Determination of the estimated useful lives

Useful lives of property, plant and equipment are based on the life prescribed in Schedule II of the Act. In cases.
where the useful lives are different from that prescribed in Schedule II and in case of intangible assets, they are
estimated by management based on technical advice, taking into account the nature of the asset, the estimated
usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological
changes, manufacturers’ warranties and maintenance support. All useful lives are reviewed at each reporting
period and revised, if required.

Recognition and measurement of defined benefit obligations

The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key
actuarial assumptions include discount rate, trends in salary escalation, actuarial rates and life expectancy. The
discount rate is determined by reference to market yields at the end of the reporting period on government bonds.
The period to maturity of the underlying bonds correspond to the probable maturity of the post-employment
benefit obligations. Due to complexities involved in the valuation and its long term nature, defined benefit
obligation is sensitive to changes in these assumptions. All assumptions are reviewed at each reporting period.

Recognition and measurement of other provisions

The recognition and measurement of other provisions are based on the assessment of the probability of an
outflow of resources, and on past experience and circumstances known at the closing date. The actual outflow of
resources at a future date may therefore vary from the amount included in other provisions.

Discounting of long-term financial assets / liabilities

All financial assets or liabilities are required to be measured at fair value on initial recognition. In case of
financial assets or liabilities which are required to subsequently be measured at amortized cost, interest is
accrued using the effective interest method.

Determining whether an arrangement contains a lease
At inception of an arrangement, we determine whether the arrangement is, or contains, a lease.

At inception or on reassessment of an arrangement that contains a lease, we separate payments and other
consideration required by the arrangement into those for the lease and those for other elements on the basis of
their relative fair values. If we conclude for a finance lease that it is impracticable to separate the payments
reliably, then an asset and a liability are recognized at an amount equal to the fair value of the underlying asset;
subsequently, the liability is reduced as payments are made and an imputed finance cost on the liability is
recognized using our incremental borrowing rate. In case of operating lease, all payments under the arrangement
are treated as lease payments.

Fair value of financial instruments

Derivatives are carried at fair value. Derivatives includes foreign currency forward contracts. Fair value of
foreign currency forward contracts are determined using the fair value reports provided by respective bankers.

Certain unquoted investments are carried at fair value. The fair value of these instruments is measured using
valuation techniques such as discounted cash flows and information from other comparable companies in the
market.

Taxes
Significant management judgment is required in determining provision for income tax, deferred income tax
assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax

assets is based on estimates of taxable income in which the entity operates and the period over which deferred
income tax assets will be recovered.

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