B. MATERIAL ACCOUNTING POLICIES
Statement of Compliance
These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified
under the Companies (Indian Accounting Standards) Rules, 2015 (as amended). The financial statements have
also been prepared in accordance with the relevant presentation requirements of the Companies Act, 2013.
Basis of Preparation
The financial statements are prepared in accordance with the historical cost convention, except for certain items
that are measured at amortised cost or fair value, as explained in the accounting policies below. The financial
statements are presented in Indian Rupees (INR) which is also the Company's functional currency.
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, regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company
takes into account the characteristics of the asset or liability if market participants would take those characteristics
into account when pricing the asset or liability at the measurement date.
The preparation of financial statements in conformity with Ind AS requires management to make judgements,
estimates and assumptions that affect the application of the accounting policies and the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements,
and the reported amounts of revenues and expenses during the year. Actual results could differ from those
estimates.The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only that period;
they are recognised in the period of the revision and future periods if the revision affects both current and future
periods.
All assets and liabilities have been classified as current or non-current as per the Company’s normal operating
cycle and other criteria set out in the Schedule III to the Companies Act, 2013 and Ind AS 1 - Presentation
of Financial Statements based on the nature of business and the time between the acquisition of assets for
processing and their realisation in cash and cash equivalents. The Company has identified twelve months as
its operating cycle.
Property, Plant & Equipment
Property, plant & equipment (PP&E) are stated at cost of acquisition or construction less accumulated
depreciation and impairment, if any. For this purpose, cost includes deemed cost which represents the carrying
value of PP&E recognised as at 1st April, 2015 measured as per the previous Generally Accepted Accounting
Principles(GAAP).
Cost is inclusive of inward freight, duties and taxes and incidental expenses related to acquisition. In respect of
major projects involving construction, related pre-operational expenses form part of the value of assets capitalised.
Expenses capitalised also include applicable borrowing costs for qualifying assets, if any. Subsequent costs are
included in the asset’s carrying amount only when it meets the recognition criteria are met as per component
accounting. The carrying amount of a replaced part is derecognized. All other repairs and maintenance are
charged to the Statement of Profit & Loss.
An item of PP&E is derecognized upon disposal or when no future economic benefits are expected to arise
from the continued use of asset. Any gain or loss arising on the disposal or retirement of an item of PP&E is
determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised
in Statement of Profit & Loss.
Depreciation of these assets commences when the assets are ready for their intended use which is generally
on commissioning. Items of PP&E are depreciated in a manner that depreciates the cost of the assets after
commissioning (or other amount substituted for cost), less its residual value, over their useful lives as specified
in Schedule II of the Companies Act, 2013 on a straight-line basis.
PP&E’s residual values and useful lives are reviewed at each balance sheet date and changes, if any, are
treated as changes in accounting estimate.
Useful lives of different class of PP&E are as follows:
Impairment of Assets
Impairment loss is provided, if any, to the extent, the carrying amount of assets or cash generating units exceed
their recoverable amount.
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable.
Recoverable amount is higher of an asset’s fair value less costs of disposal and its value in use. Value in use is
the present value of estimated future cash flows expected to arise from the continuing use of an asset or cash
generating unit and from its disposal at the end of its useful life.
Impairment losses recognised in prior years are reversed when there is an indication that the impairment
losses recognised no longer exist or have decreased. Such reversals are recognised as an increase in carrying
amounts of assets to the extent that it does not exceed the carrying amounts that would have been determined
(net of amortisation or depreciation) had no impairment loss been recognised in previous years.
Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied
in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as
changes in accounting estimates.
Financial instruments, Financial Assets and Financial Liabilities
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual
provisions of the relevant instrument and are initially measured at fair value except for trade receivables that do
not contain a significant financing component, which are measured at transaction price. Transaction cost that
are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial
assets and financial liabilities measured at fair value through profit or loss) are added to or deducted from the
fair value on initial recognition of financial assets and financial liabilities. Purchase or sale of financial assets
that require delivery of assets within a time frame established by regulation or convention in the market place
(regular way trades) are recognized on the trade date, i.e., the date when the Company commits to purchase
or sell the asset.
Financial Assets:
Recognition: Financial assets includes Investments, Trade receivable, Advances, Security Deposits, Cash and
cash equivalents. Such Assets are initially recognized at fair value or transaction price, as applicable, when the
company becomes party to contractual obligations. The transaction price includes transaction cost unless the
assets is being fair valued through the Statement of Profit and Loss.
Classification: Management determines the classification of an asset at initial recognition depending on the
purpose for which the assets were acquired. The subsequent measurement of financial assets depends on such
classification.
Financial assets are classified as those measured at:
(a) Amortised cost, where the financial assets are held solely for collection of cash flows arising from payments
of principal and /or interest.
