Significant Accounting Policies
(i) Revenue
Revenue is recognised upon transfer of control of promised product or services to customer in an amount that
reflect the consideration which the company expects to receive in exchange for those product or services at
the fair value of the consideration received or receivable, which is generally the transaction price, net of any
taxes/duties and discounts.
The company earns revenue from construction and real estate projects.
Revenue from related parties is recognized based on transaction price which is at arm's length.
Revenue from construction activity
Income from construction contracts is recognized by reference to the stage of completion of the contract
activity as certified by the client.
Revenue from real estate projects
Revenue from real estate projects is recognized on the basis of percentage of completion method of
accounting.
Other operating income
a. Income from industrial park project is recognized on the time of execution of registered sale deed /
agreement to sale, in relation to sold areas only
b. “Bill raised but unsettled” have been accounted for in the books at the value reasonably ascertained by
the management on the date of raising the bill.
c. Claims in respect of civil contracts lodged/awarded with/by the respective Department which may
pertains to earlier years have been accounted for in the books in the year of its certainty and at value
/enhanced value reasonably ascertained by the management.
Other income
Rental income from investment property is recognised as part of revenue from operations in profit or loss on a
straight-line basis over the term of the lease except where the rentals are structured to increase in line with
expected general inflation. Lease incentives granted are recognised as an integral part of the total rental
income, over the term of the lease.
Interest income
Interest income on time deposits and inter corporate loans is recognised using the effective interest method.
The ‘effective interest rate' is the rate that exactly discounts estimated future cash payments or receipts
through the expected life of the financial instrument to the gross carrying amount of the financial asset.
Dividend
Dividend income is recognised in profit and loss on the date on which the company's right to receive payment
is established.
(ii) Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost, net of recoverable taxes(wherever applicable),
which includes capitalised borrowing costs less accumulated depreciation and accumulated impairment
losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and
non-refundable purchase taxes, if any, after deducting trade discounts and rebates, any directly attributable
cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and
removing the item and restoring the site on which it is located.
If significant parts of an item of property, plant and equipment have different useful lives, then they are
accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in the statement of profit
and loss.
Subsequent expenditure
Subsequent expenditure are included in the asset's carrying amount or recognised as a separate asset, as
appropriate, only if it is probable that future economic benefits associated with the expenditure will flow to the
Company and the cost of the item can be measured reliably. The carrying amount of any component
accounted for as a separate asset is derecognised when replaced.
All other repairs and maintenance are charged to the statement of profit and loss during the reporting year in
which they are incurred.
Depreciation methods, estimated useful lives and residual values
Depreciation is calculated on cost of items of property, plant and equipment less their estimated residual
value over their useful life using straight line method,and is recognised in the statement of profit and loss.
The estimated useful lives of items of property, plant and equipment for the current and comparative periods
are as under and the same are equal to lives specified as per schedule II of the Act.
Based on technical evaluation and consequent advice, the management believes that its estimates of useful
lives as given above best represent the period over which management expects to use these assets.
Depreciation on addition to property, plant and equipment is provided on pro-rata basis from the date the
assets are ready for intended use. Depreciation on sale/discard from property, plant and equipment is
provided for up to the date of sale, deduction or discard of property, plant and equipment as the case may be.
Depreciation method, useful lives and residual values are reviewed at each financial year-end, and changes,
if any, are accounted for prospectively.
Reclassification to investment property
When the use of a property changes from owner-occupied to investment property, the property is reclassified
as investment property at its carrying amount on the date of reclassification.
(iii) Goodwill and other intangible assets
Goodwill
For measurement of goodwill that arises on a business combination. Subsequent measurement is at cost
less any accumulated impairment losses.
Other intangible assets
An intangible asset is recognised when it is probable that the future economic benefits attributable to the
asset will flow to the company and where its cost can be reliably measured.
Intangible assets are initially measured at cost. Such intangible assets are subsequently measured at cost
less accumulated amortisation and any accumulated impairment losses. Cost comprises the purchase price
and any cost attributable to bringing the assets to its working condition for its intended use.
Internally generated intangible assets
Expenditure on research activities is recognised in the statement of profit and loss as incurred.
Development expenditure is capitalised as part of the cost of the resulting intangible asset only if the
expenditure can be measured reliably, the product or process is technically and commercially feasible, future
economic benefits are probable, and the Company intends to and has sufficient resources to complete
development and to use or sell the asset. Otherwise, it is recognised in the statementof profit and loss as
incurred. Subsequent to initial recognition, the asset is measured at cost less accumulated amortisation and
any accumulated impairment losses.
