Annual Report 2016-17

Notes forming part of onancial statements (Contd.)

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iv. Provisions

Provisions are determined based on the best estimate required to settle the obligation at the reporting date. If the

effect of time value of money is material, provisions are discounted using a current pre-tax rate that repects the

risks specioc to the liability. These estimates are reviewed at each balance sheet date and adjusted to repect the

current best estimates.

(b) Property, Plant and Equipment

Property, Plant and Equipment are stated at cost, less accumulated depreciation and accumulated impairment

losses, if any. The cost comprises the purchase price and directly attributable costs of bringing the asset to its

working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase

price. Capital work-in-progress includes cost of Property, Plant and Equipment that are not ready to be put to use.

Subsequent expenditure related to an item of Property, Plant and Equipment is added to its book value only if it

is probable that future economic beneots associated with the item will pow to the Company. All other expenses

on existing Property, Plant and Equipment, including day-to-day repair and maintenance expenditure and cost

of replacing parts, are charged to the statement of proot and loss for the year during which such expenses are

incurred.

Gains or losses arising from disposal of Property, Plant and Equipment are measured as the difference between the

net disposal proceeds and the carrying amount of the asset and are recognized in the statement of proot and loss

when the asset is disposed.

(c) Intangible assets

Intangible assets including software licenses of enduring nature and contractual rights acquired separately are

measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less

accumulated amortization and accumulated impairment losses, if any. Cost comprises the purchase price and any

directly attributable cost of bringing the asset to its working condition for its intended use.

Gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal

proceeds and the carrying amount of the asset and are recognized in the statement of proot and loss when the

asset is disposed.

Research and development cost

Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognized

as an intangible asset when the Company can demonstrate:

technical feasibility of completing the intangible asset so that it will be available for use or sale;

its intention to complete the asset;

its ability to use or sell the asset;

how the asset will generate probable future economic beneots;

the availability of adequate resources to complete the development and to use or sell the asset; and

the ability to measure reliably the expenditure attributable to the intangible asset during development.

Such development expenditure, until capitalization, is repected as intangible assets under development.

Following the initial recognition, internally generated intangible assets are carried at cost less accumulated

amortization and accumulated impairment losses, if any. Amortization of internally generated intangible asset

begins when the development is complete and the asset is available for use.

(d) Depreciation and amortization

Depreciation on Property, Plant and Equipment is provided using the Straight /ine Method (‘S/M’) over the useful

lives of the assets estimated by the management.