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HCL Technologies
BSE: 532281|NSE: HCLTECH|ISIN: INE860A01027|SECTOR: Computers - Software
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« Jun 12
Accounting Policy Year : Jun '13
a) Basis of preparation
 
 The financial statements of the Company have been prepared in
 accordance with generally accepted accounting principles in India
 (Indian GAAP). These financial statements have been prepared to comply
 in all material aspect with the accounting standards notified under the
 Companies (Accounting Standards) Rules, 2006 (as amended) and the other
 relevant provisions of the Companies Act, 1956. The financial
 statements have been prepared under the historical cost convention on
 an accrual and going concern basis except for certain financial
 instruments which are measured at fair value.
 
 The accounting policies adopted in the preparation of the financial
 statements are consistent with those of the previous year.
 
 b) Use of estimates
 
 The preparation of financial statements in conformity with generally
 accepted accounting principles requires management to make estimates
 and assumptions that affect the reported amounts of assets and
 liabilities and disclosure of contingent liabilities at the date of the
 financial statements and the results of operations during the reporting
 period. Although these estimates are based upon management''s best
 knowledge of current events and actions, actual results could differ
 from these estimates.
 
 c) Tangible fixed assets and capital work-in-progress
 
 Fixed assets are stated at cost less accumulated depreciation and
 impairment losses if any. Cost comprises the purchase price and
 directly attributable cost 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.
 
 Subsequent expenditure related to an item of fixed assets is added to
 its book value only if it increases the future benefits from the
 existing asset beyond its previously assessed standard or period of
 performance. All other expenses on existing fixed assets, including day
 to day repair and maintenance expenditure and cost of replacing parts,
 are charged to the statement of profit and loss for the period during
 which such expenses are incurred.
 
 Gains or losses arising from derecognition of fixed assets are measured
 as the difference between the net disposal proceeds and the carrying
 amount of the asset and are recognized in the statement of profit and
 loss when the asset is derecognized.
 
 Fixed assets under construction and cost of assets not ready for use
 before the year-end, are disclosed as capital work in progress.
 
 d) Depreciation on tangible fixed assets
 
 Depreciation on tangible fixed assets is provided on the straight-line
 method over their estimated useful lives, as determined by the
 management, at rates which are equal to or higher than the rates
 prescribed under Schedule XIV of the Companies Act, 1956. Leasehold
 land is depreciated over the period of lease and leasehold improvements
 over the remaining period of lease or 4 years, whichever is lower.
 Depreciation is charged on a pro-rata basis for assets purchased/sold
 during the year. Assets costing less than Rs. 5,000 are fully depreciated
 in the year of purchase.
 
 e) Intangible assets
 
 Intangible assets 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. Internally generated intangible assets,
 excluding capitalized development costs, are not capitalized and
 expenditure is reflected in the statement of profit and loss in the
 year in which the expenditure is incurred.
 
 Intangible assets are amortized on a straight line basis over the
 estimated useful economic life. The Company uses a rebuttable
 presumption that the useful life of an intangible asset will not exceed
 ten years from the date when the asset is available for use. If
 persuasive evidence exists to the affect that useful life of an
 intangible asset exceed ten years, the Company amortizes that
 intangible asset over the best estimate of its useful life.
 
 The amortization period and the amortization method are reviewed at
 least at each financial year end. If the expected useful life of the
 asset is significantly different from the previous estimate, the
 amortization period is changed accordingly.  If there has been a
 significant change in the expected pattern of economic benefit from the
 asset, the amortization method is changed to reflect the changed
 pattern.
 
 Gains or losses arising from derecognition of intangible assets are
 measured as the difference between the net disposal proceeds and the
 carrying amount of the assets and are recognized in the statement of
 profit and loss when the asset is derecognized.
 
 Goodwill arising out of amalgamation is amortized over its useful life
 not exceeding 5 years unless a longer period can be justified .The
 management''s estimates of the useful life of the Software is as
 follows:
 
 f) Research and development costs
 
 Research costs are expensed as incurred. Development expenditure
 incurred on an individual project is recognized as an intangible asset
 when the Company can demonstrate all the following:
 
 (i) The technical feasibility of completing the intangible asset so
 that it will be available for use or sale;
 
 (ii) Its intention to complete the asset;
 
 (iii) its ability to use or sell the asset;
 
 (iv) how the asset will generate future economic benefits;
 
 (v) the availability of adequate resources to complete the development
 and to use or sell the asset; and
 
 (vi) the ability to measure reliably the expenditure attributable to
 the intangible asset during development.
 