Others
Other intangible assets including those acquired by the Company in a business combination are initially
measured at cost. Such intangible assets are subsequently measured at cost less accumulated amortisation
and any accumulated impairment losses.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure is recognised in the statement of profit and loss as
incurred.
Amortisation
Goodwill is not amortised and is tested for impairment annually.
Amortisation is calculated to write off the cost of intangible assets over their estimated useful lives using the
straight-line method, and is included in depreciation and amortisation in the statement of profit and loss.
Amortisation method, useful lives and residual values are reviewed at each financial year-end, and changes,
if any, are accounted for prospectively.
Losses arising from the retirement of, and gain or losses arising from disposal of an intangible asset are
determined as the difference between the net disposal proceeds and the carrying amount of asset and
recognised as income or expense in the statement of profit and loss.
(iv) Business Combinations
In accordance with Ind AS 103, the Company accounts for these business combinations using the acquisition
method when control is transferred to the Company.The consideration transferred for the business
combination is generally measured at fair value as at the date the control is acquired (acquisition date), as are
the net identifiable assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a
bargain purchase is recognised in other comprehensive income(“OCI”) and accumulated in equity as capital
reserve if there exists clear evidence of the underlying reasons for classifying the business combination as
resulting in a bargain purchase; otherwise the gain is recognised directly in equity as capital reserve.
Transaction costs are expensed as incurred except to the extent of issue of debt or equity securities.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay
contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not
re-measured subsequently and settlement is accounted for within equity. Other contingent consideration is
re-measured at fair value at each reporting date and changes in the fair value of the contingent consideration
are recognised in profit or loss.
(v) Impairment of non-financial assets
The Company's non-financial assets, other than inventories and deferred tax assets are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then
the asset's or CGU's recoverable amount is estimated. Goodwill is tested annually for impairment.
For impairment testing, assets that do not generate independent cash inflows are grouped together into
cash-generating units (CGUs). Each CGU represents the smallest group of assets that generates cash
inflows that are largely independent of the cash inflows of other assets or CGUs.
Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to
benefit from the synergies of the combination.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less
costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the CGU (or the asset).
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated
recoverable amount. Impairment losses are recognised in the statement of profit and loss. Impairment loss
recognised in respect of a CGU is allocated first to reduce the carrying amount of any goodwill allocated to the
CGU, and then to reduce the carrying amounts of the other assets of the CGU (or group of CGUs) on a pro
rata basis.
After impairment, depreciation/amortisation is provided on the revised carrying amount of the asset over its
remaining useful life.
(vi) Investment property
Investment property is property held either to earn rental income or for capital appreciation or for both, but not
for sale in the ordinary course of business, use in the production or supply of goods or services or for
administrative purposes. Upon initial recognition, an investment property is measured at cost. Subsequent to
initial recognition, investment property is measured at cost less accumulated depreciation and accumulated
impairment losses, if any.
The fair value of investment property is disclosed in the notes. Fair value is determined by an independent
valuer who holds a recognised and relevant professional qualification and has recent experience in the
relevant location and category of the investment property being valued.
Depreciation on building component of investment property is calculated on a straight-line basis using the
rate arrived at based on the useful life estimated by the management, which are equal to useful lives specified
as per Schedule II to the Act.
(vii) Borrowing costs
Borrowing costs are interest and other costs incurred in connection with the borrowing of funds. Borrowing
costs directly attributable to acquisition or construction of an asset which necessarily take a substantial
period of time to get ready for their intended use are capitalised as part of the cost of that asset. Other
borrowing costs are recognised as an expense in the period in which they are incurred.
The Ministry of Corporate Affairs issued amendments to Ind AS 23, ‘Borrowing Costs', which clarify that if
any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that
borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate
on general borrowings. There is no impact on the financial statement due to this amendment.
(viii) Financial instruments
i. Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other
financial assets and financial liabilities are initially recognised when the Company becomes a party to the
contractual provisions of the instrument.
A financial asset or financial liability is initially measured at fair value plus, transaction costs that are
directly attributable to its acquisition or issue, except for an item recognised at fair value through profit
and loss. Transaction cost of financial assets carried at fair value through profit and loss is expensed in
the statement of profit and loss.
ii. Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at
• amortised cost;
• Fair value through other comprehensive income (OCI), or
• Fair value through profit and loss (FVTPL)
The classification depends on the entity's business model for managing the financial assets and the
contractual terms of the cash flows.
