Note 1.2: Material Accounting Policy Information
(a) Basis of preparation
(i) Statement of compliance
These financial statements have been prepared in
accordance with the Indian Accounting Standards
(hereinafter referred to as the 'Ind AS') as notified by
Ministry of Corporate Affairs pursuant to Section 133 of
the Companies Act, 2013 ('Act') read with the Companies
(Indian Accounting Standards) Rules, 2015 as amended
and other relevant provisions of the Act.
The accounting policies are applied consistently to all the
periods presented in the financial statements.
(ii) Historical cost convention
The financial statements have been prepared on a historical
cost basis, except for the followings:
a) certain financial assets and liabilities that are measured
at fair value;
b) assets held for sale - measured at lower of carrying
amount or fair value less cost to sell;
c) defined benefit plans - plan assets measured at fair
value.
(iii) Current versus Non-current classification
The assets and liabilities in the Balance Sheet are based on
current/non-current classification.
The classification of assets and liabilities, wherever
applicable, are based on normal operating cycles of
different business activities of the Company, which are as
under:
(a) In case of Shipbuilding and Ship repair and Refit
activities, normal operating cycle is considered vessel
wise, as the time period from the effective date of
contract to the date of expiry of guarantee period.
(b) In case of other business activities, normal operating
cycle is 12 months.
An asset is classified as current when it is:
i. Expected to be realised or intended to be sold or
consumed in normal operating cycle,
ii. Held primarily for the purpose of trading,
iii. Expected to be realised within twelve months after
the reporting period, or
iv. Cash or cash equivalents 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 classified as current when it is:
i. Expected to be settled in normal operating cycle,
ii. Held primarily for the purpose of trading,
iii. Due to be settled within twelve months after the
reporting period, or
iv. There is no unconditional right to defer the settlement
of the liability for at least twelve months after the
reporting period.
All other liabilities are treated as non - current liabilities.
Deferred tax assets and liabilities are classified as non -
current assets and liabilities.
(iv) Rounding of amounts
All amounts disclosed in the financial statements and notes
have been rounded off to the nearest lakh as per the
requirement of Schedule III, unless otherwise stated.
(v) Functional and Presentation Currency
The Financial Statements are presented in Indian rupees
which is the functional currency for the Company.
(b) Property, Plant and Equipment
I. Property, Plant and Equipment are shown at cost, less
accumulated depreciation and impairment, if any.
(i) Cost of Property, Plant and Equipment, not ready for
their intended use as at each Balance Sheet date is
disclosed as Capital Work in Progress. It comprises of
supply cum erection contract, value of capital supplies
received at site and accepted, capital goods in transit
and under inspection and the cost of Property, Plant
and Equipment that are yet to be ready for their
intended use.
(ii) Cost means purchase price considered as cash
price after deducting trade discount, rebates and
adding duties, non-refundable taxes and costs
directly attributable to make the asset available for
intended use, other cost for replacing part of plant &
equipment and borrowed cost for long term project,
if the recognition criteria are met.
(iii) When a major inspection is performed, its cost is
recognised in the carrying amount of the plant and
equipment as a replacement if the recognition criteria
are satisfied. All other repair and maintenance costs
are recognised in profit or loss as incurred.
(iv) Where cost of the parts of a Property, Plant and
Equipment are significant and have different useful
lives, they are treated as separate component and
depreciated over their estimated useful lives.
(v) Addition to Assets individually costing ' 5000/- or less
are depreciated at 100% in the year when available
for use.
(vi) Spares purchased along with main asset are
depreciated over the estimated useful life of that
asset.
Transition to Ind AS
On transition to Ind AS, the Company has elected to
continue with the carrying value of all of its Property, Plant
and Equipment recognised as at 1 April, 2015 measured
as per the previous GAAP (Indian GAAP) and use that
carrying value as the deemed cost of the Property, Plant
and Equipment.
II. Retirement & De-recognition: Carrying amount of parts of
Property Plant and Equipment is derecognized on disposal
or when no future economic benefit is expected from its
use or disposal. Any Gain /loss arising from de recognition/
disposal/retirement of an item is recognized in Statement
of Profit & Loss of that reporting period
III. Jointly Funded Assets
Plant and equipment acquired with financial assistance from
outside agencies either wholly or partially are capitalised at
gross value.
