F Material Accounting Policy Information
The operating cycle is the time between the
acquisition of assets for processing and their
realisation in cash and cash equivalents. The
Company has identified twelve months as its
operating cycle
a) Current and non-current classification
The Company presents assets and liabilities in
the balance sheet based on current/non-current
classification.
An asset is current when :
- It is expected to be realised or intended to be sold
or consumed in normal operating cycle or
- It is held primarily for the purpose of trading or
- It is expected to be realised within twelve months
after the reporting period, or
- It is cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when :
- It is expected to be settled in normal operating
cycle or
- It is held primarily for the purpose of trading or
- It is due to be settled within twelve months after
the reporting period, or
- There is no unconditional right to defer the
settlement of the liability for atleast twelve months
after the reporting period
The Company classifies all other liabilities as non¬
current.
Deferred tax assets and liabilities are classified as
non-current assets and liabilities.
b) Revenue Recognition
"Revenue is measured based on the fair value of the
consideration that is specified in a contract with a
customer or is expected to be received in exchange
for the products or services and excludes amounts
collected on behalf of third parties. Revenue is
recognised upon transfer of control of promised
products or services to customers.
To recognise revenues, the Company applies the
following five step approach
(1) identify the contract with a customer,
(2) Identify the performance obligations in the
contract,
(3) determine the transaction price,
(4) allocate the transaction price to the
performance obligations in the contract.
(5) recognize revenues when a performance
obligation is satisfied"
The revenue is recognised when (or as) the
performance obligation is satisfied, which typically
occurs when (or as) control over the products or
services is transferred to a customer.
Contract modification are accounted for when
addition, deletions or changes are approved
either to the contract scope or contract price. The
accounting for modification of contract involves
assessment whether the services added to the
existing Contract or distinct and whether the
pricing is at the standalone selling price. Services
added that are not distinct are accounted for on
a cumulative catchup basis , while those that are
distinct are accounted prospectively, either as a
separate contract , if the sperate service are priced
at standalone selling price , or a termination of the
exiting contract and creation of a new contract if not
priced at standalone selling price.
i) Contract revenue (construction contracts)
The company has single performance obligation
of construction activity, income is recognised
over time based on the progess of the work i.e.,
cost incurred during the period and margin on the
Construction Activity.
Contract revenue and contract cost associated with
the construction of road are recognised as revenue
and expenses respectively by reference to the
stage of completion of the projects at the balance
sheet date. The stage of completion of project is
determined by the proportion that contract cost
incurred for work performed upto the balance sheet
date bear to the estimated total contract costs.
Where the outcome of the construction cannot
be estimated reliably, revenue is recognised to
the extent of the construction costs incurred if it is
probable that they will be recoverable. If total cost
is estimated to exceed total contract revenue, the
Company provides for foreseeable loss. Contract
revenue earned in excess of billing has been
reflected as unbilled revenue and billing in excess
of contract revenue has been reflected as unearned
revenue.
ii) Operation and Maintenance income:
Revenue on Operation and Maintenance contracts
are recognized over the period of the contract as
per the terms of the contract.
iii) Interest income:
For all debt instruments measured either at
amortised cost or at fair value through other
comprehensive income, interest income is recorded
using the effective interest rate (EIR). EIR is the rate
that exactly discounts the estimated future cash
payments or receipts over the expected life of
the financial instrument or a shorter period, where
appropriate, to the gross carrying amount of the
financial asset or to the amortised cost of a financial
liability. When calculating the effective interest rate,
the Company estimates the expected cash flows by
considering all the contractual terms of the financial
instrument (for example, prepayment, extension,
call and similar options) but does not consider the
expected credit losses. Interest income is included
in finance income in the statement of profit and loss.
iv) Dividend income:
Dividend is recognised when the Company's right
to receive the payment is established, which is
generally when shareholders approve the dividend.
v) Finance and Other Income ( including
remeasurement Income)
Finance income is accrued on a time proportion
basis, by reference to the principal outstanding and
the applicable EIR. Other income is accounted for
on accrual basis. Where the receipt of income is
uncertain, it is accounted for on receipt basis.
vi) Financial guarantee income
Under Ind AS, financial guarantees given by the
Company for its subsidiaries are initially recognised
as a liability at fair value which is subsequently
amortised as income to the Statement of Profit and
Loss on a time proportion basis.
c) Property, Plant and Equipment (PPE)
i) Property, Plant and Equipment is stated at cost,
net of accumulated depreciation and accumulated
impairment losses, if any. Cost comprises of
purchase price inclusive of taxes, commissioning
expenses, etc. upto the date the asset is ready for
its intended use.
ii) Significant spares which have a usage period in
excess of one year are also considered as part of
Property, Plant and Equipment and are depreciated
over their useful life.
iii) Borrowing costs on Property, Plant and Equipments
are capitalised when the relevant recognition criteria
specified in Ind AS 23 Borrowing Costs is met.
iv) Decomissioning costs, if any, on Property, Plant and
Equipment are estimated at their present value and
capitalised as part of such assets.
v) Depreciation on all assets of the Company is
charged on straight line basis over the useful life
of assets at the rates and in the manner provided
in Schedule II of the Companies Act 2013 for
the proportionate period of use during the year.
