Summary of Material Accounting Policies and Other Explanatory Information
(All amounts in ? Lakhs unless otherwise stated)
1. Nature of operations
Gayatri Highways Limited - GHL ("the Company") was incorporated during the year 2006 in accordance
with the provisions of Companies Act, 1956. The Company on its own and through its jointly controlled
entities is in the business of construction, operations and maintenance of carriage ways on toll and annuity
basis pursuant to the development agreements with the National and State Governments and makes
investments in companies engaged in the construction, operations and maintenance of roads, highways,
vehicle bridges and tunnels and toll roads. The registered office of the Company is located in 6-3-1090, 5th
Floor, A-Block, TSR Towers, Rajbhavan Road, Somajiguda, Hyderabad-500082.
2. Summary of material accounting policies
a) Basis of preparation of standalone financial statements
These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS)
under the historical cost convention on the accrual basis except for certain financial instruments which
are measured at fair values. The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of
the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards)
Amendment Rules, 2016. Unless otherwise stated, the accounting policies applied by the Group are
consistent with those used in the previous year.
All assets and liabilities have been classified as current or non-current as per the group's normal operating
cycle and other criteria set out in the Schedule III to the Act. Based on the nature of work and the time
between the acquisition of assets for processing and their realization in cash and cash equivalents, the
group has ascertained its operating cycle as up to twelve months for the purpose of current and non¬
current classification of assets and liabilities.
b) Use of esti mates
The preparation of the consolidated financial statements in conformity with Indian GAAP requires management
to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating
to contingent liabilities as at the reporting date of the financial statements and amounts of income and
expenses. Examples of such estimates include the provision for doubtful receivables, determination of
recoverable amounts of fixed assets, deferred tax assets, employee benefits and useful lives of fixed
assets.
Although these estimates are based on management's best knowledge of current events and actions, actual
results could differ from those estimates. Any revision to accounting estimates is recognised prospectively
in the current and future periods.
Significant accounting judgements, estimates and assumptions
The preparation of the Company's financial statements requires management to make judgements, estimates
and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the
accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these assumptions
and estimates could result in outcomes that require a material adjustment to the carrying amount of assets
or liabilities affected in future periods.
Estimates and assumptions
The The key assumptions concerning the future and other key sources of estimation uncertainty at the
reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year, are described below. The Company based its assumptions
and estimates on parameters available when the financial statements were prepared. Existing circumstances
and assumptions about future developments, however, may change due to market changes or circumstances
arising that are beyond the control of the Company. Such changes are reflected in the assumptions when
they occur.
c) Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is treated as current when it is:
- Expected to be realised or intended to be sold in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realised within twelve months after the reporting period; or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when it is:
- Expected to be settled in normal operating cycle;
- Held primarily for the purpose of trading;
- Due to be settled within twelve months after the reporting period; or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities. The Company has
identified twelve months as its operating cycle.
d) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company
and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is
measured at the fair value of the consideration received or receivable, taking into account contractually
defined terms of payment and excluding taxes or duties collected on behalf of the government.
Interest income: For all debt instruments measured either at amortised cost or at fair value through other
comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate
that exactly discounts the estimated future cash payments or receipts over the expected life of the financial
instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the
amortised cost of a financial liability. When calculating the effective interest rate, the company estimates the
expected cash flows by considering all the contractual terms of the financial instrument (for example,
prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest
income is included in finance income in the statement of profit and loss.
e) Earnings/(loss) per share
Basic earnings per share is calculated by dividing the net profit for the year attributable to equity shareholders
by the weighted average number of equity shares outstanding during the year. For the purpose of calculating
diluted earnings per share, the net profit for the year attributable to equity shareholders and the weighted
average number of equity shares outstanding during the year are adjusted for the effects of all dilutive
potential equity shares.
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