On transition to Ind AS, the Company has opted for
exemption under Ind AS 101. Therefore, the Plant and
equipment which were capitalised, net of cost to the
Company have been carried forward to their net value.
Any addition made of such assets from 1 April, 2015 are
disclosed at gross value and are amortised over the useful
life of the respective item of Property, Plant and Equipment.
IV. Depreciation methods, estimated useful lives and
residual values
Depreciation is provided, under the Straight Line Method,
pro rata to the period of use, based on useful life specified
in Schedule II to the Companies Act, 2013 except the
following items, where useful life estimated on technical
assessment, past trends and expected useful life differ from
those provided in Schedule II to the Companies Act, 2013:
i. In respect of additions/extensions forming an integral
part of the existing assets, depreciation is provided
over residual life of the respective asset. Significant
additions which are required for replacement/
performed at regular interval are depreciated over the
useful life of the respective item of Property, Plant and
Equipment.
ii. Depreciation on Property, Plant and Equipment
a) Depreciation on the asset commences when
asset is available for use. It ceases at the earlier
of the date that the asset is classified as held
for sale and the date of de-recognition of the
asset. Depreciation is recognized to write off
the cost of asset (other than free hold land and
properties under construction) less their residual
values over their respective useful life.
b) The residual value is considered at the rate of
5% of the original cost of the respective assets
except computers & IT peripherals.
c) Computer & peripherals (excluding servers &
network equipment) are fully depreciated over
their useful life.
iii. The estimated useful life, residual value and
depreciation method are reviewed at the end of each
reporting period with the effect of any changes in
estimate accounted for on a prospective basis.
iv. In respect of assets whose useful life has been revised,
the unamortized depreciable amount has been
charged over the revised remaining useful life of the
assets.
v. Air Conditioners have been classified under the head
furniture & fixtures and useful life is considered as
applicable to furniture & fixtures under Schedule II to
Companies Act, 2013.
vi. Depreciation on second hand tangible assets is
charged on straight line method to write off 95%
of the cost over the estimated useful lives of such
asset based on the internal technical assessment and
evaluation.
(c) Non-current assets held for sale
Non-current assets are classified as held for sale if their carrying
amount will be recovered principally through a sale transaction
rather than through continuing use and a sale is considered
highly probable. They are measured at the lower of their carrying
amount and fair value less costs to sell, except for assets such
as deferred tax assets, assets arising from employee benefits
and financial assets, which are specifically exempt from this
requirement.
Non-current assets classified as held for sale and the assets of a
disposal group classified as held for sale are presented separately
from the other assets in the balance sheet. The liabilities of a
disposal group classified as held for sale are presented separately
from other liabilities in the Balance Sheet.
(d) Borrowing Costs
Borrowing costs (net of income earned on temporary deployment
of funds) that are directly attributable to acquisition, construction
or production of a qualifying asset are capitalised as a part of
the cost of such assets. Borrowing cost consists of interest,
other cost incurred in connection with borrowings of fund and
exchange differences to the extent regarded as an adjustment
to the borrowing cost. A qualifying asset is one that necessarily
takes substantial period of time to get ready for its intended use.
All other borrowing costs are charged to the Statement of Profit
and Loss.
(e) Impairment of Assets
Cash generating units as defined in Ind AS 36 on Impairment
of Assets are identified by technical evaluation. At the date
of balance sheet, if there are indications of impairment and
the carrying amount of the cash generating unit exceeds its
recoverable amount (i.e. the higher of the fair value less costs of
disposal and value in use), an impairment loss is recognized. The
carrying amount is reduced to the recoverable amount and the
reduction is recognized as an impairment loss in the Statement
of Profit and Loss.
The impairment loss recognized in the prior accounting period is
reversed if there has been a change in the estimate of recoverable
amount. Post impairment, depreciation is provided on the revised
carrying value of the impaired asset over its remaining useful life.
(f) Intangible Assets
Intangible Assets are stated at cost of acquisition less
accumulated amortization and accumulated impairment, if any.
Amortization is done over their estimated useful life on straight
line basis from the date they are available for intended use,
subject to impairment test. Software, which is not an integral
part of the related hardware is classified as an intangible asset
and is amortized over the useful life of 5 years. Licence fee for
specific period is amortised on straight line basis over the said
period.
