Financial liabilities

All financial liabilities (other than derivative instruments) are subsequently measured at amortised cost using the
effective interest method. The carrying amounts of financial liabilities that are subsequently measured at amortised
cost are determined based on the effective interest method. Interest expense that is not capitalized as a part of cost of
an asset is included in the “Finance Costs”.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash payments (including all fees paid or received that form an integral part of the effective interest rate, transaction
costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a
shorter period, to the net carrying amount on initial recognition.

De-recognition of financial lial S

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or
have expired. An exchange with a lender of debt instruments with substantially different terms is accounted for as an
extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial
modification of the terms of an existing financial liability is accounted for as an extinguishment of the original financial
liability and the recognition of a new financial liability. The difference between the carrying amount of the financial
liability derecognised and the consideration paid and payable is recognised in Statement of Profit and Loss.

Derivative financial instruments:

The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign
exchange rate risks, including foreign exchange forward contracts and cross currency interest rate swaps. Further
details of derivative financial instruments are disclosed in Note 42

Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are
subsequently re-measured to their fair value at the end of each reporting period. The resulting gain or loss is
recognised in Statement of Profit and Loss immediately unless the derivative is designated and effective as a hedging
instrument, in which event the timing of the recognition in Statement of Profit and Loss depends on the nature of the
hedging relationship and the nature of the hedged item.

Hedge accounting:
The Group designates certain derivatives as hedging instruments in respect of foreign currency risk as cash flow

hedges. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.

At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and
the hedged item, along with its risk management objectives and its strategy for undertaking various hedge
transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the
hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable
to the hedged risk.

Note 42b sets out details of the fair values of the derivative instruments used for hedging purposes.

Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is

recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain
or loss relating to the ineffective portion is recognised immediately in Statement of Profit and Loss, and is included in
the “Other Income”.

Amounts previously recognised in other comprehensive income and accumulated in equity (relating to effective
portion as described above) are reclassified to Statement of Profit and Loss in the periods when the hedged item
affects profit or loss, in the same line as the recognised hedged item. However, when the hedged forecast transaction
results in the recognition of a non-financial asset or a non-financial liability, such gains and losses are transferred from
equity (but not as a reclassification adjustment) and are included in the initial measurement of the cost of the non-
financial asset or non-financial liability.

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