1. Company Overview
1.1 Reporting entity
Biocon Limited (“Biocon” or “the Company”), is engaged in the manufacture of biotechnology products and research services. The Company is a public Limited company incorporated and domiciled in India and has its registered office in Bangalore, Karnataka, India. The Company''''s shares are Listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) in India.
1.2 Basis of preparation of financial statements
a) Statement of compliance
A he standalone financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013, (the ''''Act'''') and other relevant provisions of the Act.
The Company''''s standalone financial statements up to and for the year ended March 31, 2016 were prepared in accordance with the Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (“Previous GAAP”).
A s these are the Company''''s first standalone financial statements prepared in accordance with Indian Accounting Standards (Ind AS), Ind AS 101, First-time Adoption of Indian Accounting Standards has been applied. An explanation of how the transition to Ind AS has affected the previously reported financial position, financial performance and cash flows of the Company is provided in Note 41.
These standalone financial statements have been prepared for the Company as a going concern on the basis of relevant Ind AS that are effective at the Company''''s Annual reporting date, March 31, 2017. These standalone financial statements were authorized for issuance by the Company''''s Board of Directors on April 27, 2017.
Details of the Company''''s accounting policies are included in Note 2.
b) Functional and presentation currency
These standalone financial statements are presented in Indian rupees (INR), which is also the functional currency of the Company. ALL amounts have been rounded-off to the nearest million, unless otherwise indicated.
c) Basis of measurement
These standalone financial statements have been prepared on the historical cost basis, except for the following items:
- Certain financial assets and Liabilities (including derivative instruments) are measured at fair value;
- Net defined benefit assets/(Liability) are measured at fair value of plan assets, Less present value of defined benefit obligations.
d) Use of estimates and judgments
A he preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and Liabilities, the disclosures of contingent assets and Liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the standalone financial statements.
Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements is included in the following notes:
- Note 1.2(b) — Assessment of functional currency;
- Note 2(a) and 39 — Financial instruments;
- Note 2(b), 2(c) and 2(d) — Useful Lives of property, plant and equipment, intangible assets and investment property;
- Note 38 — Assets and obligations relating to employee benefits;
- Note 31 — Share based payments; and
- Note 2(L) and 35 — provision for income taxes and related tax contingencies and Evaluation of Recoverability of deferred tax assets.
1.3 Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending March 31, 2018 is included in the following notes:
— Note 18 and 35 - recognition of deferred tax assets: availability of future taxable profit against which tax Losses carried forward can be used;
— Note 39 - impairment of financial assets; and
— Note 17 and 36 - recognition and measurement of provisions and contingencies: key assumptions about the Likelihood and magnitude of an outflow of resources.
1.4 Measurement of fair values
A number of the Company''''s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and Liabilities.
Fair values are categorized into different Levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
— Level 1: quoted prices (unadjusted) in active markets for identical assets or Liabilities.
— Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or Liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
— Level 3: inputs for the asset or Liability that are not based on observable market data (unobservable inputs).
W hen measuring the fair value of an asset or a Liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a Liability fall into different Levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same Level of the fair value hierarchy as the Lowest Level input that is significant to the entire measurement.
A he Company recognizes transfers between Levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. Further information about the assumptions made in measuring fair values is included in the following notes:
— Note 31 - share based payment arrangements;
— Note 4 - investment property; and
— Note 2(a) and 39 - financial instruments.
2. Significant accounting policies
a. Financial instruments
i. Recognition and initial measurement
Trade receivables and debt securities issued are initially recognized when they are originated. ALL other financial assets and financial Liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument.
A financial asset or financial Liability is initially measured at fair value plus, for an item not at fair value through profit and Loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.
ii. Classification and subsequent measurement Financial assets
On initial recognition, a financial asset is classified as measured at
— amortized cost;
— FVOCI - debt investment;
— FVOCI - equity investment; or
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:
— the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
— the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
— the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
— the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A n initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment''''s fair value in OCI (designated as FVOCI - equity investment). This election is made on an investment- by- investment basis.
ALL financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial Liabilities are classified as measured at amortized cost or FVTPL. A financial Liability is classified as at FVTPL if it is classified as held-for- trading, or it is a derivative or it is designated as such on initial recognition. Financial Liabilities at FVTPL are measured at fair value and net gains and Losses, including any interest expense, are recognized in statement of profit and Loss. Other financial Liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and Losses are recognized in statement of profit and Loss. Any gain or Loss on de-recognition is also recognized in statement of profit and Loss.
iii. De-recognition Financial assets
T he Company de-recognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognized on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognized.