Individual items of intangible assets valuing ' 5,000 or less are
fully amortized in the year of acquisition or available for use.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue
with the carrying value of all of its intangible assets recognised
as at 1 April, 2015 measured as per the previous GAAP (Indian
GAAP) and use that carrying value as the deemed cost of the
intangible assets.
(g) Research and Development
Capital expenditure on research and development is included
in intangible assets and revenue expenditure on research and
development is charged as expenditure in the year in which it is
incurred.
(h) Inventories
Inventory valuation is as per provisions of Ind AS 2. The cost is
determined as under:
i. Raw materials, components, stores and spares: At weighted
average cost.
ii. In-plant items: At standard cost.
iii. Equipment for specific projects, Stores in transit, materials
and other supplies: At cost.
iv. Obsolete, slow-moving and defective inventories are
identified at the time of physical verification and provisions
are made for such inventories wherever necessary.
(a) Project specific stores not moving for 4 years and
more from the date of delivery of a vessel are valued
at 50% of cost.
(b) Obsolescence is provided to the items for which shelf
life is expired, non-moving stores (other than project
specific) for 4 years and more and which may not be
required for further use.
v. All items of jobs in progress (including material held by
contractors) other than the Construction and Ship Repair
Contracts: At cost.
vi. Scrap: At estimated net realisable value.
vii. Inter-unit transfer items: At cost.
Note:
a) The cost of inventories comprise all costs of purchase,
costs of conversion and other costs incurred in bringing the
inventories to their present location and condition.
b) In-plant items are valued at standard cost for convenience
taking into account normal level of activity and are regularly
reviewed.
(i) Revenue Recognition
Keeping in view of applicable Ind AS 115, revenue from contracts
with customers is recognised when control of the goods or
services are transferred to the customer at an amount that
reflects the consideration to which the Company expects to be
entitled in exchange for those goods or services.
Revenue from Contracts is recognised when (or as) the entity
satisfies a performance obligation by transferring a promised
goods or service (i.e., an asset) to a customer. An asset is
transferred when (or as) the customer obtains control of that
asset.
The Company considers whether there are other promises in
the contract that are separate performance obligations. For
each performance obligation identified in the contract, the
Company determines at the inception of the contract whether
it satisfies the performance obligation over time or satisfies the
performance obligation at a point in time. If the Company does
not satisfy a performance obligation over time, the performance
obligation is satisfied at a point in time.
Revenue from Operations
(A) Revenue from Ship Construction, Ship Repair and Other
Construction Contracts :
(i) The Company transfers control of a goods or service
over time and, therefore, satisfies a performance
obligation and recognises revenue over time, if one of
the following criteria is met -
(a) the customer simultaneously receives and
consumes the benefits provided by the
Company's performance as the Company
performs; or
(b) the Company's performance creates or enhances
an asset (for example, work in progress) that
the customer controls as the asset is created or
enhanced; or
(c) The Company's performance does not create an
asset with an alternative use to the Company
and the Company has an enforceable right to
payment for performance completed to date.
(d) Ship Building Financial Assistance is recognised
over a period of time in respect of contracts
which are eligible under SBFA policy when the
management can reliably measure the probable
receipt of the same.
The Company recognises revenue for a
performance obligation satisfied over time
only if the entity can reasonably measure its
progress towards complete satisfaction of the
performance obligation.
Methods for Measuring Progress:
• Based on the nature of the goods, progress
w.r.t Ship Construction is recognized over time
using Input Method i.e. by comparing the actual
costs incurred to the total costs anticipated for
the entire contract. These estimates are revised
periodically.
• For ship repair contracts having defined
performance obligation, revenue is recognized
over time using Input Method i.e. by comparing
the actual costs incurred to the total costs
anticipated for the entire contract.
• For Ship repair contracts involving continuous
maintenance support, revenue is recognised by
using Output Method to measure its progress
based on time elapsed upto reporting date as
the same is representative of the satisfaction of
performance obligation subject to entitlement
of consideration in exchange of goods and/or
services.
(ii) Revenue from supply of B&D Spares is recognised
based on satisfaction of performance obligation at
point in time on proof of receipt of goods from Naval
Stores.
(iii) Revenue Recognition for Modification Jobs: In case
of modification jobs, revenue against completed
Modification jobs is recognised on the basis of Work
Done Certificate issued by appropriate authority and
for which Modification Cost for Approval is submitted
to the customer, duly recommended by onsite
representative of customer.
