Airtel 2011 Annual Report Download - page 115

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right to offset the recognised amounts and there is an intention
to settle on a net basis, or to realize the assets and settle the
liabilities simultaneously.
D. Derivative financial instruments - Current versus non-current
classification
Derivative instruments that are not designated and effective
hedging instruments are classified as current or non-current or
separated into a current and non-current portion based on an
assessment of the facts and circumstances (i.e. the underlying
contracted cash flows).
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hedge (and does not apply hedge accounting) for a period
beyond 12 months after the reporting date, the derivative
is classified as non-current (or separated into current and
non-current portions) consistent with the classification of
the underlying item.
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host contract are classified consistent with the cash flows
of the host contract.
3.13 Compulsory Convertible Debentures
Compulsory Convertible Debentures are separated into
liability and equity components based on the terms of the
contract. On issuance of the convertible debentures, the fair
value of the liability component is determined using a market
rate for an equivalent non-convertible bond. This amount is
classified as a financial liability and measured at amortised cost
(net of transaction costs) until it is extinguished on conversion
or redemption. The remainder of the proceeds is included
in equity, net of transaction costs and is not re-measured in
subsequent years.
3.14 Treasury shares
Own equity instruments which are reacquired (treasury shares)
through Bharti Tele-Ventures Employees’ Welfare Trust are
recognised at cost and deducted from equity. No gain or loss
is recognised in the statement of comprehensive income on the
purchase, sale, issue or cancellation of the Group’s own equity
instruments. Any difference between the carrying amount and
the consideration is recognised in other components of equity.
3.15 Share-based compensation
The Group issues equity-settled share-based options to certain
employees. Equity-settled share-based options are measured at
fair value at the date of grant.
The fair value determined at the grant date of the equity-settled
share-based options is expensed over the vesting period, based
on the Group’s estimate of the shares that will eventually vest.
Fair value is measured using lattice-based option valuation
model, Black-Scholes and Monte Carlo Simulation framework
and is recognised as an expense, together with a corresponding
increase in equity, over the period in which the options vest
using the graded vesting method. The expected life used in the
model has been adjusted, based on management’s best estimate,
for the effects of non-transferability, exercise restrictions
and behavioural considerations. The expected volatility and
forfeiture assumptions are based on historical information.
Where the terms of a share-based compensation are modified,
the minimum expense recognised is the expense as if the terms
had not been modified, if the original terms of the award are
met. An additional expense is recognised for any modification
that increases the total fair value of the stock-based payment
transaction, or is otherwise beneficial to the employee as
measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if
it is vested on the date of cancellation, and any expense not
yet recognised for the award is recognised immediately. This
includes any award where non-vesting conditions within
the control of either the entity or the employee are not met.
However, if a new award is substituted for the cancelled
award, and designated as a replacement award on the date that
it is granted, the cancelled and new awards are treated as if
they were a modification of the original award, as described
in the previous paragraph. All cancellations of equity-settled
transaction awards are treated equally.
The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of diluted earnings
per share.
3.16 Employee benefits
The Group post employment benefits include defined benefit
plan and defined contribution plans. The Group also provides
other benefits in the form of deferred compensation and
compensated absences.
Under the defined benefit retirement plan, the Group provides
for the retirement obligation in the form of Gratuity. Under
the plan, a lump sum payment is made to vested employees at
retirement or termination of employment based on respective
employee salary and years of experience in the Group.
For defined benefit retirement plans, the difference between
the fair value of the plan assets and the present value of the plan
liabilities is recognised as an asset or liability in the statement
of financial position. Scheme liabilities are assessed using the
projected unit funding method and applying the principal
actuarial assumptions as at the date of statement of financial
position. Plan assets are assets that are held by a long-term
employee benefit fund or qualifying insurance policies.
All expenses in respect of defined benefit plans, including
actuarial gains and losses, are recognised in the profit or loss as
incurred.
The amount charged to the statement of comprehensive income
in respect of these plans is included within operating costs or in
the Group’s share of the results of equity accounted operations
as appropriate.
The Group’s contributions to defined contribution plans are
recognised in profit or loss as they fall due. The Group has
no further obligations under these plans beyond its periodic
contributions.
The employees of the Group are entitled to compensated
absences based on the unavailed leave balance as well as