 Any expenditure so capitalized is amortized over the period of expected
 future sales from the related project.
 
 The carrying value of development costs is reviewed for impairment
 annually when the asset is not yet in use, and otherwise when events or
 changes in circumstances indicate that the carrying value may not be
 recoverable.
 
 g) Leases
 
 Where the Company is the lessee
 
 Finance leases, which effectively transfer to the Company substantially
 all the risks and benefits incidental to ownership of the leased item,
 are capitalized at the inception of the lease term at the lower of the
 fair value and present value of the minimum lease payments. Lease
 payments are apportioned between the finance charges and reduction of
 the lease liability so as to achieve a constant rate of interest on the
 remaining balance of the liability. Finance charges are recognized as
 finance cost in the statement of profit and loss. Lease management
 fees, legal charges and other initial direct costs of the lease are
 capitalized.
 
 A leased asset is depreciated on a straight line basis over the useful
 life of the asset or the useful life envisaged in Schedule XIV to the
 Companies Act, 1956, whichever is lower. However, if there is no
 reasonable certainty that the Company will obtain the ownership by the
 end of lease term, the capitalized asset is depreciated on a straight
 line basis over the shorter of the estimated useful life of the asset,
 the lease term or the useful life envisaged in Schedule XIV to the
 Companies Act, 1956.
 
 Leases, where the lessor effectively retains substantially all the
 risks and benefits of ownership of the leased items, are classified as
 operating leases. Operating lease payments are recognized as an expense
 in the statement of profit and loss on a straight-line basis over the
 lease term.
 
 Where the Company is the lessor
 
 Leases in which the Company transfers substantially all the risk and
 benefits of ownership of the asset are classified as finance leases.
 Assets given under a finance lease are recognized as a receivable at an
 amount equal to the net investment in the leases. After initial
 recognition, the Company apportions lease rentals between the principal
 repayment and interest income so as to achieve a constant periodic rate
 of return on the net investment outstanding in respect of the finance
 leases. The interest income is recognized in the statement of profit
 and loss. Initial direct cost such as legal cost, brokerage cost etc
 are recognized immediately in the statement of profit and loss.
 
 Leases in which the Company does not transfer substantially all the
 risk and benefits of ownership of the asset are classified as operating
 leases. Assets subject to operating leases are included in fixed
 assets. Lease income on an operating lease is recognized in the
 statement of profit and loss on a straight line basis over the lease
 term. Costs, including depreciation, are recognized as an expense in
 the statement of profit and loss. Initial direct cost such as legal
 cost, brokerage cost etc are recognized immediately in the statement of
 profit and loss.
 
 h) Borrowing cost
 
 Borrowing costs include interest, amortization of ancillary costs
 incurred in connection with the arrangement of borrowings and exchange
 differences arising from foreign currency borrowings to the extent they
 are regarded as an adjustment to the interest cost.
 
 Borrowing costs directly attributable to the acquisition, construction
 or production of an asset that necessarily takes a substantial period
 of time to get ready for its intended use or sale are capitalized as
 part of the cost of the respective asset.  All other borrowing costs
 are expensed in the period they occur.
 
 i) Impairment of tangible and intangible assets
 
 An assessment is done at each balance sheet date as to whether there is
 any indication that an asset (tangible or intangible) may be impaired.
 For the purpose of assessing impairment, the smallest identifiable
 group of assets that generates cash inflows from continuing use that
 are largely independent of the cash inflows from other assets or groups
 of assets, is considered as a cash generating unit. If any such
 indication exists, an estimate of the recoverable amount of the asset/
 cash generating unit is made. Assets whose carrying value exceeds their
 recoverable amount are written down to the recoverable amount.
 Recoverable amount is higher of an asset''s or cash generating unit''s
 net selling price and its value in use. Value in use is the present
 value of estimated future cash flows expected to arise from the
 continuing use of an asset and from its disposal at the end of its
 useful life. 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
 risks specific to the asset.
 
 j) Investments
 
 Investments, which are readily realizable and intended to be held for
 not more than one year from the date on which such investments are
 made, are classified as current investments. All other investments are
 classified as long-term investments.
 