(B) Revenue from contracts for construction of diesel engine,
overhauling of diesel engine, and Helo -Traversing System
(a product of deck machinery) which involves designing,
engineering or constructing specifically designed products
and service contracts, is recognized over time using input
method. While other provisions attracting point over time,
the same is recognised on the basis as stated in (A) (i)
supra.
(C) Revenue from Bailey Bridge Contracts is satisfied at point
in time, as it does not meet the over-time criteria. Every
set of bridge supplied is a distinct good and a separate
performance obligation. Thus, the Company recognizes
revenue (including transportation) when the control is
transferred, that is when an entire set of bridge is delivered
to customer.
For Bailey Bridge Contracts having multiple performance
obligation such as the sale of Bailey Bridge, installation
service and construction of approach roads, free
maintenance service, project management service, etc., the
Company recognises revenue of performance obligation
related to sale of Bailey Bridge when the control of Bailey
Bridge is transferred. However, for other performance
obligations in the contract, revenue is recognised over time
using input method. While other provisions attracting point
over time, the same is recognised on the basis as stated in
(A) (i) supra.
(D) Revenue from sale of Deck Machinery (except Helo¬
Traversing System) is in substance similar to delivery of
goods which is recognised when control over the assets
that is subject of the contract is transferred to the customer
considering performance obligations being satisfied at a
point in time.
(E) Other operational revenue represents income earned from
activities incidental to the business which is recognised
when a right to receive the income is established when
performance obligation is satisfied as per terms of contract.
(F) When either party to a contract has performed, the
Company presents the contract in the balance sheet as
a contract asset or a contract liability, depending on the
relationship between the Company's performance and the
customer's payment.
Contract Assets: When the contract revenue recognized
by the company by satisfaction of performance obligation,
exceeds the performance obligation satisfied by the
customer by way of payment of consideration, is presented
as a Contract Assets.
Contract Liabilities: When the performance obligation
satisfied by the customer through payment of consideration
exceeds the contract revenue recognized by the company,
the difference is presented as a Contract Liabilities.
(G) Variable Consideration:
Variable considerations like discounts, rebates, refunds,
credits, price concessions, penalties (liquidated damages) or
other similar items in a Contract are accounted on the basis
of contractual provisions/ management estimation and the
net amount of consideration to which the company will be
entitled in exchange for transferring the promised goods or
services to a customer. The promised consideration can vary
if an entity's entitlement to the consideration is contingent
on the occurrence or non-occurrence of a future event
Other Income
(A) Interest income is recognised using the effective interest
rate (EIR). Interest income is included in "Other Income" in
the Statement of Profit and Loss and is accounted for on
accrual basis on time proportion on certainty of receipt. In
case of fixed deposits, interest is accounted when it accrues
to the Company by applying interest rate as applicable to
each fixed deposit.
(B) Other items are recognized on accrual basis.
Insurance Claims
Amounts due against insurance claims are accounted for on
accrual basis; in respect of claims which are yet to be finally
settled at the end of reporting date by the underwriter,
credits are reckoned, based on the Company's estimate of
the realisable value.
(j) Foreign currency transactions:
(i) Initial recognition
Foreign currency transactions are recorded in the functional
currency, by applying to the foreign currency amount, the
exchange rate between the functional currency and the
foreign currency at the date of the transaction.
(ii) Conversion
Foreign currency monetary items are reported using
the closing exchange rate as on the reporting date.
Non-monetary items which are carried at historical cost
denominated in a foreign currency are reported using
exchange rate at the date of the transaction. Advances paid
to foreign suppliers for material / services are treated as
non-monetary assets and consequently are reported using
exchange rate on the date of transaction.
(iii) Exchange difference
Exchange differences arising on the settlement of monetary
items or on reporting a company's monetary items at
rates different from those at which they were initially
recorded during the year, or reported in previous financial
statements, are recognized as income or as expenses in the
year in which they arise.
(k) Grants/Subsidy
i. Capital grants / Subsidies
Capital grants/Subsidies relating to specific assets are
disclosed at gross value and are amortised over the useful
life of the respective item of PPE.
ii. Revenue grants / Subsidies
Government grants related to revenue items are adjusted
with the related expenditure. If not related to a specific
expenditure, it is taken as income.