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period
theCompany changes its business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not
designated as at FVTPL:
• the asset is held within a business model whose objective is to hold assets to collect contractual cash
flows; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as
at FVTPL:
• the asset is held within a business model whose objective is achieved by both collecting contractual cash
flows and selling financial assets; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are
solelypayments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect
to present subsequent changes in the investment's fair value in OCI (designated as FVOCI - equity
investment). This election is made on an investment by investment basis.
All financial assets not classified to be measured at amortised cost or FVOCI as described above are
measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may
irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised
cost or at FVOCI or at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that
would otherwise arise.
Financial assets: Business model assessment
The Company makes an assessment of the objective of the business model in which a financial asset is held
at a portfolio level because this best reflects the way the business is managed and information is provided to
management. The information considered includes:
• the stated policies and objectives for the portfolio and the operation of those policies in practice. These
include whether management's strategy focuses on earning contractual interest income, maintaining a
particular interest rate profile, matching the duration of the financial assets to the duration of any related
liabilities or expected cash outflows or realising cash flows through the sale of the assets;
• how the performance of the portfolio is evaluated and reported to the Company's management;
• the risks that affect the performance of the business model (and the financial assets held within that
business model) and how those risks are managed;
• how managers of the business are compensated - e.g. whether compensation is based on the fair value
of the assets managed or the contractual cash flows collected; and
• the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales
and expectations about future sales activity
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not
considered sales for this purpose, consistent with the Company's continuing recognition of the assets
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair
value basis are measured at FVTPL.
Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, ‘principal' is defined as the fair value of the financial asset on initial
recognition. ‘Interest' is defined as consideration for the time value of money and for the credit risk
associated with the principal amount outstanding during a particular period of time and for other basic
lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Company
considers the contractual terms of the instrument. This includes assessing whether the financial asset
contains a contractual term that could change the timing or amount of contractual cash flows such that it
would not meet this condition. In making this assessment, the Company considers:
• contingent events that would change the amount or timing of cash flows;
• terms that may adjust the contractual coupon rate, including variable interest rate features; prepayment
and extension features; and
• terms that limit the Company's claim to cash flows from specified assets (e.g. non- recourse features).
A prepayment feature is consistent with the solely payments of principal and interest criterion if the
prepayment amount substantially represents unpaid amounts of principal and interest on the principal
amount outstanding, which may include reasonable additional compensation for early termination of the
contract. Additionally, for a financial asset acquired at a significant discount or premium to its contractual
paramount, a feature that permits or requires prepayment at an amount that substantially represents the
contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable
additional compensation for early termination) is treated as consistent with this criterion if the fair value of the
prepayment feature is insignificant at initial recognition.
Financial assets: Subsequent measurement and gains and losses
Financial assets at amortised cost: These assets are subsequently measured at amortised cost using the
effective interest method. The amortised cost is reduced by impairment losses, if any. Interest income and
impairment are recognised in the statement of profit and loss. Any gain or loss o derecognition is recognised
in statement of profit and loss.
Financial assets at FVTPL: These assets are subsequently measured at fair value. Net gains and losses,
including any interest income, are recognised in the statement of profit and loss.
Debts investments at FVOCI: These assets are subsequently measured at fair value. Interest income under
the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or
loss. Other net gains and losses are recognised in OCI. On Derecognition, gains and losses accumulated in
OCI are reclassified to profit or loss.
Equity investments at FVOCI: These assets are subsequently measured at fair value. Dividends are
recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of
the investment. Other net gains and losses are recognised in oCi and are not reclassified to profit or loss.
Financial liabilities: classification, subsequent measurement & gain and loss
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as
at FVTPL if it is classified as held fortrading, or it is a derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any
interest expense, are recognised in the statement of profit and loss. Other financial liabilities are
subsequently measured at amortised cost using the effective interest method. Interest expense and foreign
exchange gains and losses are recognised in the statement of profit and loss. Any gain or loss on
derecognition is also recognised in the statement of profit and loss.
iii. Offsetting
Financial assets and monetary liabilities are offset and the net amount presented in the balance sheet when,
and only when, the Company currently has a legally enforceable right to set off the amounts and it intends
either to settle them on a net basis or to realise the assets and settle the liabilities simultaneously.
