From Published Accounts

Accounting Policy and disclosures for Leases of
land and other assets as per Ind AS (year ended 31st
March 2017)

ATUL LTD.

Consolidated financial statements

Significant Accounting Policies

As a lessee

Leases in which a significant portion of the risks and
rewards of ownership are not transferred to the Company
as lessee are classified as operating leases. Payments
made under operating leases (net of any incentives
received from the lessor) are charged to profit or loss
on a straight-line basis over the period of the lease
unless the payments are structured to increase in line
with expected general inflation to compensate expected
inflationary cost increases for the lessor.

As a lessor

Lease income from operating leases where the Company
is a lessor is recognised as income on a straightline
basis over the lease term, unless the receipts are
structured to increase in line with expected general
inflation to compensate for the expected inflationary
cost increases. The respective leased assets
are included in the Balance Sheet based on
their nature. Leases of property, plant and
equipment where the Company as a lessor
has substantially transferred all the risks
and rewards are classified as finance lease.
Finance leases are capitalised at the inception
of the lease at the fair value of the leased
property or, if lower, the present value of the
minimum lease payments. The corresponding
rent receivables, net of interest income,
are included in other financial assets. Each
lease receipt is allocated between the asset
and interest income. The interest income
is recognised in the Statement of Profit and
Loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of the asset for each period.

Under combined lease agreements, land and building
are assessed individually. Lease rental attributable to the
operating lease are charged to Statement of Profit and
Loss as lease income, whereas lease income attributable
to finance lease is recognised as finance lease receivable
and recognised on the basis of effective interest rate.

Disclosures

Operating lease

The Company has taken various residential and office
premises under operating lease or leave and licence
Agreements. These are generally cancellable, having
a term between 11 months and 3 years and have no
specific obligation for renewal. Payments are recognised
in the Statement of Profit and Loss under ‘Rent’.

Finance lease

The Company has given a building on finance lease for a
term of 30 years.
Future minimum lease payments receivable under finance
leases together with the present value of the net minimum
lease payments (MLP) are as under:

The Company has taken on lease a parcel of land from
Gujarat Industrial Development Corporation for a period
of 99 years with an option to extend the lease by another
99 years on expiry of lease at a rental that is 100% higher
than the current rental. However, the Company has no
specific obligation for renewal. The Company believes
and has considered that such a lease of land transfers
substantially all of the risks and rewards incidental to
ownership of land, and has thus accounted for the same
as finance lease.

IDEA CELLULAR LTD.

Consolidated Financial Statements

Significant Accounting Policies

Leases

The Company evaluates whether an arrangement is
(or contains) a lease based on the substance of the
arrangement at the inception of the lease. An arrangement
which is dependent on the use of a specific asset or
assets and conveys a right to use the asset or assets,
even if it is not explicitly specified in an arrangement is (or
contains) a lease.

Leases are classified as finance lease whenever the
terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are
classified as operating leases.

Company as a lessee Finance lease

Assets held under finance leases are initially recognised
as assets at the commencement of the lease at their fair
value or, if lower, at the present value of the minimum lease
payments. Lease payments are apportioned between
finance charges and reduction of the lease liability so as to achieve a constant rate of interest on
the remaining balance of the liability. Finance
charges are recognised in the Statement
of Profit and Loss, unless they are directly
attributable to qualifying assets, in which case
they are capitalised in accordance with the
Company’s general policy on borrowing costs.
Such assets are depreciated/amortised over
the period of lease or estimated useful life
of the assets whichever is less. Contingent
rentals are recognised as expenses in the
periods in which they are incurred.

Operating lease

Operating lease payments are recognised as an expense
in the statement of profit and loss on a straight-line basis
unless payments to the lessor are structured to increase
in line with expected general inflation to compensate for
the lessor’s expected inflationary cost increase; such
increases are recognised in the year in which such
benefits accrue. Contingent rentals arising, if any, under
operating leases are recognised as an expense in the
period in which they are incurred.

In the event that lease incentives are received to enter
into operating leases, such incentives are recognised
as a liability. The aggregate benefit of incentives is
recognised as a reduction of rental expense on a straightline
basis, except where another systematic basis is more
representative of the time pattern in which economic
benefits from the leased asset are consumed.

Company as a lessor Finance lease

Amounts due from lessees under finance leases are
recognised as receivables at the amount of the Company’s
net investment in the leases. Finance lease income is
allocated to accounting period so as to reflect a constant
periodic rate of return on the net investment outstanding
in respect of the lease.

Operating lease

Rental income from operating lease is recognised on a
straight-line basis over the lease term unless payments
to the Company are structured to increase in line
with expected general inflation to compensate for the
Company’s expected inflationary cost increase; such
increases are recognised in the year in which such
benefits accrue. Initial direct costs incurred in negotiating
and arranging an operating lease are added to the
carrying amount of the leased asset and recognised on
a straight-line basis over the lease term. Contingent rents are recognised as revenue in the period in which they are
earned.