The Company derecognizes a financial Liability when its contractual obligations are discharged or cancelled, or expire.
T he Company also derecognizes a financial Liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial Liability based on the modified terms is recognized at fair value. The difference between the carrying amount of the financial Liability extinguished and the new financial Liability with modified terms is recognized in statement of profit and Loss.
Financial assets and financial Liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a Legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the Liability simultaneously.
v. Derivative financial instruments and hedge accounting
The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognized in statement of profit and Loss.
T he Company designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable forecast transactions arising from changes in foreign exchange rates and interest rates.
To inception of designated hedging relationships, the Company documents the risk management objective and strategy for undertaking the hedge. The Company also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
Cash flow hedges
T hen a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in OCI and accumulated in other equity under ''''effective portion of cash flow hedges''''. The effective portion of changes in the fair value of the derivative that is recognized in OCI is Limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in statement of profit and Loss.
T he hedge no Longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated
in other equity remains there until, for a hedge of a transaction resulting in recognition of a non-financial item, it is included in the non-financial item''''s cost on its initial recognition or, for other cash flow hedges, it is reclassified to profit and Loss in the same period or periods as the hedged expected future cash flows affect profit and Loss.
If the hedged future cash flows are no Longer expected to occur, then the amounts that have been accumulated in other equity are immediately reclassified to statement of profit and Loss.
vi. Treasury shares
The Company has created an Employee Welfare Trust (EWT) for providing share-based payment to its employees. Own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. When the treasury shares are issued to the employees by EWT, the amount received is recognized as an increase in equity and the resultant gain/ (Loss) is transferred to/ from securities premium.
vii. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or Less, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''''s cash management.
Cash dividend to equity holders
The Company recognizes a Liability to make cash to equity holders when the distribution is authorized and the distribution is no Longer at the discretion of the Company. As per the corporate Laws in India, a distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in equity. Interim dividends are recorded as a Liability on the date of declaration by the Company''''s Board of Directors.
b. Property, plant and equipment
i. Recognition and measurement
A teems of property, plant and equipment are measured at cost Less accumulated depreciation and accumulated impairment Losses, if any. The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct Labor, any other costs directly attributable to bringing the item to working condition for its intended use, and estimated costs of dismantling and removing the item and restoring the site on which it is Located.
A significant parts of an item of property, plant and equipment have different useful Lives, then they are accounted for as separate items (major components) of property, plant and equipment.
Any gain or Loss on disposal of an item of property, plant and equipment is recognized in statement of profit and Loss.
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
Appreciation is calculated on cost of items of property, plant and equipment Less their estimated residual values over their estimated useful Lives using the straight-Line method. Assets acquired under finance Leases are depreciated over the shorter of the Lease term and their useful Lives unless it is reasonably certain that the Company will obtain ownership by the end of the Lease term. Freehold Land is not depreciated.
c. Intangible assets
Internally generated: Research and development
Expenditure on research activities is recognized in statement of profit and Loss as incurred.
Development expenditure is capitalized as part of the cost of the resulting intangible asset only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognized in statement of profit and Loss as incurred. Subsequent to initial recognition, the asset is measured at cost Less accumulated amortization and any accumulated impairment Losses.
At their intangible assets are initially measured at cost. Subsequently, such intangible assets are measured at cost Less accumulated amortization and any accumulated impairment Losses.
i. Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. ALL other expenditure, including expenditure on internally generated goodwill and brands, is recognized in statement of profit and Loss as incurred.
Goodwill is not amortized and is tested for impairment Annually.
Other intangible assets are amortized on a straight Line basis over the estimated useful Life as follows:
— Computer software 3-5 years
— Marketing and Manufacturing rights 5-10 years
— Customer related intangibles 5 years
Amortization method, useful Lives and residual values are reviewed at the end of each financial year and adjusted if appropriate.
d. Investment property
Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Upon initial recognition, an investment property is measured at cost. Subsequent to initial recognition, investment property is measured at cost Less accumulated depreciation and accumulated impairment Losses, if any.
Based on technical evaluation and consequent advice, the management believes a period of 25 years as representing the best estimate of the period over which investment properties (which are quite similar) are expected to be used. Accordingly, the Company depreciates investment properties over a period of 25 years on a straight-Line basis. The useful Life estimate of 25 years is different from the indicative useful Life of relevant type of buildings mentioned in Part C of Schedule II to the Act i.e. 30 years.