 On initial recognition, all investments are measured at cost. The cost
 comprises the purchase price and directly attributable acquisition
 charges such as brokerage, fees and duties. If an investment is
 acquired, or partly acquired by the issue of shares or the other
 securities, the acquisition cost is the fair value of securities
 issued. If an investment is acquired in exchange for another asset, the
 acquisition is determined by reference to the fair value of the asset
 given up or by reference to the fair value of the investment acquired,
 whichever is more clearly evident.
 
 Current investments are carried at the lower of cost and fair value
 determined on an individual investment basis. Long- term investments
 are carried at cost. However, provision for diminution in value is made
 to recognize a decline other than temporary in the value of the long
 term investments.
 
 On disposal of an investment, the difference between its carrying
 amount and net disposal proceeds is charged or credited to the
 statement of profit and loss.
 
 k) Inventories
 
 Stock in trade, stores and spares are valued at the lower of the cost
 or net realizable value. Net realizable value is the estimated selling
 price in the ordinary course of business, less estimated costs of
 completion and estimated costs necessary to make the sale.
 
 Cost of stock in trade procured for specific projects is assigned by
 specific identification of individual costs of each item.  Costs of
 stock in trade, that are interchangeable and not specific to any
 project is determined using the weighted average cost formula. Cost of
 stores and spare parts is determined using weighted average cost.
 
 l) Revenue recognition
 
 Revenue is recognized to the extent that it is probable that the
 economic benefits will flow to the Company and the revenue can be
 reliably measured. Revenue from sale of goods and rendering of services
 is recognized when risk and reward of ownership have been transferred
 to the customer, the sale price is fixed or determinable and
 collectability is reasonably assured. The Company derives revenues
 primarily from:-
 
 - Software services;
 
 - Infrastructure services; and
 
 - Business process outsourcing services.
 
 i) Software services
 
 Revenue from software services comprises income from time and material
 and fixed price contracts. Revenue with respect to time and material
 contracts is recognized as related services are performed. Revenue from
 fixed price contracts is recognized in accordance with the percentage
 completion method under which the revenue is recognized on the basis of
 cost incurred in respect of each contract as a proportion of total cost
 expected to be incurred. The cumulative impact of any revision in
 estimates of the percentage of work completed is reflected in the year
 in which the change becomes known. Provision for estimated losses is
 made during the year in which a loss becomes probable based on current
 cost estimates. Revenue from sale of licenses for the use of software
 applications is recognized on transfer of title in the user license.
 Revenue from annual technical service contracts is recognized on a pro
 rata basis over the period in which such services are rendered. Income
 from revenue sharing agreements is recognized when the right to receive
 is established.
 
 ii) Infrastructure services
 
 Revenue from sale of products is recognized when risk and reward of
 ownership have been transferred to the customer, the sales price is
 fixed or determinable and collectability is reasonably assured. Revenue
 related to products with installation services that are critical to the
 products is recognized when installation of networking equipment at
 customer site is completed and accepted by the customer. Revenue from
 bandwidth services is recognized upon actual usage of such services by
 customers based on either the time for which these services are
 provided or volume of data transferred or both and excludes service
 tax. Revenue from maintenance services is recognized ratably over the
 period of the contract. Revenue from infrastructure management services
 comprise income from time-and-material, and fixed price contracts.
 Revenue with respect to time-and-material contracts is recognized as
 related services are performed. Revenue with respect to fixed price
 contracts is recognized in accordance with the percentage of completion
 method.
 
 Unearned income arising in respect of bandwidth services and
 maintenance services is calculated on the basis of the unutilized
 period of service at the balance sheet date and represents revenue
 which is expected to be earned in future periods in respect of these
 services.
 
 In case of multi-deliverable contracts where revenue cannot be
 allocated to various deliverables in a contract, the entire contract is
 accounted for as one deliverable and accordingly the revenue is
 recognized on a proportionate completion method following the
 performance pattern of predominant services in the contract or is
 deferred until the last deliverable is delivered.
 
 iii) Business process outsourcing services
 
 Revenue from business process outsourcing services is derived from both
 time based and unit-price contracts.  Revenue is recognized as the
 related services are performed in accordance with the specific terms of
 the contracts with the customers.
 
