Page 197 - Annual Report 2019-20

notes forming part of the consolidated financial statements Notes forming part of the consolidated financial statements 195

At initial recognition, financial assets and financial liabilities are initially measured at fair value. Transaction 2.18 segment Reporting
costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities The Group identifies primary segments based on the dominant source, nature of risks and returns
(other than financial assets and financial liabilities at Fair Value Through Profit and Loss) are added to or and the internal organisation and management structure. The operating segments are the segments
deducted from the value of the financial assets or financial liabilities, as appropriate, on initial recognition. for which separate financial information is available and for which operating profit/ loss amounts are
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at Fair evaluated regularly by the Chief Operating Decision Maker (CODM) in deciding allocation of resources PIDILITE ANNUAL REPORT 2019-20
Value Through Profit and Loss are recognised in Consolidated Statement of Profit and Loss. and in assessing performance.
2.16.2 Subsequent measurement of Financial Assets The accounting policies adopted for segment reporting are in line with the accounting policies of
All recognised financial assets are subsequently measured in their entirety at either amortised cost or the Group. Segment revenue, segment expenses, segment assets and segment liabilities have been
fair value, depending on the classification of the financial assets. Debt instruments that meet conditions identified to segments on the basis of their relationship to the operating activities of the segment.
based on purpose of holding assets and contractual terms of instrument are subsequently measured Inter-segment revenue is accounted on the basis of cost plus margins. Revenue, expenses, assets and
at amortised cost using effective interest method. All other financial assets are measured at fair value. liabilities which relate to the Group as a whole and are not allocable to segments on reasonable basis
Income is recognised on an effective interest basis for debt instruments other than those financial have been included under “unallocated revenue/ expenses/ assets/ liabilities respectively”.
assets classified as at Fair Value Through Profit and Loss. Interest income is recognised in Consolidated
Statement of Profit and Loss and is included in the “Other income” line item. 2.19 Employee Benefits
2.16.3 Impairment of Financial Assets Employee benefits include Provident Fund, Superannuation Fund, Employee State Insurance Scheme,
The Group recognises loss allowance using expected credit loss model financial assets which are not Gratuity Fund, Compensated Absences, Anniversary Awards, Premature Death Pension Scheme and
measured at Fair Value Through Profit and Loss. Expected credit losses are weighted average of credit Total Disability Pension Scheme.
losses with the respective risks of default occurring as the weights. Credit loss is the difference between 2.19.1 Defined Contribution Plans
all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows The Group’s contribution to Provident Fund, Superannuation Fund, national Pension Scheme and
that the Group expects to receive, discounted at original effective rate of interest.
Employee State Insurance Scheme are considered as defined contribution plans and are charged as an
For Trade receivables, the Group measures loss allowance at an amount equal to lifetime expected credit expense based on the amount of contribution required to be made and when services are rendered by
losses. The Group computes expected credit loss allowance based on a provision matrix which takes into the employees.
account historical credit loss experience and adjusted for forward-looking information.
2.19.2 Defined Benefit Plans
2.16.4 Financial Liabilities and Equity Instruments
For defined benefit plans in the form of Gratuity Fund, the cost of providing benefits is determined using
2.16.4.1 Classification of debt or equity the Projected unit Credit method, with actuarial valuations being carried out at each Balance Sheet
Debt or equity instruments issued by the Group are classified as either financial liabilities or as equity in date. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding
accordance with the substance of the contractual arrangements and the definitions of financial liability net interest) is reflected in the Consolidated Balance Sheet with a charge or credit recognised in
and equity instrument. Other Comprehensive Income in the period in which they occur. Remeasurement recognised in Other
Comprehensive Income is reflected in retained earnings and is not reclassified to profit or loss. Past
2.16.4.2 Equity Instruments
service cost is recognised immediately for both vested and the non-vested portion. The retirement
An equity instrument is any contract that evidences a residual interest in the assets of an entity after benefit obligation recognised in the Consolidated Balance Sheet represents the present value of the
deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds, defined benefit obligation, as reduced by the fair value of scheme assets. Any asset resulting from this
net of direct issue costs. calculation is limited taking into account the present value of available refunds and reductions in future
2.16.4.3 Financial Liabilities contributions to the schemes.
All financial liabilities (other than derivative financial instruments) are measured at amortised cost using 2.19.3 Short-Term and Other Long-Term Employee Benefits
effective interest method. A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave
2.16.5 Derecognition of Financial Assets and Liabilities and sick leave in the period the related service is rendered at the undiscounted amount of the benefits
expected to be paid in exchange for that service.
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial
asset expire, or when the Group transfers the contractual rights to receive the cash flows of the financial Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted
asset in which substantially all the risks and rewards of ownership of the financial asset are transferred, or amount of the benefits expected to be paid in exchange for the related service.
in which the Group neither transfers nor retains substantially all the risks and rewards of ownership of the Liabilities recognised in respect of other long-term employee benefits are measured at the present value
financial asset and does not retain control of the financial asset.
of the estimated future cash outflows expected to be made by the Group in respect of services provided
The Group derecognises a financial liability (or a part of financial liability) when the contractual obligation by employees up to the reporting date.
is discharged, cancelled or expires. 2.20 Earnings per share
2.16.6 Derivative Financial Instruments
The Company presents basic and diluted earnings per share (“EPS”) data for its equity shares. Basic EPS
The Group holds derivative financial instruments such as foreign exchange forward contracts to hedge its is calculated by dividing the profit or loss attributable to equity shareholders of the Company by the
exposure to foreign currency exchange rate risks. weighted average number of equity shares outstanding during the period. Diluted EPS is determined
PIDILITE ANNUAL REPORT 2019-20 2.17 reporting period. The resulting gain or loss is recognised in Consolidated Statement of Profit and Loss 2.21 options granted to employees.
by adjusting the profit or loss attributable to equity shareholders and the weighted average number of

Derivatives are initially recognised at fair value at the date the contracts are entered into. Subsequent
equity shares outstanding for the effects of all dilutive potential ordinary shares, which includes all stock
to initial recognition, these contracts are measured at their fair value and changes at the end of each
immediately.
The number of equity shares and potentially dilutive equity shares are adjusted retrospectively for all
Cash Flow statement
periods presented for any share splits and bonus shares issues including for changes effected prior to
the approval of the financial statements by the Board of Directors.
Cash flows are reported using the indirect method, whereby profit/ loss before exceptional items and tax

Assets held for sale
for the period is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of
activities of the Group are segregated.
principally through sale rather than through continuing use. The condition for classification as held for
past or future operating cash receipts or payments. Cash flows from operating, investing and financing Sale of business is classified as held for sale, if their carrying amount is intended to be recovered
Cash and Cash Equivalents for the purpose of cash flow statement comprise of cash at bank, cash in hand
sale is met when disposal business is available for immediate sale and the same is highly probable of
194 and short-term deposits with an original maturity of three months or less, as reduced by bank overdrafts. being completed within one year from the date of classification as held for sale.