UBHL annual report - United Spirits Limited

Consolidated Financial StatementsNotes to the financial statements for the year ended March 31, 2012 (Contd.)1.18 ProvisionsA provision is recognised when an enterprise has a present obligation as a result of a past event and it is probable thatan outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.Provisions, other than employee benefits, are not discounted to their present value and are determined based onmanagement estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each BalanceSheet date and adjusted to reflect the current management estimates.Onerous Lease Provision:When a leasehold property ceases to be used in the business or a commitment is entered into which would cause this tooccur, provision is made for the entire amount by which the recoverable amount of interest in the property is expectedto be insufficient to cover future obligations relating to the lease.1.19 ContingenciesLiabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treatedas contingent and, to the extent not provided for, are disclosed by way of notes to the accounts.1.20 Share issue expensesShare issue expenses incurred are adjusted to the Securities Premium Account as permitted by Section 78(2) of theCompanies Act, 1956.1.21 ExpenditureExpenses are net of taxes recoverable, where applicable.1.22 Government GrantsGovernment grants related to revenue expenses are recognised on a systematic basis in the Statement of Profit andLoss over the periods necessary to match them with the related costs which they are intended to compensate.1.23 Miscellaneous Expenditure (to the extent not written off)Expenditure incurred for raising borrowed funds represents ancillary costs incurred in connection with the arrangementof borrowings and is amortised over the tenure of the respective borrowings. Amortisation of such MiscellaneousExpenditure is included under Interest and Finance charges.1.24 Borrowing CostsBorrowing costs incurred for the acquisition of qualifying assets are recognised as part of cost of such assets when it isconsidered probable that they will result in future economic benefits to the Company while other borrowing costs areexpensed in the period in which they are incurred.79