PRIVI SPECIALITY CHEMICALS LIMITED Annual Report 2020-21

151 Annual Report 2020-21 CORPORATE OVERVIEW STATUTORY REPORTS FINANCIAL STATEMENTS are translated using the exchange rates at the dates of the initial transactions. Non-monetary item measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items who is fair value gain or loss is recognised in OCI or profit and loss are also recognised in OCI or profit and loss, respectively). Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss. Foreign currency operation The assets and liabilities of foreign operations are translated into Rupees, the functional currency of the Company, at the exchange rates at the reporting date. The income and expenses of foreign operations are translated using an average exchange rate if the average rate approximates the actual rate at the date of transaction. All resulting exchange differences recognised in other comprehensive income. The cumulative amount of the exchange differences is presented in a separate component of equity until disposal of the foreign operation. When the exchange differences relate to a foreign operation that is consolidated but not wholly owned accumulated exchange differences arising from translation and attributable to non-controlling interests are allocated to, and recognised as part of, non-controlling interests in the consolidated balance sheet. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognised in other comprehensive income and accumulated in the separate component of equity, shall be reclassified from equity to profit and loss (as a reclassification adjustment) when the gain or loss on disposal is recognised. x. Financial Instruments a. Financial assets Initial recognition and initial measurement All financial assets are initially recognised at fair value plus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue. Classification and subsequent measurement For purposes of subsequent measurement, financial assets are classified in three categories: Financial assets at amortised cost A financial asset is classified as subsequently measured at the amortised cost if both the following conditions are met: – The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and – Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. The losses arising from impairment are recognised in the profit or loss. This category generally applies to trade and other receivables. Financial assets at fair value through Other Comprehensive Income (“FVTOCI”) A financial asset is classified as subsequently measured at fair value through Other Comprehensive Income if both the following conditions are met: – The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and – Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. Financial assets included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in other comprehensive income (OCI). However, the Group recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the P&L. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from equity to P&L. The Group did not have any financial assets at FVTOCI during the current year as well as previous year. Financial assets at fair value through Profit and loss (“FVTPL”) Financial assets at FVTPL is a residual category for financial assets. Any financial assets which does not meet the criteria of categorising it at amortised cost or at FVTOCI is classified as at FVTPL. Financial assets included within the FVTPL category are measured at fair value with all changes recognised in Profit and Loss. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2021 (Currency: Indian Rupees in lakhs)