(l) Cash Flow Statement
Cash flows are reported using the indirect method, whereby
profit/loss before tax is adjusted for the effects of transactions
of a non-cash nature, any deferrals or accruals of past or future
operating cash receipts or payments and item of income or
expenses associated with investing or financing flows. The cash
flows from operating, investing and financing activities of the
Company are segregated.
(m) Cash and Cash Equivalents
Cash and cash equivalents include cash in hand, cheques in hand,
balance with banks in current accounts and short term, highly
liquid investments with an original maturity of three months or
less and which carry insignificant risk of changes in value.
(n) Financial Instruments
A financial instrument is a contract that gives rise to a financial
asset of one entity and a financial liability or equity instrument of
another entity.
Financial Assets
Classification
The Company classifies financial assets as subsequently measured
at amortised cost, fair value through Other Comprehensive
Income or fair value through profit or loss on the basis of its
business model for managing the financial assets and the
contractual cash flows characteristics of the financial asset.
Initial recognition and measurement:
All financial assets are recognised initially at fair value plus, in the
case of financial assets not recorded at fair value through profit
or loss, transaction costs that are attributable to the acquisition
of the financial asset.
Financial Assets measured at amortised cost:
Financial assets are measured at amortised cost when asset is
held within a business model, whose objective is to hold assets
for collecting contractual cash flows and contractual terms of
the asset give rise on specified dates to cash flows that are
solely payments of principal and interest. Such financial assets
are subsequently measured at amortised cost using the effective
interest rate (EIR) method. The losses arising from impairment
are recognised in the Statement of Profit and Loss. This category
generally applies to trade and other receivables.
Financial Assets measured at fair value through Other
Comprehensive Income (FVTOCI)
Financial assets under this category are measured initially as well
as at each reporting date at fair value. Fair value movements are
recognized in Other Comprehensive Income.
Financial Assets measured at fair value through profit or
loss (FVTPL)
Financial assets under this category are measured initially as well
as at each reporting date at fair value with all changes recognised
in profit or loss.
Impairment of financial assets
The Company assesses on a forward looking basis the expected
credit losses associated with its assets carried at amortised cost
and FVTOCI debt instruments. The impairment methodology
applied depends on whether there has been a significant increase
in credit risk. Note 34 discloses how the company determines
whether there has been a significant increase in credit risk.
Debts from Government / Government departments /
Government Companies are generally not treated as doubtful.
However, provisions are made in the Accounts on a case to case
review basis excepting those which are not contractually due.
Derecognition of Financial Assets
A financial asset is primarily derecognised when the rights to
receive cash flows from the asset have ceased or the Company
has transferred its rights to receive cash flows from the asset.
Financial Liabilities
Financial liabilities of the Company are contractual obligation
to deliver cash or another financial asset to another entity or
to exchange financial assets or financial liabilities with another
entity under conditions that are potentially unfavourable to the
Company.
The Company's financial liabilities include borrowings, trade and
other payables.
Classification, initial recognition and measurement
Financial liabilities are recognised initially at fair value minus
transaction costs that are directly attributable to the issue of
financial liabilities. Financial liabilities are subsequently measured
at amortized cost. Amortized cost is calculated by taking into
account any discount or premium on acquisition and fees or costs
that are an integral part of the effective interest rate (EIR). Any
difference between the proceeds (net of transaction costs) and
the redemption amount is recognised in the Statement of Profit
and Loss over the period of the borrowings using the effective
rate of interest.
Subsequent measurement
After initial recognition, financial liabilities are subsequently
measured at amortised cost using the EIR method. Gains and
losses are recognised in Statement of Profit or Loss when the
liabilities are derecognised as well as through the EIR amortisation
process.
The EIR amortisation is included as finance cost in the Statement
of Profit and Loss.
De-recognition of financial liability
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires. The difference
between the carrying amount of a financial liability that has
been extinguished or transferred to another party and the
consideration paid, including any non-cash assets transferred or
liabilities assumed, is recognised in profit or loss as other income
or finance cost.
(o) Fair Value Measurement
The Company measures financial instruments at fair value at
each balance sheet date.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction
to sell the asset or transfer the liability takes place either:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most
advantageous market for the asset or liability.
The principal or the most advantageous market must be
accessible by the Company.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing
the asset or liability, assuming that market participants act in
their best economic interest.