Estimates and Judgments

Operating lease commitments – Company as lessee

The Company has entered into lease agreements for
properties and cell sites, where it has, on the basis of
evaluation of the terms and conditions of the arrangement
determined that the significant risks and rewards related
to the assets and properties are retained with the lessors.
Accordingly, such lease agreements are accounted for as
operating leases. Further details about operating lease
are given in Note 45.

Disclosures

Operating Lease

Company as lessee

The Company has entered into non-cancellable operating
leases for offices, switches and cell sites for periods
ranging from 36 months to 240 months.
Lease payments amounting to ₹52,522.45 million
(Previous year: ₹44,973.69 million) are included in rental
and passive infrastructure expenses in the statement of
profit and loss during the current year.

Future minimum lease rentals payable under noncancellable
operating leases are as follows:

Company as lessor

The Company has leased certain Optical Fibre Cables
pairs (OFC) on Indefeasible Rights of Use (“IRU”) basis
and certain cell sites under operating lease arrangements.
The gross block, accumulated depreciation and
depreciation expense of the assets given on lease are
not separately identifiable and hence not disclosed.
Future minimum lease rentals receivable under
non-cancellable operating leases are as follows:

The Company has composite IT outsourcing agreements
where in property, plant and equipment, computer
software and services related to IT has been supplied
by the vendor. Such property, plant and equipment
received have been accounted for as finance lease.
Correspondingly, such assets are recorded at fair value
at the time of receipt and depreciated on the stated useful
life applicable to similar IT assets of the company.

PVR LTD.

Consolidated financial statements

Significant accounting policies

The determination of whether an arrangement is
(or contains) a lease is based on the substance of
the arrangement at the inception of the lease. The
arrangement is, or contains, a lease if fulfilment of the
arrangement is dependent on the use of a specific asset
or assets and the arrangement conveys a right to use the
asset or assets, even if that right is not explicitly specified
in an arrangement.

Where the Company is the lessee Finance leases, which
effectively transfer to the Company substantially all the
risks and benefits incidental to ownership of the leased
item, are capitalised at the inception of the lease term at the
lower of the fair value of the leased property and present
value of minimum lease payments. Lease payments are
apportioned between the finance charges and reduction
of the lease liability so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance
charges are recognised as finance costs in the Statement
of Profit and Loss. A leased asset is depreciated on a
straight-line basis over the useful life of the asset.

Leases where the lessor effectively retains substantially
all the risks and benefits of ownership of the leased
items are classified as operating leases. Operating lease
payments are recognised as an expense in the statement
of profit and loss on an ongoing basis.

Where the Company is the lessor

Leases in which the Company does not transfer
substantially all risks and benefits of ownership of the
assets are classified as operating lease.

Assets subject to operating leases are included in fixed
assets. Lease income is recognised in the Statement
of Profit and Loss on ongoing basis. Costs, including
depreciation are recognised as an expense in the
Statement of Profit and Loss. Initial direct costs such
as legal costs, brokerage costs, etc. are recognised
immediately in the Statement of Profit and Loss.

Disclosures

i. Rental expenses in respect of operating leases are
recognised as an expense in the Statement of Profit
and Loss and pre-operative expenditure (pending
allocation), as the case may be.

Operating Lease (for assets taken on lease)

Disclosure for assets taken under non-cancellable leases,
where the Company is presently carrying commercial
operations is as under, which reflects the outstanding
amount for non-cancellable period:

ii. Rental income/Sub-Lease income in respect of
operating leases are recognised as an income in the
Statement of Profit and Loss or netted off from rent
expense, as the case may be.

Operating Lease (for assets given on lease)

The Company has given various spaces under operating
lease agreements. These are generally cancellable on
mutual consent and the lessee can vacate the rented
property at any time. There is no escalation clause in the
lease agreement. There are no restrictions imposed by
lease arrangements.

The Company has given spaces of cinemas/food courts
under operating lease arrangements taken on lease or
being operated under revenue sharing arrangements.
The Company has common fixed assets for operating
multiplex/giving on rent. Hence, separate figures for the
fixed assets given on rent are not ascertainable.

iii. Finance lease: Company as lessee

The Company has finance leases contracts for plant and
machinery (Projectors). These leases involve significant
upfront lease payment, have terms of renewal and bargain
purchase option. However, there is no escalation clause.
Each renewal is at the option of lessee. Future minimum
lease payments (MLP) under finance leases together with
the present value of the net MLP are as follows:

There was no finance lease arrangement for the year
ended March 31, 2015.

THE INDIAN HOTELS COMPANY LTD.

Consolidated Financial statements

Significant accounting policies

Operating Lease

A Lease in which a significant portion of the risks and rewards of ownership are not transferred to the Company
is classified as operating lease. Payments made under
operating lease are charged to the Statement of Profit
and Loss on a straight line basis over the period of the
lease, unless the payments are structured to increase in
line with the expected general inflation to compensate for
the lessor’s expected inflationary cost increases.

For leases which include both land and building elements,
basis of classification of each element is assessed on the
date of transition, April 1, 2015, in accordance with Ind AS
101 First-time Adoption of Indian Accounting Standard.

