31. MATERIAL ACCOUNTING POLICIES:

GENERAL INFORMATION:

Dredging Corporation of India Limited ("DCIL"/ "the Company") is a Public limited Company incorporated and domiciled in India and has its Registered Office at Delhi and Corporate Office at Visakhapatnam. The Regional/Project offices are situated in different parts of the Country like Haldia, Kolkata, Cochin, Chennai, Mumbai etc.The Company's Securities are primarily listed on the BSE and NSE Limited.

The primary objective is catering to the dredging requirements of Ports, Navy etc., both in India and abroad. The principal activities of the Company comprise of providing the services of Capital Dredging, Maintenance Dredging, Beach Nourishment, Land Reclamation, Shallow and Inland water Dredging, Project Management Consultancy, Marine Construction."

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

1.1 STATEMENT OF COMPLIANCE:

These financial statements prepared in accordance with applicable Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time and other accounting principles generally accepted in India.

1.2 ACCOUNTING CONVENTION AND BASIS OF MEASUREMENT::

The Financial Statements have been prepared on the historical cost convention and on an accrual basis, except for the following material items that have been measured at fair values as required by the relevant Ind AS:

i) Certain Financial Assets and Liabilities (refer

accounting policy on financial instruments);

ii) Defined benefit and other long-term

employee benefits (Refer accounting policy on

Employee Benefits);

1.3 FUNCTIONAL AND PRESENATATION CURRENCY:

The financial statements are presented in Indian rupees, which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates. All financial information presented in Indian rupees has been rounded off to the nearest lakh of rupees except share and per share data.

2. USE OF ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS:

The preparation of the financial statements in conformity with IndAS requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, revenues and expenses and the disclosures of contingent assets and liabilities. Actual results may differ from those estimates.

Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any affected future periods.

Information about critical judgements in applying accounting policies, as well as estimates and assumptions in respect of the following areas, that have most significant effect on the carrying amounts within the next financial year are included in the relevant notes.

i) Useful lives of property, plant, equipment.

ii) Measurement of defined benefit obligations.

iii) Measurement and likelihood of occurrence of provisions and contingencies.

3. REVENUE RECOGNITION:

a) Revenue from contracts with customers that meet the recognition criteria under paragraph 9 of Ind AS 115 is recognised, when (or as) a performance obligation is satisfied by transferring a promised service to a customer, for the amount of the transaction price that is allocated to that performance obligation based on internal assessment/survey.

b) Transaction price is determined at fair value of the consideration received or receivable and is reduced for allowances wherever applicable as per the contract.

c) Satisfaction of a performance obligation and recognition of revenue at a point in time or over time in respect of Dredging Activities is recognised when, transfer of control of a service are made and, if one of the following criteria is met:

i) the customer simultaneously receives and consumes the benefits of dredging service provided by the DCIL.

ii) DCIL's performance creates or enhances an asset (for example, Capital Dredging) that the customer controls as the asset is created or enhanced; or

iii) DCIL's performance does not create an asset with an alternative use and DCIL has an enforceable right to payment for performance completed to date.

d) Claims against outside agencies other than those specified in clause (e) below are accounted for on certainty of realization.

e) In respect of hull and machinery insurance claims, the claim is accounted as claims recoverable from

underwriters on submission of average adjuster report to the underwriter under operational income. Necessary adjustments are made to the claims recoverable account as and when the actual claims are received from the underwriters. In respect of other insurance claims, the same are accounted for on realization /settlement of the same by the underwriters and is accounted under operational income.

f) Interest income is recognized on an accrual basis using the applicable interest rate.

g) All other revenue is recognised on certainty of realization.

4. OPERATIONAL EXPENSES:

a) All operational expenses are charged to revenue under accrual basis.

b) Final adjustments to insurance premium paid are considered in accounts on the basis of final demands/refunds received.

c) Expenses on account of general average claims/ damages to ships are written off in the year in which they are incurred.

5. PROPERTY, PLANT & EQUIPMENT:

a) Property, plant and equipment are measured at cost, less accumulated depreciation and impairment losses, if any.

b) The Cost of Property, Plant and Equipment includes those incurred directly for the construction or acquisition of the asset, and directly attributable to bringing it to the location and condition necessary for it to be capable of operating in the manner intended by the management and includes the present value of expected cost for dismantling / restoration wherever applicable.

c) Depreciation on cost of tangible assets less their 2% residual value for Dredgers, Ancillary craft buildings and Motor vehicles (other than freehold land, properties under construction,Computers,Furniture and Office Equipments and other operational assets) including those on leasehold premises is provided for under straight line method over the useful life of assets specified in Part C of Schedule II to the Companies Act, 2013 and in the manner specified therein. Assets costing less than Rs. 5,000/- are fully depreciated in the year of acquisition / purchase.

d) Depreciation methods, useful lives and residual values are reviewed at each reporting date and accounted for as change in accounting estimate.

read with the notification dated 9th August, 2012, the Company has opted for adjusting the exchange difference on the long-term foreign currency monetary items to the cost of the assets acquired out of these foreign currency items.

c) Other borrowing costs are treated as expense for the year.

d) Significant transaction costs in respect of longterm borrowings are amortized over the tenor of respective loans using effective interest rate (EIR) method.