iv. Derecognition
Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial
asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which
substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the
Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not
retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but
retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets
are not derecognised.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or
cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under
the modified terms are substantially different. In this case, a new financial liability based on the modified
terms is recognised at fair value. The difference between the carrying amount of the financial liability
extinguished and the new financial liability with modified terms is recognised in the statement of profit and
loss.
v. Impairment of financial instruments:
The Company recognises loss allowances for expected credit losses on:¬
- Financial assets measured at amortised cost; and
- Financial assets measured at FVOCI- debt investments
At each reporting date, the Company assesses whether financial assets carried at amortised cost and debt
securities at FVOCI are credit impaired. A financial asset is ‘credit-impaired' when one or more events that
have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence
that a financial asset is credit- impaired includes the following observable data:
• significant financial difficulty of the borrower or issuer;
• a breach of contract such as a default or being past due for agreed credit period;
• the restructuring of a loan or advance by the Company on terms that the Company would not consider
otherwise;
• it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
• the disappearance of an active market for a security because of financial difficulties.
Expected credit loss:
Loss allowances for trade receivables are always measured at an amount equal to lifetime expected credit
losses.
Lifetime expected credit losses are the expected credit losses that result from all possible default events
over the expected life of a financial instrument.
12-month expected credit losses are the portion of expected credit losses that result from default events that
are possible within 12 months after the reporting date (or a shorter period if the expected life of the
instrument is less than 12 months).
In all cases, the maximum period considered when estimating expected credit losses is the maximum
contractual period over which the Company is exposed to credit risk.
When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating expected credit losses, the Company considers reasonable and
supportable information that is relevant and available without undue cost or effort. This includes both
quantitative and qualitative information and analysis, based on the Company's historical experience and
informed credit assessment and including forward looking information.
The Company assumes that the credit risk on a financial asset has increased significantly if it is more than
agreed credit period.
The Company considers a financial asset to be in default when:
• the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the
Company to actions such as realising security (if any is held); or
• the financial asset is past due and not recovered within agreed credit period.
Measurement of expected credit losses
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as
the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in
accordance with the contract and the cash flows that the Company expects to receive).
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying
amount of the assets disclosed in the Balance Sheet.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is
no realistic prospect of recovery. This is generally the case when the Company determines that the debtor
does not have assets or sources of income that could generate sufficient cash flows to repay the amounts
subject to the write-off. However, financial assets that are written off could still be subject to enforcement
activities in order to comply with the Company's procedures for recovery of amounts due.
The Company has adopted the new accounting standard Ind AS 116 “Leases” w.e.f April 1, 2019 as per
Companies (Indian Accounting Standards) amendment Rules, 2019, notified by MCA on March 30, 2019.
Ind AS 116 is a single lessee accounting model and sets out the principles for the recognition, measurement,
presentation and disclosure of leases for both lessees and lessors. On application of Ind AS 116, the nature
of expenses has changed from lease rent in previous periods to depreciation cost for the right-of-use assets
(ROU), and finance cost for interest accrued on lease liability.
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a
period in exchange for consideration.
As a lessee
At the commencement date of the lease the Company recognizes a lease liability measured at the present
value of the lease payments that are not paid at that date. The lease payments included in the measurement
of the lease liability consist of the payments for the right of use the underlying assets during the lease term
that are not paid at the commencement date of the lease.
The payments included in the measurement of the lease liability include fixed payments lessany lease
incentives receivable variable lease payments that depend on an index or a rate,initially measured using the
index or rate as at the commencement date, residual valueguarantees, exercise price of a purchase option
where the Company is reasonably certain toexercise that option and payments of penalties for terminating
the lease, if the lease termreflects the lessee exercising an option to terminate the lease.
The lease payments are discounted using the interest rate implicit in the lease, if that rate isreadily
determined, if that rate is not readily determined, the lease payments arediscounted using the incremental
borrowing rate.
The Company recognizes a right-of-use asset from a lease contract at the commencementdate of the lease,
which is the date that the underlying asset is made available for use.
The cost of the right-of-use assets comprises the amount of the initial measurement of thelease liability, any
initial direct costs incurred and any lease payments made at or before thecommencement date of the lease
less any lease incentives received. Subsequently, the rightof-use assets is measured at cost less any
accumulated depreciation and accumulatedimpairment losses, if any and adjusted for any re measurement
of the lease liability.
