Page 193 - Kolte Patil AR 2019-20
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Notes forming part of the Consolidated Financial Statements

                Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and
                lease liabilities includes these options when it is reasonably certain that they will be exercised.
                The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease
                payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are
                subsequently measured at cost less accumulated depreciation and impairment losses.
                Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful
                life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate
                that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher
                of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate
                cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash
                Generating Unit (CGU) to which the asset belongs.
                The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are
                discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the
                country of domicile of the leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if
                the group changes its assessment if whether it will exercise an extension or a termination option.

                Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing
                cash flows.

                As a lessor:
                Leases for which the Group is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially
                all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating
                For operating leases, rental income is recognized on a straight line basis over the term of the relevant lease.

                Effective April 1, 2019, the Group adopted Ind AS 116 and applied the standard to all lease contracts existing on April 1, 2019 using the
                modified retrospective method. On the date of initial application the Group has recognised equivalent lease liability and right of use
                asset without impacting opening reserves. Comparatives as at and for the year ended March 31, 2019 have not been retrospectively
                adjusted and therefore will continue to be reported as per the accounting policies included as part of the Company’s Annual Report
                for year ended March 31, 2019.
                On transition, the adoption of the new standard resulted in recognition of “Right of Use” asset of INR 2,190 Lakhs and “Lease liability” of
                the same amount.
                The following is the summary of practical expedients elected on initial application:
                1.  Applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date
                2.   Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term on the
                   date of initial application
                3.  Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.
                4.   Applied the practical expedient to grandfather the assessment of which transactions are leases. Accordingly, Ind AS 116 is applied
                   only to contracts that were previously identified as leases under Ind AS 17.
                The difference between the lease obligation recorded as at March 31, 2019 under Ind AS 17 disclosed under Note 37 of the Annual
                Report for year ended March 31, 2019 and the value of the lease liabilities as at April 1, 2019 is primarily on account of inclusion of
                extension and termination options reasonably certain to be exercised, in measuring the lease liability in accordance with Ind AS 116
                and discounting the lease liabilities to the present value under Ind AS 116.
                The weighted average incremental borrowing rate applied to lease liabilities as at April 1, 2019 is 12%.

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