Annual Report, 2016-17

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future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently

involves the exercise of significant judgments and the use of estimates regarding the outcome of future events.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have

a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial

year, are described below. The Company based its assumptions and estimates on parameters available when the consolidated

financial statements were prepared. Existing circumstances and assumptions about future developments, however, may

change due to market change or circumstances arising beyond the control of the Company. Such changes are reflected in the

assumptions when they occur.

(a) Impairment of non-financial assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication

exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. It is

determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those

from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the

asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate

that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair

value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an

appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for

publicly traded subsidiaries or other available fair value indicators.

(b) Defined benefit plans

The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation are

determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from

actual developments in the future. These include the determination of the discount rate, future salary increases, mortality

rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined

benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on

quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs

to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment

is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and

volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

(d) Impairment of financial assets

The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates.

The Company uses judgments in making these assumptions and selecting the inputs to the impairment calculation, based

on Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting

period.

Notes on the standalone financial statements

for the year ended 31 March 2017