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NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

For the year ended June 30, 2020

5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of financial statements in conformity with the approved accounting standards require management
to make judgments, estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be reasonable under the circumstances, the results
of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimates are revised if the revision affects only that period, or in the period
of the revision and future periods. Judgments made by management in application of the approved accounting
standards that have significant effect on the consolidated financial statements and estimates with a significant risk of
material adjustments in the next year are discussed in respective policy notes. The areas where various assumptions
and estimates are significant to the group’s financial statements or where judgment was exercised in application of
accounting policies are as follows:
Estimate of useful life of operating fixed assets – note 7.1
Impairment of non–financial assets – note 7.4
Stores and spares – note 7.6
Stock–in–trade – note 7.7
Staff retirement benefits – note 7.11
Provisions – note 7.14
Contingencies – note 7.15
Taxation – note 7.19

6. BASIS OF CONSOLIDATION
Subsidiary
Subsidiary is an entity over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power to direct the activities of the entity. Subsidiary is fully consolidated from the date on which control is
transferred to the Group and is deconsolidated from the date that control ceases.

The assets and liabilities of Subsidiary Company have been consolidated on a line by line basis and carrying value of
investments held by the Holding Company is eliminated against Holding Company’s share in paid up capital of the
Subsidiary Company.

Intragroup balances and transactions have been eliminated.

Non–controlling interests are that part of net results of the operations and of net assets of Subsidiary Company
attributable to interest which are not owned by the Holding Company. Non–controlling interests are presented as
separate item in the consolidated financial statements.

Associate
Associates is an entity in which the Group has significant influence, but not control, over the financial and operating
policies. Interests in associate is accounted for using the equity method. They are initially recognized at cost, which
includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the
Group’s share of the profit or loss and other comprehensive income of equity accounted investee, until the date on
which significant influence ceases.
Unrealized gains arising from transactions with equity accounted investee are eliminated against the investment to
the extent of the Group companies’ interest in the investee. Unrealized losses are eliminated in the same way as
unrealized gains, but only to the extent that there is no evidence of impairment.

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