 Earnings in excess of billing are classified as unbilled revenue, while
 billing in excess of earnings are classified as unearned revenue.
 Incremental revenue from existing contracts arising on future sales of
 the customers'' products will be recognized when it is earned. Revenue
 and related direct costs from transition services in outsourcing
 arrangements are deferred and recognized over the period of the
 arrangement. Certain upfront non-recurring costs incurred in the
 initial phases of outsourcing contracts and contract acquisition costs,
 are deferred and amortized usually on a straight line basis over the
 term of the contract. The Company periodically estimates the
 undiscounted cash flows from the arrangement and compares it with the
 unamortized costs. If the unamortized costs exceed the undiscounted
 cash flow, a loss is recognized.
 
 The Company gives volume discounts and pricing incentives to customers.
 The discount terms in the Company''s arrangements with customers
 generally entitle the customer to discounts, if the customer completes
 a specified level of revenue transactions. In some arrangements, the
 level of discount varies with increases in the levels of revenue
 transactions. The Company recognizes discount obligations as a
 reduction of revenue based on the rateable allocation of the discount
 to each of the underlying revenue transactions that result in progress
 by the customer toward earning the discount.
 
 Revenues are shown net of sales tax, value added tax, service tax and
 applicable discounts and allowances.
 
 Revenue from sales-type leases is recognized when risk of loss has
 transferred to the client and there are no unfulfilled obligations that
 affect the client''s final acceptance of the arrangement. Interest
 attributable to sales-type leases and direct financing leases included
 therein is recognized on the accrual basis using the effective interest
 method.
 
 iv) Others
 
 Interest on the deployment of surplus funds is recognized using the
 time-proportion method, based on interest rates implicit in the
 transaction. Brokerage, commission and rent are recognized once the
 same are earned and accrued to the Company and dividend income is
 recognized when the right to receive the dividend is established.
 
 m) Foreign currency translation
 
 (i) Initial Recognition
 
 Foreign currency transactions are recorded in the reporting currency,
 by applying to the foreign currency amount the exchange rate between
 the reporting currency and the foreign currency at the date of the
 transaction.
 
 (ii) Conversion
 
 Foreign currency monetary items are reported using the closing rate.
 Non-monetary items which are carried in terms of historical cost
 denominated in a foreign currency are reported using the exchange rate
 at the date of the transaction.
 
 (iii) Exchange Differences
 
 Exchange differences arising on the settlement of monetary items, or on
 reporting such monetary items of Company at rates different from those
 at which they were initially recorded during the year, or reported in
 previous financial statements, are recognized as income or as expenses
 in the statement of profit and loss in the year in which they arise.
 
 (iv) Hedging
 
 (a) Cash flow hedging
 
 The Company uses derivative financial instruments (foreign currency
 forward and option contracts) to hedge its risks associated with
 foreign currency fluctuations relating to certain highly probable
 forecast transactions.
 
 The use of foreign currency forward and options contracts is governed
 by the Company''s policies, which provide written principles on the use
 of such financial derivatives consistent with the Company''s risk
 management strategy. The Company does not use derivative financial
 instruments for speculative purposes.
 
 The derivative instruments are initially measured at fair value, and
 are re-measured at subsequent reporting dates
 
 In respect of derivatives designated as hedges, the Company formally
 documents all relationships between hedging instruments and hedged
 items, as well as its risk management objective and strategy for
 undertaking various hedge transactions. The Company also formally
 assesses both at the inception of the hedge and on an ongoing basis,
 whether each derivative is highly effective in offsetting changes in
 fair values or cash flows of the hedged item. Changes in the fair value
 of these derivatives (net of tax) that are designated and effective as
 hedges of future cash flows are recognized directly in the hedging
 reserve account under shareholders'' funds and the ineffective portion
 is recognized immediately in the statement of profit and loss. Changes
 in the fair value of derivative financial instruments that do not
 qualify for hedge accounting are recognized in the statement of profit
 and loss as they arise.
 
 Hedge accounting is discontinued from the last testing date when the
 hedging instrument expires or is sold, terminated, or exercised, or no
 longer qualifies for hedge accounting. Cumulative gain or loss on such
 hedging instrument recognized in shareholders'' funds is retained there
 until the forecast transaction occurs. If a hedged transaction is no
 longer expected to occur, the net cumulative gain or loss recognized in
 shareholders'' funds is transferred to the statement of profit and loss
 for the year.
 