L FOREIGN CURRENCY TRANSACTIONS:

a) Transactions relating to non-monetary items and purchase and sale of goods/services denominated in foreign currency are recorded at the prevailing exchange rate or a rate that approximates to the actual rate on the date of transaction.

b) Assets & liabilities in the nature of monetary items denominated in foreign currencies are translated and restated at exchange rates prevailing at the end of the reporting period.

c) Exchange differences arising on account of settlement / conversion of foreign currency monetary items are recognized as expense or income in the period in which they occur.

d) Foreign currency gains and losses are reported on a net basis.

3. INVENTORIES:

a) Stock of spares and stores is valued at lower of periodic weighted average cost and net realizable value.

b) Stores / Spares/ fuel / lubricants issued / delivered to crafts are charged off to statement of Profit and Loss, as and when consumed by respective crafts. However, spares consumed in Dry Dock are capitalised vide Policy on Property Plant & Equipment.

c) Service works in Progress are valued at lower of cost and net realizable value.

'. FINANCIAL INSTRUMENTS (Financial Assets and Financial

Liabilities):

a) All financial instruments are recognized initially at fair value. The classification of financial Instruments depends on the objective of the business model for which it is held and the contractual cash flows that are solely payments of principal and interest on the principal amount outstanding.

b) Subsequent measurement of Non- Derivative Financial Instruments:

i) Security Deposits, cash and cash equivalents, employee and other advances, trade receivables and eligible current and noncurrent financial assets are classified as financial assets under this clause.

ii) Loans and borrowings, trade and other payables including deposits collected from various parties and eligible current and noncurrent financial liabilities are classified as financial liabilities under this clause.

iii) Financial instruments are subsequently carried at amortized cost wherever applicable using Effective Interest Rate (EIR) method less impairment loss.

c) Impairment:

i) Financial Assets:

• Financial assets that are debt instruments, are measured at amortized cost wherever applicable for e.g., loans, debt securities, deposits, and bank balance.

• Trade receivables - The Company follows 'simplified approach' for recognition of impairment loss allowance on trade receivables which do not contain a significant financing component. The

application of simplified approach does not require the company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime Expected Credit Loss (ECL) at each reporting date, right from its initial recognition

ii) Non- Financial Assets:

• The company assesses at each reporting date whether there is any objective evidence that a non-financial asset or a group of non-financial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss.

0. EMPLOYEE BENEFITS:

a) Short Term Benefits

(i) All employee benefits falling due within twelve months of rendering the service are classified as short-term employee benefits. The cost of the benefits like salaries, wages, medical, leave travel assistance, short term compensated absences, bonus, exgratia, etc. is recognised as an expense in the period in which the employee renders the related service.

b) Post Employment Benefits

i) Defined Contribution Plans:

The contribution paid / payable under provident fund scheme, and employee postretirement medical benefits, pension (NPS) scheme is recognised as expenditure on the undiscounted amount of obligations of the company to contribute to the plan.

ii) Defined Benefit Plans:

The Company's obligation towards Gratuity is a defined benefit plan. The present value of the estimated future cash flows of the obligation under such plan is determined based on actuarial valuation using the Projected Unit Credit (PUC) method. Any difference between the interest income on plan assets and the

return actually achieved and any changes in the liabilities over the year due to changes in actuarial assumptions or experienced adjustments within the plan are recognized immediately in other comprehensive income and subsequently not reclassified to the statement of profit and loss.

All defined benefit plan obligations are determined based on valuation as at the end of the reporting period, made by independent actuary using the PUC Method. The classification of the Company's net obligation into current and non-current is as per the actuarial valuation report.

Hi) Other Long Term Benefit Plans:

The obligation for long term employee benefits such as long term compensated absences, is determined and recognised in the manner similar to that stated in the defined benefit plan.

c) Provision for Gratuity, Provident fund, Postretirement Medical and Pension benefits are funded with separate Trusts formed for the purpose.