A fair value measurement of a non-financial asset takes into
account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by selling
it to another market participant that would use the asset in its
highest and best use.
The Company uses valuation techniques that are appropriate in
the circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within the
fair value hierarchy, described as follows, based on the lowest
level input that is significant to the fair value measurement as a
whole:
Level 1 — Quoted (unadjusted) market prices in active markets
for identical assets or liabilities;
Level 2 — Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable;
Level 3 — Valuation techniques for which the lowest level input
that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Company determines
whether transfers have occurred between levels in the hierarchy
by re-assessing categorisation (based on the lowest level input
that is significant to the fair value measurement as a whole) at
the end of each reporting period.
The Company determines the policies and procedures for
recurring fair value measurement, such as derivative instruments
and unquoted financial assets measured at fair value.
(p) Leases
In view of the implementation of Ind As 116, from 1 April 2019,
leases are recognised as a right-of-use asset and a corresponding
liability at the date at which the leased asset is available for
use by the company. Assets and liabilities arising from a lease
are initially measured on a present value basis. Lease liabilities
include the net present value of the fixed payments (including
in-substance fixed payments) and variable lease payment, if any,
that are based on an index or a rate, initially measured using the
index or rate as at the commencement date.
The lease payments are discounted using the interest rate
implicit in the lease. If the rate cannot be readily determined,
which is generally the case for leases in the company, the
lessee's incremental borrowing rate is used, being the rate that
the individual lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value to the right-of-use
asset in a similar economic environment with similar terms,
security and conditions.
To determine the incremental borrowing rate, the company:
a) Where possible, uses recent third-party financing received
by the individual lessee as a starting point, adjusted to
reflect changes in financing conditions since third party
financing was received.
b) Uses a build-up approach that starts with a risk-free interest
rate adjusted for credit risk for leases held by the company,
which does not have recent third-party financing, and
c) Makes adjustments specific to the lease, e.g. term, country,
currency and security.
Lease payments are allocated between principal and finance
cost. The finance cost is charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest on
the remaining balance of the liability for each period.
Right of use assets are measured at cost comprising the following:
a) the amount of the initial measurement of lease liability,
b) any lease payments made at or before the commencement
date less any lease incentive received, and
c) any initial direct costs
Right-of-use assets are generally depreciated over the asset's
useful life and the lease term on a straight-line basis. If the
company is reasonably certain to exercise a purchase option,
the right-of-use asset is depreciated over the underlying asset's
useful life.
Payments associated with short-term leases and all leases of low-
value assets are recognised on a straight-line basis as an expense
in profit or loss. Short-term leases are leases with a lease term of
12 months or less.
The Company as Lessor
The Company classifies leases as either operating or finance lease.
A lease is classified as a financial lease if the Company transfers
substantially all the risks and rewards incidental to ownership
of the Asset to the lessee, and classifies it as an operating lease
otherwise.
(q) Employee Benefits
I. Short-term obligations
Liabilities for wages and salaries, including non-monetary
benefits that are expected to be settled wholly within 12
months after the end of the period in which the employees
render the related service are recognised in respect of
employees' services up to the end of the reporting period
and are measured at the amounts expected to be paid
when the liabilities are settled.
II. Other long-term employee benefit obligations
The liabilities for earned leave and sick leave that are
not expected to be settled wholly within 12 months
are measured as the present value of expected future
payments to be made in respect of services provided by
employees up to the end of the reporting period using the
projected unit credit method. The benefits are discounted
using the yield on Government Securities (G-Sec) at the end
of the reporting period that have terms approximating to
the terms of the related obligation. Remeasurements as a
result of experience adjustments and changes in actuarial
assumptions are recognised in the Statement of Profit and
Loss.
III. Post-employment Obligations
The Company operates the following post-employment
schemes:
(a) defined benefit plans such as gratuity, Provident Fund
and post-retirement medical scheme ; and
(b) defined contribution plans such as pension scheme.
Gratuity
Gratuity Fund, a defined benefit scheme, is administered
through duly constituted independent Trust and yearly
contributions are based on actuarial valuation. Any
additional provision as may be required, is provided for
on the basis of actuarial valuation as per Ind AS -19 on
Employee Benefits.
The liability or asset recognised in the Balance Sheet in
respect of defined benefit gratuity plan is the present value
of the defined benefit obligation at the end of the reporting
period less the fair value of plan assets. The defined benefit
obligation is calculated annually by actuaries using the
projected unit credit method.
