PRIVI SPECIALITY CHEMICALS LIMITED Annual Report 2020-21

148 PRIVI SPECIALITY CHEMICALS LIMITED (Formerly known as Fairchem Speciality Limited) iii. Use of estimates, judgements, and assumptions In preparing these Consolidated financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of income, expenses, assets and liabilities, Actual results may differ from these estimates and assumptions. Estimate and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised prospectively. The Company has identified the following areas where significant judgements, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described below and in the relevant notes to the Consolidated financial statements. Changes in estimates are accounted for prospectively. Judgements: In the process of applying the Company’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognized in the Consolidated financial statements. a. Lease term, whether the group is reasonably certain to exercise extension options – Refer Note 4(a) Assumptions and estimation uncertainties Information about judgements in applying accounting policies, as well as estimates and assumptions that have the most significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are included in the following notes: (a) Measurement of defined benefit obligations for key actuarial assumptions. - Note 32 (b) Recognition of deferred tax assets – Note 17. iv. Current and non-current classification All assets and liabilities are classified into current and non-current. Assets An asset is classified as current when it satisfies any of the following criteria: (a) it is expected to be realised in, or is intended for sale or consumption in, the Group’s normal operating cycle. (b) it is held primarily for the purpose of being traded. (c) it is expected to be realised within 12 months after the balance sheet date; or (d) it is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the balance sheet date. Current assets include the current portion of non-current financial assets. All other assets are classified as non-current. Liabilities A liability is classified as current when it satisfies any of the following criteria: (a) it is expected to be settled in, the group’s normal operating cycle. (b) it is held primarily for the purpose of being traded. (c) it is due to be settled within 12 months after the balance sheet date; or (d) the group does not have an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. Terms of a liability that could, at the option of the counter party, result in its settlement by issue of equity instruments do not affect its classification. Current liabilities include current portion of non-current financial liabilities. All other liabilities are classified as non-current. Operating cycle Operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2021 (Currency: Indian Rupees in lakhs)