 (b) Hedging of monetary assets and liabilities
 
 Exchange differences on such contracts are recognized in the statement
 of profit and loss in the period in which the exchange rates change.
 Any profit or loss arising on cancellation or renewal of a forward
 exchange contract is recognized as income or as expense for the year.
 
 (v) Translation of Integral and Non-integral foreign operation
 
 The financial statements of an integral foreign operation are
 translated as if the transactions of the foreign operation had been
 those of the Company itself.
 
 In translating the financial statements of a non-integral foreign
 operation for incorporation in the financial statements, the assets and
 liabilities, both monetary and non-monetary, of the non-integral
 foreign operation are translated at the closing rate; income and
 expense items of the non-integral foreign operation are translated at
 monthly weighted average rates ,which approximate the actual exchange
 rates; and all resulting exchange differences are accumulated in a
 foreign currency translation reserve until the disposal of the net
 investment.
 
 On the disposal of a non-integral foreign operation, the cumulative
 amount of the exchange differences which had been deferred and which
 relate to that operation are recognized as income or as expenses in the
 same period in which the gain or loss on disposal is recognized.
 
 n) Retirement and other employee benefits
 
 i. Contributions to provident fund, a defined benefit plan, are
 deposited with the Recognized Provident Fund Trusts, set up by the
 Company. The Company''s liability is actuarially determined at the end
 of the year. Actuarial losses/ gains are recognized in the statement of
 profit and loss in the year in which they arise. The interest rate
 payable by the Trust to the beneficiaries every year is notified by the
 government and the Company has an obligation to make good the
 shortfall, if any, between the return from the investments of the Trust
 and the notified interest rate.
 
 ii. The Company contributes to a scheme administered on its behalf by
 an insurance company in respect of superannuation, a defined
 contribution plan for applicable employees and such contributions are
 charged to the statement of profit and loss for each period of service
 rendered by the employees. The Company has no further obligations to
 the superannuation plan beyond its contributions.
 
 iii. Gratuity liability: The Company provides for gratuity, a defined
 benefit plan (the Gratuity Plan) covering eligible employees. 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
 employment.  The Company''s liability is actuarially determined (using
 the Projected Unit Credit method) at the end of each year.
 
 iv. Compensated absences: The employees of the Company are entitled to
 compensated absences which are both accumulating and non-accumulating
 in nature. The expected cost of accumulating compensated absences is
 determined by actuarial valuation (using the Projected Unit Credit
 method) based on the additional amount expected to be paid as a result
 of the unused entitlement that has accumulated at the balance sheet
 date. Accumulated leave, which is expected to be utilized within the
 next 12 months, is treated as a short-term employee benefit and
 accumulated leave expected to be carried forward beyond twelve months
 is treated as a long-term employee benefit for measurement purposes.
 The expense on non-accumulating compensated absences is recognized in
 the period in which the absences occur.
 
 v.  Actuarial gains/losses are immediately taken to the statement of
 profit and loss and are not deferred.
 
 vi. State Plans : The Company''s contribution to State Plans , a defined
 contribution plan namely Employee State Insurance Fund and Employees
 Pension Scheme are charged to the statement of profit and loss for each
 period of service rendered by the employees.
 
 o) Taxation
 
 Tax expense comprises current and deferred tax. Current income tax
 expense comprises taxes on income from operations in India and in
 foreign jurisdictions. Income tax payable in India is determined in
 accordance with the provisions of the Income Tax Act, 1961 and tax
 expense relating to overseas operations is determined in accordance
 with tax laws applicable in countries where such operations are
 domiciled.
 
 Deferred tax expense or benefit is recognized on timing differences
 being the difference between taxable income and accounting income that
 originate in one period and are capable of reversal in one or more
 subsequent periods.
 
 Deferred tax assets and liabilities are measured using the tax rates
 and tax laws that have been enacted or substantively enacted by the
 balance sheet date. Deferred income tax relating to items recognized
 directly in equity is recognized in equity and not in the statement of
 profit and loss . Deferred tax assets and deferred tax liabilities are
 offset, if a legally enforceable right exists to set off current tax
 assets against current tax liabilities and the deferred tax assets and
 deferred tax liabilities relate to the taxes on income levied by the
 same governing taxation laws.
 
