1. IFRS 1 FIRST TIME ADOPTION OF IFRS Asish K Bhattacharyya Slide 1

2. First-time Adoption of IFRS - Introduction and Overview Objective is transparent for users and comparable over all periods presented; provides a suitable starting point for accounting under International Financial Reporting Standards (IFRSs); and can be generated at a cost that does not exceed the benefits to users. Application to the first IFRS financial statements (March 31, 2012); and each interim financial report under IFRS in the first period (2011-12) Slide 2

3. Slide 3 First-time Adoption of IFRS - Introduction and Overview (Contd..) Requires Identification of date of transition (April 1, 2010) Selection of accounting policies that comply with IFRS Preparation of an opening IFRS balance sheet as at April 1, 2010 The first IFRS financial statements are: The first financial statements to contain “an explicit and unreserved statement of compliance with IFRSs”

4. Slide 4 First-time Adoption of IFRS - Introduction and Overview (Contd..) IFRS 1 requires retrospective adoption of most IFRSs, but the guidance is more comprehensive there are specific exemptions the latest version of each IFRS will be applied there is guidance on the use of previous estimates the disclosure requirements are more extensive Financial statements are not IFRS financial statements when there is no explicit statement of compliance with IFRSs they do not comply with all aspects of IFRSs IFRSs are used to fill gaps in local guidance

5. RECOGNITION AND MEASUREMENT Slide 5

6. Key Dates Transition date: –April 1,2010 –First balance sheet to be prepared (not to be published) Adoption date: April 1, 2011 First financial statements under IFRS: March 31, 2012 Apply all IFRSs applicable on March 31, 2012 Slide 6

7. Slide 7 First-time Adoption of IFRS - Opening IFRS balance sheet An entity need not present its opening IFRS balance sheet in its first IFRS financial statements. Adjustments are required to move from previous GAAP to IFRS (except where an exemption or exception allows or requires otherwise) recognition of some new assets and liabilities derecognition of some old assets and liabilities reclassification previous-GAAP opening balance sheet items into the appropriate IFRS classification apply IFRSs in measuring all recognised assets and liabilities

8. Slide 8 First-time Adoption of IFRS - Accounting policies Accounting policies based on current version of IFRSs at the reporting date All standards that will be mandatory in the first year of IFRS financial statements Early adoption of other standards is permitted Retrospective application to opening IFRS balance sheet and all periods, subject to Optional exemptions; and Mandatory exceptions Transitional guidance in IFRSs not used by first time adopters unless specifically directed

9. EXEMPTIONS AND EXCEPTIONS Slide 9

10. Slide 10 IFRS 1 Exemptions summary Comparatives for financial Instruments* Designation of financial assets and Financial liabilities Insurance contracts* Sixteen optional exemptions Business combinations Property, plant and equipment, investment properties, intangibles Employee benefits Standards in force at reporting date Cumulative translation adjustment Compound instruments Transition date for subsidiaries, associates and joint ventures Share-based payments *Relief is for “2005 adopters” only Decommissioning liabilities Leases Borrowing cost Service concessions arrangements Exploration and Evaluation – O&G Fair value measurement of financial Instruments on initial recognition

11. Slide 11 IFRS 1 Exceptions summary Four mandatory exceptions Derecognition of financial assets and liabilities Assets held for sale Hedge accounting Standards in force at reporting date Estimates

12. Slide 12 First-time Adoption of IFRS - Optional exemptions from other IFRSs ExemptionImpact Business combinations Previous business combinations need not be restated Property, plant and equipment, investment properties, intangibles Fair value or revaluation as deemed cost Employee benefits Unrecognised gains and losses at date of transition need not be recognised Cumulative translation differences May be set to zero for all subsidiaries Date of transition for some entities Balances already reported by subsidiary to parent need not be restated Compound financial instruments Circumstances at inception, but equity element not identified if liability is not outstanding Designation of financial assets and liabilities Designation as “at fair value through profit or loss” at transition