The right-of-use assets is depreciated using the straight-line method from thecommencement date over the
shorter of lease term or useful life of right-of-use asset.It also considers possible asset retirement
obligations in the cost of the right-of-use asset.
Right-of-use assets are subject to impairment testing in future periods.On date of transition, the Company
has applied the standard to its leases, retrospectively,with the cumulative effect of initially applying the
Standard and accordingly not restatedcomparative information, instead, the cumulative effect of initially
applying this standardhas been recognised as an adjustment to the opening balance of retained earnings as
on April1,2019.
The Company has also applied the following practical expedient provided by the standard when applying Ind
AS 116.
a) By measuring the assets at an amount equal to the lease liability, adjusted by the amount of any prepaid
or accrued lease payment recognized immediately before the date of initial applications.
b) The Company has applied a single discount rate to a portfolio of leases of similar assets in similar
economic environment, consequently, the Company has recorded the lease liability at the present value
of remaining lease payments, discounted using the incremental borrowing rate at the date of initial
application.
c) not to reassess whether a contract is or contains a lease, accordingly the definition oflease in accordance
with Ind AS 17 will continue to be applied to those leases entered ormodified before April 1,2019.
d) excluded the initial direct costs from measurement of the ROU asset.
e) Not to recognize ROU assets and lease liabilities for leases with less than twelve monthsof lease term
and low-value assets on the date of initial application
As a lessor
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms
of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is
classified as a finance lease. All other leases are classified as operating leases.
For operating leases, rental income is recognized on a straight line basis over the term of the relevant lease.
(x) Inventories
Inventoriescomprising of traded goods are measured at the lower of cost and net realisable value.The cost
of inventories is based on the first in, first out formula.
The Cost comprises all costs of purchases and other costs incurred in bringing the inventory to their present
location and condition. Net realisable value is the estimated selling price in the ordinary course of business
less estimated costs necessary to make the sale. The comparison of cost and net realisable value is made
on an item by item basis.
(xi) Employee Benefits
Short term employee benefits:
Short term employee benefit obligations are measured on an undiscounted basis and are expenses off as
the related services are provided. Benefits such as salaries, wages, and bonus etc. are recognised in the
statement of profit and loss in the year in which the employee renders the related service. The liabilities are
presented as current employee benefit obligation in thebalance sheet.
Long term employee benefits
Defined contribution plan: Provident fund
All employees of the Company are entitled to receive benefits under the Provident Fund, which is a defined
contribution plan. Both the employee and the employer make monthly contributions to the plan at a
predetermined rate as per the provisions of The Employees Provident Fund and Miscellaneous Provisions
Act, 1952. These contributions are made to the fund administered and managed by the Government of
India. The Company has no further obligations under the plan beyond its monthly contributions. Obligation
for contribution to defined contribution plan are recognised as an employee benefit expenses in statement
of profit and loss in the period during which the related services are rendered by the employees.
Defined Benefit Plan: Gratuity
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan.
The Company provides for retirement benefits in the form of Gratuity, which provides for lump sum
payments to vested employees on retirement, death while in service or on termination of employment in an
amount equivalent to 15 days basic salary for each completed year of service. Vesting occurs upon
completion of five years of service. Benefits payable to eligible employees of the company with respect to
gratuity is accounted for on the basis of an actuarial valuation as at the balance sheet date.
' The present value of such obligation is determined by the projected unit credit method and adjusted for past
service cost and fair value of plan assets as at the balance sheet date through which the obligations are to be
settled. The resultant actuarial gain or loss on change in present value of the defined benefit obligation or
change in return of the plan assets is recognised as an income or expense in the other comprehensive
income. The Company's obligation in respect of defined benefit plans is calculated by estimating the amount
of future benefit that employees have earned in the current and prior periods, discounting that amount and
deducting the fair value of any plan assets.
The Company's determines the net interest expense (income) on the net defined benefit liability (asset) for
the period by applying the discount rate used to measure the defined benefit obligation at the beginning of
the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net
defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net
interest expense and other expenses related to defined benefit plans are recognised in the statement of
profit and loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that
relates to past service (‘past service cost' or ‘past service gain') or the gain or loss on curtailment is
recognised immediately in the statement of profit and loss. The Company recognises gains and losses on
the settlement of a defined benefit plan when the settlement occurs.