Disclosures

In respect of a plot of land provided to the Company
under a licence agreement, on which the Company has
constructed a hotel, the licensor has made a claim of
₹ 344.50 crore to date, (13 times the previous annual
rental) for increase in the rentals with effect from 2006-
07. The Company believes these claims to be untenable.
The Company has contested the claim based upon
legal advice, by filing a suit in the Hon’ble High Court
of Judicature at Bombay on grounds of the licensor’s
inconsistent stand on automatic renewal of lease, levy
of lease rentals and method of computing such lease
rent, within the terms of the existing license agreement
as also a Supreme Court judgement on related matters.
Even taking recent enactments into consideration, in the
opinion of the Company, the computation cannot stretch
more than ₹ 86.36 crore (excluding interest/penalty), and
this too is being contested by the Company on merit.
Further, a “Notice of Motion” has been issued by the
Hon’ble High Court of Judicature at Bombay, inter alia,
for a stay against any further proceedings by the licensor,
pending a resolution of this dispute by the Hon’ble Bombay
High Court. In view of this, and based on legal advice,
the Company regards the likelihood of sustainability of
the lessor’s claim to be remote and the amount of any
potential liability, if at all, is indeterminate.

Note 32: Operating lease

The Company has taken certain vehicles, land and
immovable properties on operating lease. The leases of
hotel properties are generally long-term in nature with
varying terms and renewal rights expiring within five
years to one hundred & ninety eight years. On renewal,
the terms of the leases are renegotiated. The total lease
rent paid on the same is included under Rent and Licence
Fees forming part of Other Expenses (Refer Note No. 26,
Footnote (iv), Page 144).

The minimum future lease rentals payable in respect of
non-cancellable leases entered into by the Company to
the extent of minimum guarantee amount are as follows:—

In addition, in certain circumstances, the Company is
committed to making additional lease payments that
are contingent on the performance viz. gross operating
profits, revenues etc. of the hotels that are being leased.

Expenses Recognised in the statement of profit and loss:

WIPRO LTD.

Consolidated financial statements

Significant accounting policies

The determination of whether an arrangement is, or
contains, a lease is based on the substance of the
arrangement at the inception date. The arrangement
is, or contains a lease if, fulfilment of the arrangement
is dependent on the use of a specific asset or assets
or the arrangement conveys a right to use the asset or
assets, even if that right is not explicitly specified in an
arrangement.

Arrangements where the Company is the
lessee

Leases of property, plant and equipment, where the
Company assumes substantially all the risks and rewards
of ownership are classified as finance leases. Finance
leases are capitalised at lower of the fair value of the
leased property and the present value of the minimum lease payments. Lease payments are apportioned
between the finance charge and the outstanding liability.
The finance charge is allocated to periods during the
lease term at a constant periodic rate of interest on the
remaining balance of the liability.

Leases where the lessor retains substantially all the risks
and rewards of ownership are classified as operating
leases. Payments made under operating leases are
recognised in the Statement of Profit and Loss on a
straight-line basis over the lease term.

Arrangements where the Company is the lessor
In certain arrangements, the Company recognises
revenue from the sale of products given under finance
leases. The Company records gross finance receivables,
unearned income and the estimated residual value of
the leased equipment on consummation of such leases.
Unearned income represents the excess of the gross
finance lease receivable plus the estimated residual value
over the sales price of the equipment. The Company
recognises unearned income as finance income over the
lease term using the effective interest method.

Disclosures

Finance lease receivables

Finance lease receivables consist of assets that are
leased to customers for a contract term ranging from 1 to
7 years, with lease payments due in monthly or quarterly
installments. Details of finance lease receivables are
given below:

Present value of minimum lease receivables are as
follows:

Included in the consolidated balance sheet as follows:

Assets taken on lease

Finance leases:

The following is a schedule of present
value of minimum lease payments under finance leases,
together with the value of the future minimum lease
payments as of March 31, 2017, March 31, 2016 and April
1, 2015.

Operating leases

The Company has taken office, vehicle and IT equipment
under cancellable and non-cancellable operating lease
agreements that are renewable on a periodic basis at the
option of both the lessor and the lessee. The operating
lease agreements extend up a maximum of fifteen years
from their respective dates of inception and some of these
lease agreements have price escalation clause. Rental
payments under such leases were ₹5,953, ₹5,184 and
₹4,727 during the years ended March 31, 2017, March
31, 2016 and April 1, 2015.

Details of contractual payments under non-cancellable
leases are given below:

Finance lease receivables

Leasing arrangements

Finance lease receivables consist of assets that are
leased to customers for contract terms ranging from 1 to
7 years, with lease payments due in monthly or quarterly
installments.

Finance leases

Obligation under finance lease is secured by underlying
assets leased. The legal title of these assets vests with
the lessors. These obligations are repayable in monthly,
quarterly and yearly installments up to year ending March
31, 2021. The interest rate for these obligations ranges
from 1.82% to 17.19%.

Operating leases

The Company leases office and residential facilities
under cancellable and non-cancellable operating lease
agreements that are renewable on a periodic basis at the
option of both the lessor and the lessee. Rental payments
under such leases are ₹2,878, ₹2,905 and ₹2,682 during
the years ended March 31, 2017, March 31, 2016 and
April 1, 2015.