13. Slide 13 First-time Adoption of IFRS - Optional exemptions from other IFRSs - (Contd..) ExemptionImpact Share-based payments Only apply IFRS 2 to share-based payments vested/settled after date of transition/1 January 2005 Decommissioning liabilities Adjustments to the asset cost required by IFRIC 1 need not be applied to changes to the liability occurring before transition Leases Apply the transitional provisions in IFRIC 4 Determining whether an Arrangement contains a Lease. Borrowing cost Use the transition provisions of IAS 23. Fair value measurement of financial instruments on initial recognition Measure fair value based on observable market current market transactions in the same instrument or based on a valuation technique. Service concessions arrangements A first-time adopter may apply the transitional provisions in IFRIC 12. *Relief is for “2005 adopters” only

14. Slide 14 IFRS 3 need not be applied to combinations before date of transition (April 1, 2010) BUT, if one combination is restated, all subsequent combinations are restated When the exemption is used No change in classification Post combination carrying amount deemed cost for assets and liabilities measured at cost Assets and liabilities measured at fair value restated at date of transition – adjust retained earnings First-time Adoption of IFRS - Business combinations exemption

15. Slide 15 Assets and liabilities not recognised at the time of a business combination under previous GAAP are: Recognized as if subsidiary adopted IFRSs at the same date Subsidiaries not consolidated under previous GAAP are: Consolidated as if subsidiary adopted IFRSs at the same date Goodwill is the difference between cost of investment and net assets recognised at date of transition First-time Adoption of IFRS - Business combinations exemption - (Contd..)

16. Slide 16 Goodwill is recognised at the carrying amount under previous GAAP and adjusted for Intangibles that are not recognised under IFRS Intangibles that must be recognised under IFRS Contingent consideration not recognised; and Tested for impairment Goodwill deducted from equity remains in equity First-time Adoption of IFRS - Business combinations exemption – (Contd..)

17. Slide 17 This IFRS prohibits retrospective application of some aspects of other IFRSs relating to: Derecognition of financial assets and financial liabilities Hedge accounting Estimates and Assets classified as held for sale and discontinued operations. First-time Adoption of IFRS - Mandatory exceptions

18. Slide 18 IFRS 1 Mandatory exceptions Retrospective application of IAS 39 is prohibited for Financial assets and liabilities derecognised before 1 January 2004 but: –Recognise all derivatives and other interests retained from 1 January 2005; –Consolidate all SPEs controlled at transition date (SIC-12) Hedge accounting –Where the relationship does not qualify –Until the documentation is in place

19. Slide 19 First-time Adoption of IFRS - Estimates Estimate required by previous GAAP? Evidence of error? Calculation consistent with IFRS? Make estimate reflecting conditions at relevant date NO YES NO YES Use previous estimate and adjust to reflect IFRS Use previous estimate YES NO

20. Slide 20 Assets held for sale / discontinued operations Apply IFRS 5 from 1 January 2005: no restatement of comparatives except: –May apply from earlier date only if information obtained at earlier date –First-time adopters after 2005 must apply retrospectively and restate comparatives IFRS 1 Mandatory exceptions

21. Slide 21 IFRS 1 Disclosures Reconciliation of equity from previous GAAP to IFRS at transition and last year end Reconciliation of last year’s net profit under previous GAAP to IFRS Sufficient detail to understand adjustments to each line item Errors made under previous GAAP and identified during transition Fair value as deemed cost and the amount of the adjustment IAS 36 disclosures for impairment identified during transition

22. Slide 22 First-time Adoption of IFRS - Reconciliations Interim financial Reports equity under previous GAAP at the end of that comparable interim period to its equity under IFRSs at that date; and its profit or loss under previous GAAP for that comparable interim period (current and year-to-date) to its profit or loss under IFRSs for that period. further information to comply with IAS 34

23. Slide 23 First-time Adoption of IFRS - Reconciliations EquityEquity and net income Reporting date Transition date 01.04.20X0 Year end – comparative 31.03.20X1 Equity and net income Interim – comparative 30.09.20X0 Interim date 30.09.20X1

24. Slide 24 First-time Adoption of IFRS - Existing IFRS subsidiaries Subsidiaries already reporting under IFRS do not apply exemptions Use subsidiary’s existing IFRS results for consolidation purposes, adjusted for –Consolidation adjustments –Accounting policy differences However, business combinations exemption is applied as normal

25. Slide 25 Identification of Adoption Dates Selection of Options – Multiple Scenarios Enterprise-Wide Adoption for all Reporting Units Needs Pro-active Decisions First-time Adoption of IFRS - Common implementation issues

26. Thank You