(b) Fair value through other comprehensive income (FVTOCI), where the financial assets are held not only
for collection of cash flows arising from payments of principal and interest but also from the sale of such
assets. Such assets are subsequently measured at fair value, with unrealised gains and losses arising
from changes in the fair value being recognised in other comprehensive income.
(c) Fair value through profit or loss (FVTPL), where the assets are managed in accordance with an approved
investment strategy that triggers purchase and sale decision based on fair value of such assets. Such
assets are subsequently measured at fair value. Unrealized gain and losses arising from changes in
the fair value, interest income and dividend income (if any),are recognised under ‘other income’ in the
Statement of Profit and Loss in the period in which they arise.
Trade receivable, Advances, Security Deposits, Cash and Cash equivalents etc., are classified for measurement
at amortised cost while Investment have been classified for measurement at Fair value through profit or loss
(FVTPL).
impairment: The Company assesses at each reporting date whether a financial asset (or group of financial
assets) such as investment, trade receivable, advances and security deposit held at amortised cost are tested
for impairment based on evidence or information that is available without undue cost or effort. Expected credit
losses are assessed and loss allowances recognized if the credit quality of the financial asset has deteriorated
significantly since initial recognition.
Reclassification: When and only when the business model is changed, the Company shall reclassify all
affected financial assets prospectively from the reclassification date as subsequently measured at amortised
cost, fair value through profit or loss without restating the previously recognized gains or losses and in terms of
the reclassification principles laid down in the Ind AS relating to Financial Instruments.
De-recognition: Financial assets are derecognized when the rights to receive benefits have expired or been
transferred, and the Company has transferred substantially all risks and rewards of ownership of such financial
asset.
Financial Liabilities
Trade payables and other financial liabilities are initially recognized at fair value and are subsequently measured
at amortised cost.
Financial liabilities are derecognized when the liability is extinguished, that is when the contractual obligation is
discharged, cancelled or expires.
Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount is included in the Balance Sheet where there is a
legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or
realise the asset and settle the liability simultaneously.
Revenue
1. Revenue is measured at the transaction price that the Company receives or expects to receive as
consideration for services rendered, net of discounts to customers and excludes taxes such as Goods and
Services Tax. Revenue from the sale of services is recognised when the Company performs its obligations
to its customers and the amount of revenue can be measured reliably and recovery of the consideration is
probable. Income from operating license fees is recognized on accrual basis in accordance with Operating
License agreement. The timing of such revenue recognition is in the periods in which such services are
rendered.
2. Interest Income is booked in the Statement of Profit and Loss using the effective interest method.
3. Dividend Income is recognised in the Statement of Profit and Loss when the right to receive dividend is
established.
Employee Benefits
Short-term employee benefits are expensed in the period in which the employee renders the related service on
an undiscounted basis. A liability is recognised for the amount expected to be paid within twelve months, if the
Company has a present legal or constructive obligation to pay the same as a result of past service provided by
the employee and the obligation can be reliably estimated.
The Company makes contributions to both defined benefit and defined contribution schemes.
Contributions to Provident Fund are in the nature of defined contribution scheme and such paid/payable amounts
are recognised as expense. The contributions in respect of provident fund and family pension are statutorily
deposited with the Government.
The Company also makes contribution to defined benefit gratuity plan. The cost of providing benefits under
the defined benefit obligation is calculated by independent actuary using the projected unit credit method. The
Company has taken a Policy with Life Insurance Corporation of India (LIC) to cover the gratuity liability with
respect to the employees and the premium paid to LIC is charged to Statement of Profit & Loss. The difference
between the actuarial valuation of the gratuity with respect to employees at the year-end and the contribution
paid to LIC is further adjusted in the books of accounts.
Employees Benefit w.r.t. Leave Encashment is considered as Employees Long Term Benefit, for which the
Company records the liability based on actuarial valuation computed under projected unit credit method. These
benefits are unfunded.
All such Employee Benefit expenditure/provisions are reimbursed by the Licensee as per the Operating License
Agreement.
Taxes on income
Taxes on income comprises of current tax and deferred tax. Current tax in the Statement of Profit and Loss is
provided as the amount of tax payable in respect of taxable income for the period using tax rates and tax laws
enacted during the period,together with any adjustment to tax payable in respect of previous years.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities
and the amounts used for taxation purposes (tax base), at the tax rates and tax laws enacted or substantively
enacted by the end of the reporting period.
Deferred tax assets are recognized for the future tax consequences to the extent it is probable that future
taxable profits will be available against which the deductible temporary differences can be utilized.
Deferred tax assets and liabilities are offset when there is legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on
net basis, or to realize the asset and settle the liability simultaneously
Dividend Distribution
Dividends paid (including income tax thereon) is recognised in the financial statements in the period in which
the interim dividends are approved by the Board of Directors or, in respect of the Company’s final dividend for
the year, when the same are approved by shareholders of the Company.
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