Full annual report of 2011-2012 - Mindtree

5. Determination of fair values
The Company's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and
liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods.
(i) Property, plant and equipment
The fair value of property, plant and equipment recognized as a result of a business combination is based on appraised market values
and replacement cost determined by an external valuer.
(ii) Intangible assets
The fair value of intangible assets is based on the discounted cash flows expected to be derived from the use and eventual sale of the
assets as determined by an external valuer.
(iii) Investments in equity and debt securities and units of mutual funds
The fair value of available-for-sale equity securities is determined using a valuation technique.
In respect of investments in mutual funds, the fair values represent net asset value as stated by the issuers of these mutual fund units in
the published statements. Net asset values represent the price at which the issuer will issue further units in the mutual fund and the
price at which issuers will redeem such units from the investors. Accordingly, such net asset values are analogous to fair market value
with respect to these investments, as transactions of these mutual funds are carried out at such prices between investors and the
issuers of these units of mutual funds.
(iv) Derivatives
The fair value of forward exchange contracts is estimated by discounting the difference between the contractual forward price and the
current forward price for the residual maturity of the contract using a risk-free interest rate (based on government bonds). The fair
value of foreign currency option contracts is determined based on the appropriate valuation techniques, considering the terms of the
contract.
(v) Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash
flows, discounted at the market rate of interest at the reporting date.
(vi) Share-based payment transactions
The fair value of employee stock options is measured using the Black-Scholes valuation model. Measurement inputs include share price
on grant date, exercise price of the instrument, expected volatility (based on weighted average historical volatility), expected life of
the instrument (based on historical experience), expected dividends, and the risk free interest rate (based on government bonds).
6. Property, plant and equipment
Particulars Land Building Computer Furniture, Vehicles Total
systems* fixtures and
equipment
Gross carrying value:
As at April 1, 2010 97 1,511 1,339 1,854 5 4,806
Additions - 113 404 495 - 1,012
Disposal/adjustments - - 202 394 2 598
Acquisition through business combination - 2 3 4 - 9
As at March 31, 2011 97 1,626 1,544 1,959 3 5,229
Accumulated depreciation/impairment:
As at April 1, 2010 2 119 1,186 1,146 2 2,455
Depreciation 1 55 237 374 1 668
Disposal/adjustments - - 202 391 2 595
As at March 31, 2011 3 174 1,221 1,129 1 2,528
Capital work-in-progress 1
Net carrying value as at March 31, 2011 94 1,452 323 830 2 2,702
Gross carrying value:
As at April 1, 2011 97 1,626 1,544 1,959 3 5,229
Additions - - 143 138 - 281
Disposal/adjustments - - 49 35 1 85
Acquisition through business combination - - - - - -
As at March 31, 2012 97 1,626 1,638 2,062 2 5,425
Accumulated depreciation/impairment:
As at April 1, 2011 3 174 1,221 1,129 1 2,528
Depreciation 1 58 249 369 1 678
Disposal/adjustments - - 49 35 - 84
As at March 31, 2012 4 232 1,421 1,463 2 3,122
Capital work-in-progress 85
Net carrying value as at March 31, 2012 93 1,394 217 599 - 2,388
*Computer systems include software.
The capital work-in-progress balance as on April 1, 2010 was Rs. 168.
The depreciation expense for the year ended March 31, 2012 and March 31, 2011 is included in the following line items in the statement of
income.
Particulars Year ended Year ended
March 31, 2012 March 31, 2011
Cost of revenues 617 608
Selling, general and administrative expenses 61 60
Total 678 668
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