Depreciation on assets purchased /installed during
the year is calculated on a pro-rata basis from the
date of such purchase /installation.
vi) An item of property, plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or
loss arising on derecognition of the asset (calculated
as the difference between the net disposal
proceeds and the carrying amount of the asset) is
included in the income statement when the asset is
derecognised.
vii) The residual values and useful lives of property, plant
and equipment are reviewed at each financial year
end and adjusted prospectively, if appropriate.
viii) Leasehold improvements is amortized on a straight
line basis over the period of lease.
d) Intangible assets
i) Intangible assets acquired separately are measured
on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost
less any accumulated amortisation and accumulated
impairment losses. Internally generated intangibles,
excluding capitalised development costs, are
not capitalised and the related expenditure is
reflected in profit or loss in the period in which the
expenditure is incurred.
ii) The useful lives of intangible assets are assessed as
either finite or indefinite.
iii) Intangible assets with finite lives are amortised over
the useful economic life and assessed for impairment
whenever there is an indication that the intangible
asset may be impaired. The amortisation period and
the amortisation method for an intangible asset with
a finite useful life are reviewed at least at the end
of each reporting period. Changes in the expected
useful life or the expected pattern of consumption
of future economic benefits embodied in the asset
are considered to modify the amortisation period or
method, as appropriate, and are treated as changes
in accounting estimates. The amortisation expense
on intangible assets with finite lives is recognised
in the statement of profit and loss unless such
expenditure forms part of carrying value of another
asset.
(iv) Intangible Assets without finite life are tested
for impairment at each Balance Sheet date and
Impairment provision, if any are debited to profit and
loss.
(v) Gains or losses arising from derecognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the
carrying amount of the asset and are recognised
in the statement of profit or loss when the asset is
derecognised.
e) Borrowing costs
Borrowing costs directly attributable to the
acquisition, construction or production of an asset
that necessarily takes a substantial period of time to
get ready for its intended use or sale are capitalised
as part of the cost of the asset. All other borrowing
costs are expensed in the period in which they
occur. Borrowing costs consist of interest and other
costs that an entity incurs in connection with the
borrowing of funds. Borrowing cost also includes
exchange differences to the extent regarded as an
adjustment to the borrowing costs.
f) Impairment of assets
"Assets with an indefinite useful life and goodwill are
not amortized/ depreciated and are tested annually
for impairment. Assets subject to amortization/
depreciation are tested for impairment provided
that an event or change in circumstances indicates
that their carrying amount might not be recoverable.
An impairment loss is recognized in the amount
by which the asset's carrying amount exceeds
its recoverable amount. The recoverable amount
is the higher between an asset's fair value less
sale costs and value in use. For the purposes of
assessing impairment, assets are grouped together
at the lowest level for which there are separately
identifiable cash flows (cash-generating units).
Non-financial assets other than goodwill for which
impairment losses have been recognized are tested
at each balance sheet date in the event that the loss
has reversed."
g) Equity and mutual fund investment
All equity investments in scope of Ind AS 109 are
measured at fair value. Equity instruments which
are held for trading are classified as at FVTPL. For
all other equity instruments, the Company may
make an irrevocable election to present in other
comprehensive income subsequent changes in the
fair value. The Company makes such election on an
instrument-by instrument basis. The classification is
made on initial recognition and is irrevocable. If the
Company decides to classify an equity instrument
as at FVTOCI, then all fair value changes on the
instrument, excluding dividends, are recognized in
the OCI. There is no recycling of the amounts from
OCI to statement of profit and loss, even on sale of
investment. However, the Company may transfer
the cumulative gain or loss within equity. Equity
instruments included within the FVTPL category are
measured at fair value with all changes recognized in
the statement of profit and loss.
Investment in subsidiaries, joint venture and
associates are carred at Cost in separate revised
financial Statement less impairment if any.
Current Investments :-Investments that are readily
realisable and intended to be held for not more than
one year from the date on which such investments
are made, are classified as current investments.
All other investments are classified as non-current
investments.
Current investments: are carried at fair value with the
changes in fair value taken through the statement of
Profit and Loss.
h) Inventories
Inventories are valued at the lower of cost and net
realisable value.
Stores and materials are valued at lower of cost
and net realizable value. Net realizable value is
the estimated selling price less estimated cost
necessary to make the sale. The weighted average
method of inventory valuation is used to determine
the cost.
i) Taxes
i) Current Income Tax
The income tax expense or credit for the period
is the tax payable on the current period's taxable
income based on the applicable income tax rate for
each jurisdiction adjusted by changes in deferred
tax assets and liabilities attributable to temporary
differences and to unused tax losses. The current
income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the
end of the reporting period in the countries where
the company and its subsidiaries and associates
operate and generate taxable income. Management
periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
ii) Deferred Tax
Deferred income tax is provided in full, using the
liability method, on temporary differences arising
between the tax bases of assets and liabilities and
their carrying amounts in the revised standalone
financial statements. However, deferred tax
liabilities are not recognised if they arise from the
initial recognition of goodwill. Deferred income
tax is also not accounted for if it arises from initial
recognition of an asset or liability in a transaction
other than a business combination that at the time
of the transaction affects neither accounting profit
nor taxable profit (tax loss). Deferred income tax is
determined using tax rates (and laws) that have beer
enacted or substantially enacted by the end of the
reporting period and are expected to apply when
the related deferred income tax asset is realised
or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible
temporary differences and unused tax losses only
if it is probable that future taxable amounts will be
available to utilise those temporary differences and
losses. Current and deferred tax is recognised in
profit or loss, except to the extent that it relates to
items recognised in other comprehensive income
or directly in equity. In this case, the tax is also
recognised in other comprehensive income or
directly in equity, respectively.
j) Earnings per share
Earnings per share is calculated by dividing
the net profit or loss before OCI for the year by
the weighted average number of equity shares
outstanding during the period. For the purpose
of calculating diluted earnings per share, the net
profit or loss before OCI for the period attributable
to equity shareholders and the weighted average
number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity
shares.
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