 Deferred tax liabilities are recognized for all taxable timing
 differences. Deferred tax assets are recognized only to the extent that
 there is reasonable certainty that sufficient future taxable income
 will be available against which such deferred tax assets can be
 realized. In situations where the Company has unabsorbed depreciation
 or carry forward tax losses, all deferred tax assets are recognized
 only if there is virtual certainty supported by convincing evidence
 that they can be realized against future taxable profits. In the
 situations where the Company is entitled to a tax holiday under the
 Income- tax Act, 1961 enacted in India, no deferred tax (asset or
 liability) is recognized in respect of timing differences which reverse
 during the tax holiday period, to the extent the Company''s gross total
 income is subject to the deduction during the tax holiday period.
 Deferred tax in respect of timing differences which reverse after the
 tax holiday period is recognized in the year in which the timing
 differences originate.
 
 At each balance sheet date the Company re-assesses recognized and
 unrecognized deferred tax assets. The Company writes-down the carrying
 amount of a deferred tax asset to the extent that it is no longer
 reasonably certain or virtually certain, as the case may be, that
 sufficient future taxable income will be available against which the
 deferred tax asset can be realized. Any such write-down is reversed to
 the extent that it becomes reasonably certain or virtually certain, as
 the case may be, that sufficient future taxable income will be
 available. The Company recognizes unrecognized deferred tax assets to
 the extent that it has become reasonably certain or virtually certain,
 as the case may be, that sufficient future taxable income will be
 available against which such deferred tax assets can be realized.
 
 Minimum Alternative tax (MAT) credit is recognized as an asset only
 when and to the extent there is convincing evidence that the Company
 will pay normal income tax during the specified period. In the year in
 which the MAT Credit becomes eligible to be recognized as an asset in
 accordance with the recommendations contained in guidance note issued
 by the Institute of Chartered Accountants of India, the said asset is
 created by way of a credit to the statement of profit and loss and
 shown as MAT Credit Entitlement. The Company reviews the MAT Credit
 Entitlement at each balance sheet date and writes down the carrying
 amount of the MAT Credit Entitlement to the extent there is no longer
 convincing evidence to the effect that Company will pay normal income
 tax during the specified period.
 
 p) Employee stock compensation cost
 
 In accordance with the SEBI (Employee Stock Option Scheme and Employee
 Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on
 Accounting for Employee Share-based Payments issued by the Institute of
 Chartered Accountants of India, the Company calculates the compensation
 cost of equity-settled transactions based on the intrinsic value method
 wherein the excess of the market price of the underlying equity shares
 on the date of the grant of the options over the exercise price of the
 options given to the employees under the employee stock option schemes
 of the Company, is recognized as deferred stock compensation cost and
 is amortized on a graded vesting basis over the vesting period of the
 options.
 
 q) Earnings per share
 
 Basic earnings per share are calculated by dividing the net profit or
 loss for the period attributable to equity shareholders by the weighted
 average number of equity shares outstanding during the period.
 
 For the purpose of calculating diluted earnings per share, the net
 profit or loss for the period attributable to equity shareholders and
 the weighted average number of shares outstanding during the year are
 adjusted for the effects of all dilutive potential equity shares.
 
 r) Provisions
 
 A provision is recognized when there exists a present obligation as a
 result of past events and it is probable that an outflow of resources
 embodying economic benefits will be required to settle the obligation,
 and a reliable estimate can be made of the amount of the obligation.
 Provisions are not discounted to present value and are determined based
 on best estimates required to settle the obligation at the reporting
 date. These estimates are reviewed at each reporting date and adjusted
 to reflect the current best estimates.
 
 s) Contingent liabilities
 
 A contingent liability is a possible obligation that arises from past
 events whose existence will be confirmed only by the occurrence or non
 occurrence of one or more uncertain future events beyond the control of
 the Company or a present obligation that is not recognized because it
 is not probable that an outflow of resources will be required to settle
 the obligation. A contingent liability also arises in extremely rare
 cases where there is a liability that cannot be recognized because it
 cannot be measured reliably, the Company does not recognize a
 contingent liability but discloses its existence in the financial
 statements.
 
 t) Cash and cash equivalent
 
 Cash and cash equivalents for the purposes of cash flow statement
 comprise cash at bank and in hand and short term deposits with banks
 with an original maturity of three months or less.
Source : Dion Global Solutions Limited
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