Any gain or Loss on disposal of an investment property is recognized in statement of profit and Loss.
e. Business combination
An accordance with Ind AS 103, Business combinations, the Company accounts for business combinations after acquisition date using the acquisition method when control is transferred to the Company (see Note 42). The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued and Liabilities incurred or assumed at the date of exchange. The cost of acquisition also includes the fair value of any contingent consideration and deferred consideration, if any. Any goodwill that arises is tested Annual ly for impairment. Any gain on a bargain purchase is recognized in OCI and accumulated in equity as capital reserve if there exists clear evidence of the underlying reasons for classifying the business combination as resulting in a bargain purchase; otherwise the gain is recognized directly in equity as capital reserve. Transaction costs are expensed as incurred.
Inventories are measured at the Lower of cost and net realizable value. The cost of inventories is based on the first-in first-out formula, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their present Location and condition. In the case of manufactured inventories and work-in-progress, cost includes an appropriate share of fixed production overheads based on normal operating capacity.
At realizable value is the estimated selling price in the ordinary course of business, Less the estimated costs of completion and selling expenses. The net realizable value of work-in-progress is determined with reference to the selling prices of related finished products.
Few materials, components and other supplies held for use in the production of finished products are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realizable value.
The comparison of cost and net realizable value is made on an item-by-item basis.
i. Impairment of financial assets
An accordance with Ind AS 109, the Company applies expected credit Loss (“ECL”) model for measurement and recognition of impairment Loss on following:
— financial assets measured at amortized cost; and
— financial assets measured at FVOCI- debt investments.
Loss allowance for trade receivables with no significant financing component is measured at an amount equal to Lifetime expected credit Losses. For all other financial assets, ECL are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at Lifetime ECL.
Loss allowance for financial assets measured at amortized cost are deducted from gross carrying amount of the assets. For debt securities at FVOCI, the Loss allowance is charged to statement of profit and Loss and is recognized in OCI.
ii. Impairment of non-financial assets
T he Company assess at each reporting date whether there is any indication that the carrying amount may not be recoverable. If any such indication exists, then the asset''''s recoverable amount is estimated and an impairment Loss is recognized if the carrying amount of an asset or CGU exceeds its estimated recoverable amount in the statement of profit and Loss.
Goodwill is tested Annually for impairment. For the purpose of impairment testing, goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.
The Company''''s non-financial assets, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''''s recoverable amount is estimated. For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are Largely independent of the cash inflows of other assets or CGUs.
Impairment Loss recognized in respect of a CGU is allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets of the CGU (or groups of CGUs) on a pro rata basis.
The impairment Loss in respect of goodwill is not subsequently reversed. In respect of other assets for which impairment Loss has been recognized in prior periods, the Company reviews at each reporting date whether there is any indication that the Loss has decreased or no Longer exists. An impairment Loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset''''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment Loss had been recognized.
h. Employee benefits
T he Company provides for gratuity, a defined benefit plan ("the Gratuity Plan") covering the eligible employees of the Company. The Gratuity Plan provides a Lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s salary and the tenure of the employment with the Company.
Liability with regard to the Gratuity Plan are determined by actuarial valuation, performed by an independent actuary, at each balance sheet date using the projected unit credit method. The defined benefit plan is administered by a trust formed for this purpose through the Company gratuity scheme.
T he Company recognizes the net obligation of a defined benefit plan as a Liability in its balance sheet. Gains or Losses through re-measurement of the net defined benefit Liability are recognized in other comprehensive income and are not reclassified to profit and Loss in the subsequent periods. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligation is recognized in other comprehensive income. The effect of any plan amendments are recognized in the statement of profit and Loss.
ii. Provident Fund
Legible employees of the Company receive benefits from provident fund, which is a defined contribution plan. Both the eligible employees and the Company make monthly contributions to the Government administered provident fund scheme equal to a specified percentage of the eligible employee’s salary. Amounts collected under the provident fund plan are deposited with in a government administered provident fund. The Company has no further obligation to the plan beyond its monthly contributions.
iii. Compensated absences
The Company has a policy on compensated absences which are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary at each balance sheet date using the projected unit credit method on the additional amount expected to be paid/availed as a result of the unused entitlement that has accumulated at the balance sheet date. Expense on non-accumulating compensated absences is recognized is the period in which the absences occur
iv. Share-based compensation
The grant date fair value of equity settled share-based payment awards granted to employees is recognized as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognized as expense is based on the estimate of the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that do meet the related service and non-market vesting conditions at the vesting date.
