Page 242 - Hitachi IR 2025

NOTES TO THE FINANCIAL STATEMENTS
2.18 Impairment
a Financial assets
Financial assets (other than at fair value) The Company assesses at each date of balance sheet whether
a financial asset or a group of financial assets is impaired. Ind AS 109 (‘Financial Instruments’) requires
expected credit losses to be measured through a impairment allowance. The Company recognises
lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a
financing transaction. For all other financial assets, expected credit losses are measured at an amount
equal to the 12-month expected credit losses or at an amount equal to the life time expected credit
losses if the credit risk on the financial asset has increased significantly since initial recognition. The
Company provides for impairment upon the occurrence of the triggering event.
b Non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be
impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company
estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or
cash-generating unit’s (CGU) fair value less costs of disposal and its value in use. Recoverable amount
is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. When the carrying amount of an asset
or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount.
Intangible assets and property, plant and equipment 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 CGU to which the asset belongs.
If such assets are considered to be impaired, the impairment to be recognised in the statement of profit
and loss is measured by the amount by which the carrying value of the assets exceeds the estimated
recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if
there has been a change in the estimates used to determine the recoverable amount. An impairment
loss in case of goodwill is not reversed. The carrying amount of the asset is increased to its revised
recoverable amount, provided that this amount does not exceed the carrying amount that would have
been determined (net of any accumulated amortization or depreciation) had no impairment loss been
recognised for the asset in prior years.
2.19 Earnings per share
The Company presents basic and diluted Earnings per share for its ordinary shares. Basic earnings per equity
share is computed by dividing the net profit attributable to the equity holders of the Company by the weighted
average number of equity shares outstanding during the year/period. Diluted earnings per equity share is
computed by dividing the net profit attributable to the equity holders of the Company by the weighted average
number of equity shares considered for deriving basic earnings per equity share and also the weighted average
number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The
dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually
issued at fair value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity
shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential
equity shares are determined independently for each period presented.
2.20 Retirement and other employee benefits
2.20.1 Gratuity
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defined benefit plans
The present value of the obligation under defined benefit plans are determined based on actuarial valuation
using the Projected Unit Credit Method. In case of funded plans, the fair value of the plan assets is reduced
from the gross obligation under the defined benefit plans to recognize the obligation on a net basis.
Remeasurement comprising of actuarial gains and losses is recognised in other comprehensive income (OCI)
and is reflected in reserves and surplus as part of equity and is not eligible to be reclassified to profit or loss.
240 Hitachi Energy India Limited