The present value of the defined benefit obligation is
determined by discounting the estimated future cash
outflows by reference to market yields at the end of the
reporting period on government bonds that have terms
approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount
rate to the net balance of the defined benefit obligation
and the fair value of plan assets.
Re-measurement gains and losses arising from experience
adjustments and changes in actuarial assumptions are
recognised in the period in which they occur, directly in
Other Comprehensive Income. They are included in retained
earnings in the Statement of Changes in Equity and in the
Balance Sheet.
Post-Retirement Medical Scheme
The post-retirement medical benefit to the existing
employees is a defined benefit plans and is determined
based on actuarial valuation as per Ind AS -19 on Employee
Benefits using Projected Unit Credit Method which
recognises each period of service as giving rise to additional
unit of employee benefit entitlement and measures each
unit separately to build up the final obligation.
Remeasurement gains and losses arising from experience
adjustments and changes in actuarial assumptions are
recognised in the period in which they occur, directly in
Other Comprehensive Income. They are included in retained
earnings in the Statement of Changes in Equity and in the
Balance Sheet.
Post-retirement medical benefits in the case of the super
annuated employees are defined contribution schemes and
premium paid to an Insurance company is charged to the
Statement of Profit and Loss of the year.
Provident Fund and Pension Scheme
Eligible employees receive benefits from a provident
fund, which is a defined benefit plan. Both the eligible
employee and the Company make monthly contributions
to the provident fund plan equal to specified percentage
of covered employee's salary. The rate at which the annual
interest is payable to the beneficiaries by the trust is being
administered by the government. The Provident Fund Trust
of the Company has to declare interest on the Provident
Fund at a rate not less than that declared by the Employees
Provident Fund Organization. In case, the trust is not able
to meet the interest liability, Company has to make good
the shortfall. Since, the plan is defined benefit plan, the
Company has got the same actuarially valued. In case,
the additional liability is needed for the year, the same is
provided.
Pension Fund
Defined contribution to Superannuation Pension Scheme
is charged to statement of Profit & Loss at the applicable
contribution rate as per approved Pension scheme.
(r) Dividend to Equity Shareholders
Dividend to Equity Shareholders is recognised as a liability and
deducted from shareholders equity, in the period in which
dividends are approved by the equity shareholders in the general
meeting. In case of Interim dividend, the same is recognised as
a liability and deducted from shareholders equity in the period in
which interim dividend are approved by the Board of Director.
(s) Provision for Current & Deferred Tax
Income tax expense comprises current and deferred tax. It is
recognised in the Statement of Profit and Loss except to the
extent that it relates to items recognised directly in Equity or in
Other Comprehensive Income, in which case it is recognized in
Equity or in Other Comprehensive Income, as applicable.
i. Current Tax
Current tax comprises of the expected tax payable or
receivable on the taxable income for the year and any
adjustment to the tax payable or receivable in respect of
the previous years. It is measured using tax rates enacted
or substantively enacted at the reporting date.
Current tax assets and liabilities are offset only if, the
Company:
• has a legally enforceable right to set off the recognised
amounts; and
• intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
ii. Deferred Tax
Deferred tax is recognized for the future tax consequences
of deductible temporary differences between the carrying
values of assets and liabilities and their respective tax base
at the reporting date, using the tax rates and laws that
are enacted or substantively enacted as on reporting date.
Deferred tax assets are recognized to the extent that it
is probable that future taxable income will be available
against which the deductible temporary differences,
unused tax losses and credits can be utilised. Deferred
tax relating to items recognised in Other Comprehensive
Income and directly in equity is recognised in correlation to
the underlying transaction.
Deferred tax assets and liabilities are offset only if:
a. Entity has a legally enforceable right to set off current
tax assets against current tax liabilities; and
b. Deferred tax assets and the deferred tax liabilities
relate to the income taxes levied by the same taxation
authority.
(t) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit
or loss for the period attributable to equity shareholders by the
weighted average number of equity shares outstanding during
the period. The weighted average number of equity shares
outstanding during the period is adjusted for events of bonus
issue; bonus element in a rights issue to existing shareholders;
share split; and reverse share split (consolidation of shares).
For the purpose of calculating diluted earnings per share, the net
profit or loss 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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