loss or when a hedged transaction is no longer expected to occur.
Derecognition
The Group derecognises a onancial asset when the contractual rights to the cash pows from the asset expire,
or when it transfers the onancial asset and substantially all the risks and rewards of ownership of the asset to
another party.
On derecognition of a onancial 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 proot or loss.
ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the issue
of onancial liabilities (other than onancial liabilities at fair value through proot or loss) are deducted from the fair
value of the onancial liabilities on initial recognition. Transaction costs directly attributable to the issue of onancial
liabilities at fair value through proot or loss are recognised immediately in proot or loss.
Subsequent measurement
For the purpose of subsequent measurement, onancial liabilities are classioed 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 onance costs in the statement
of proot and loss.
- Financial liabilities at fair value through proot or loss (FVTPL)
Financial liabilities include onancial liabilities held for trading and onancial liabilities designated upon initial
recognition as at fair value through proot or loss if the recognition criteria as per Ind AS 109 are satisoed.