Other long-term benefits: Compensated absences
Benefits under the Company's compensated absences scheme constitute other employee benefits. The
liability in respect of compensated absences is provided on the basis of an actuarial valuation using the
Projected Unit Credit Method. done by an independent actuary as at the balance sheet date. Actuarial gain
and losses arerecognised immediately in the statement of profit and loss.
Share based payments
The Employee Stock Option Scheme (‘the Scheme') provides for the grant of equity shares of the Company
to its employees. The Scheme provides that employees are granted an option to acquire equity shares of the
Company that vests in a graded manner. The options may be exercised within a specified period. The
Company uses the grant date fair value to account for its equity settled share based payment plans granted
to employee, with a corresponding increase in equity over the periodthat the employees unconditionally
become entitled to the awards.Compensation cost is measured using independent valuation by Black-
Scholes model. Compensation cost, if any is amortised over the vesting period.
The Ministry of Corporate Affairs issued amendments to Ind AS 19, ‘Employee Benefits', in connection with
accounting for plan amendments, curtailments and settlements requiring an entity to determine the current
service costs and the net interest for the period after the remeasurement using the assumptions used for the
remeasurement; and determine the net interest for the remaining period based on the remeasured net
defined benefit liability or asset. There is no impact on the financial statement due to this amendment.
(xii) Foreign exchange transactions and translations
Initial recognition
Foreign currency transactions are recorded in the reporting currency, by applying the foreign currency
amount of exchange rate between the reporting currency and foreign currency at the date of transaction.
Conversion
Foreign currency monetary assets and liabilities outstanding as at balance sheet date are
restated/translated using the exchange rate prevailing at the reporting date. Non-monetary assets and
liabilities which are measured in terms of historical cost denomination in foreign currency, are reported using
the exchange rate at the date of transaction except for non-monetary item measured at fair value which are
translated using the exchange rates at the date when fair value is determined.
Exchange difference arising on the settlement of monetary items or on restatement of the Company's
monetary items at rates different from those at which they initially recorded during the year or reported in
previous financials statement (other than those relating to fixed assets and other long term monetary
assets) are recognised as income or expenses in the year in which they arise.
Foreign operations:
The assets and liabilities of foreign operations are translated into INR the functional currency of the
Company, at the exchange rates at the reporting date. The income and expenses of foreign operations are
translated into INR at the exchange rates at the dates of the transaction or an average rate if the average
rate approximates the actual rate at the date of the transaction.
Income tax comprises current and deferred tax. It is recognised in the statement of profit and loss except to
the extent that it relates to a business combination or to an item recognised directly in equity or in other
comprehensive income.
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and
any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax
reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty,
if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted
by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the
recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or
simultaneously.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes.
Deferred tax is also recognised in respect of carried forward tax losses and tax credits. Deferred tax is not
recognised for;
- temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a
business combination and that affects neither accounting nor taxable profit or loss at the time of the
transaction;
- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available
against which they can be used. The existence of unused tax losses is strong evidence that future taxable
profit may not be available. Therefore, in case of a history of recent losses, the Company recognises a
deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing
other evidence that sufficient taxable profit will be available against which such deferred tax asset can be
realised. Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date and are
recognised/ reduced to the extent that it is probable/ no longer probable respectively that the related tax
benefit will be realised.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realized
or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting
date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which
the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and
liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on
different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets
and liabilities will be real.
On March 30, 2019, Ministry of Corporate Affairs has notified, Appendix C to Ind AS 12 which clarifies the
accounting for uncertainties in income taxes. The interpretation is to be applied to the determination of
taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is
uncertainty over income tax treatments under Ind AS 12. The company has adopted this amendment and
there is no impact on financial statement due to adoption of Appendix C to Ind AS 12.
The Company has also adopted the other amendments to “Ind AS 12” Income Tax w.e.f April 01, 2019, in
connection with accounting for dividend distribution tax and there is no impact on financial statement due to
this amendment.
Minimum alternate tax
Minimum Alternative Tax (‘MAT') credit entitlement under the provisions of the Income-tax Act, 1961 is
recognised as a deferred tax asset when it is probable that future economic benefit associated with it in the
form of adjustment of future income tax liability, will flow to the Company and the asset can be measured
reliably. MAT credit entitlement is set off to the extent allowed in the year in which the Company becomes
liable to pay income taxes at the enacted tax rates. MAT credit entitlement is reviewed at each reporting date
and is recognised to the extent that is probable that future taxable profits will be available against which they
can be used. Significant management judgement is required to determine the probability of recognition of
MAT credit entitlement.
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