i. Provisions (other than for employee benefits)
T provision is recognized if, as a result of a past event, the Company has a present Legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pretax rate that reflects current market assessments of the time value of money and the risks specific to the Liability. The unwinding of the discount is recognized as finance cost. Expected future operating Losses are not provided for
T contract is considered to be onerous when the expected economic benefits to be derived by the Company from the contract are Lower than the unavoidable cost of meeting its obligations under the contract. The provision for an onerous contract is measured at the present value of the Lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before such a provision is made, the Company recognizes any impairment Loss on the assets associated with that contract.
i. Sale of goods
Revenue is recognized when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimate reliably, there is no continuing management involvement with the goods and the amount of revenue can be measured reliably. The timing of transfers of risks and rewards varies depending on the individual terms of sale. Revenue from the sale of goods includes excise duty and is measured at the fair value of the consideration received or receivable, net of returns, sales tax and applicable trade discounts and allowances.
ii. Milestone payments and out licensing arrangements
The Company enters into certain dossier sales, Licensing and supply arrangements that, in certain instances, include certain performance obligations. Based on an evaluation of whether or not these obligations are inconsequential or perfunctory, we recognize or defer the upfront payments received under these arrangements. The deferred revenue is recognized in the Standalone statement of operations in the period in which we complete our remaining performance obligations.
These arrangements typically also consist of subsequent payments dependent on achieving certain milestones in accordance with the terms prescribed in the agreement. Milestone payments which are contingent on achieving certain clinical milestones are recognized as revenues either on achievement of such milestones, if the milestones are considered substantive, or over the period we have continuing performance obligations, if the milestones are not considered substantive. If milestone payments are creditable against future royalty payments, the milestones are deferred and released over the period in which the royalties are anticipated to be paid.
iii. Sales Return Allowances
The Company accounts for sales return by recording an allowance for sales return concurrent with the recognition of revenue at the time of a product sale. The allowance is based on Company''''s estimate of expected sales returns. The estimate of sales return is determined primarily by the Company''''s historical experience in the markets in which the Company operates.
Dividend is recognized when the Company''''s right to receive the payment is established, which is generally when shareholders approve the dividend.
v. Rental income
Rental income from investment property is recognized in statement of profit and Loss on a straight-Line basis over the term of the Lease except where the rentals are structured to increase in Line with expected general inflation. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the Lease.
vi. Contribution received from customers/co-development partners towards plant and equipment
Contributions received from customers/co-development partners towards items of property, plant and equipment which require an obligation to supply goods to the customer in the future, are recognized as a credit to deferred revenue. The contribution received is recognized as revenue from operations over the useful Life of the assets. The Company capitalizes the gross cost of these assets as the Company controls these assets.
k. Government grants
The Company recognizes government grants only when there is reasonable assurance that the conditions attached to them will be complied with, and the grants will be received. Government grants received in relation to assets are presented as a reduction to the carrying amount of the related asset. Grants related to income are deducted in reporting the related expense.
l. Income taxes
Income tax comprises current and deferred income tax. Income tax expense is recognized in statement of profit and Loss except to the extent that it relates to an item recognized directly in equity in which case it is recognized in other comprehensive income. Current income tax for current year and prior periods is recognized at the amount expected to be paid or recovered from the tax authorities, using the tax rates and Laws that have been enacted or substantively enacted by the balance sheet date.
Deferred income tax assets and Liabilities are recognized for all temporary differences arising between the tax bases of assets and Liabilities and their carrying amounts in the financial statements except when:
— taxable temporary differences arising on the initial recognition of goodwill;
— Temporary differences arising on the initial recognition of assets or Liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or Loss at the time of transaction;
— Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no Longer probable that the related tax benefit will be realized.
Deferred income tax assets and Liabilities are measured using the tax rates and Laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and Liabilities is recognized as income or expense in the period that includes the enactment or substantive enactment date. A deferred income tax assets is recognized to the extent it is probable that future taxable income will be available against which the deductible temporary timing differences and tax Losses can be utilized. The Company offsets income-tax assets and Liabilities, where it has a Legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the Liability simultaneously.
m. Borrowing cost
Sorrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalized as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.
n. Earnings per share
Basic earnings per share is computed using the weighted average number of equity shares outstanding during the period adjusted for treasury shares held. Diluted earnings per share is computed using the weighted-average number of equity and dilutive equivalent shares outstanding during the period, using the treasury stock method for options and warrants, except where the results would be anti-dilutive.