2. Material accounting policies
A summary of the material accounting policies applied in
the preparation of the Standalone Financial Statements
are as given below. These accounting policies have
been applied consistently to all periods presented in
the Standalone Financial Statements.
2.1. Basis of preparation
2.1.1. Compliance with Ind AS
All the Indian Accounting Standards issued under
section 133 of the Companies Act, 2013 and notified
by the Ministry of Corporate Affairs (MCA) under the
Companies (Indian Accounting Standards) Rules,
2015 (as amended) till the financial statements are
approved have been considered in preparation of
these Financial Statements.
2.1.2. Historical Cost Convention
The Standalone Financial Statements have been
prepared on the historical cost basis except for
the following:
• certain financial assets and liabilities and
contingent consideration is measured at
fair value.
• assets held for sale measured at fair value less
cost to sell.
• defined benefit plans - plan assets measured at
fair value.
Historical cost is generally based on the fair value of
the consideration given in exchange for goods and
services. The Financial Statements are presented in
Indian Rupees except where otherwise stated.
2.1.3. Use of estimates and judgements
The preparation of these financial statements in
conformity with the recognition and measurement
principles of Ind AS requires the management of
the Company to make estimates and judgements
that affect the reported balances of assets and
liabilities, disclosures relating to contingent
liabilities as at the date of the financial statements
and the reported amounts of income and expense
for the periods presented.
Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period
in which the estimates are revised and future
periods are affected.
2.2. Business combinations and goodwill
Business combinations are accounted for using the
acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration
transferred measured at acquisition date fair value
and the amount of any non-controlling interests in the
acquiree. For each business combination, the Company
elects whether to measure the non-controlling interests
in the acquiree at fair value or at the proportionate share
of the acquiree's identifiable net assets. Acquisition-
related costs are expensed as incurred.
At the acquisition date, the identifiable assets
acquired and the liabilities assumed are recognised
at their acquisition date fair values. For this purpose,
the liabilities assumed include contingent liabilities
representing present obligation and they are measured
at their acquisition fair values irrespective of the
fact that outflow of resources embodying economic
benefits is not probable. However, the following assets
and liabilities acquired in a business combination are
measured at the basis indicated below:
Deferred tax assets or liabilities, and the assets or
liabilities related to employee benefit arrangements
are recognised and measured in accordance with
Ind AS 12 - Income Taxes and Ind AS 19- Employee
Benefits respectively.
When the Company acquires a business, it assesses the
financial assets and liabilities assumed for appropriate
classification and designation in accordance with
the contractual terms, economic circumstances and
pertinent conditions as at the acquisition date.
If the business combination is achieved in stages, any
previously held equity interest is re-measured at its
acquisition date fair value and any resulting gain or loss
is recognised in profit or loss or OCI, as appropriate.
Goodwill is initially measured at cost, being the excess
of the aggregate of the consideration transferred and
the amount recognised for non-controlling interests,
and any previous interest held, over the net identifiable
assets acquired and liabilities assumed. If the fair value
of the net assets acquired is in excess of the aggregate
consideration transferred, then the gain is recognised in
OCI and accumulated in equity as capital reserve. After
initial recognition, goodwill is measured at cost less any
accumulated impairment losses.
Goodwill is tested for impairment annually, or more
frequently when there is an indication that the unit
may be impaired. Any impairment loss for goodwill
is recognised in profit or loss. An impairment
loss recognised for goodwill is not reversed in
subsequent periods.
2.3. 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:
a) Expected to be realised or intended to be sold or
consumed in normal operating cycle; or
b) Held primarily for the purpose of trading; or
c) Expected to be realised within twelve months after
the reporting period other than for (a ) above; or
d) 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:
a) It is expected to be settled in normal operating
cycle; or
b) It is held primarily for the purpose of trading; or
c) It is due to be settled within twelve months after
the reporting period other than for (a ) above; or
d) 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.
2.4. Fair value measurement
The Company measures financial instruments, such as
Investments 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.
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.
The Company categorises assets and liabilities measured
at fair value into one of three levels as follows:
• Level 1 — Quoted (unadjusted)
This hierarchy includes financial instruments
measured using quoted prices.
• Level 2
Level 2 inputs are inputs other than quoted prices
included within Level 1 that are observable for the
asset or liability, either directly or indirectly.
Level 2 inputs include the following:
a) quoted prices for similar assets or liabilities in
active markets.
b) quoted prices for identical or similar assets or
liabilities in markets that are not active.
c) i nputs other than quoted prices that are
observable for the asset or liability.
d) Market - corroborated inputs.
• Level 3
They are un-observable inputs for the asset or
liability reflecting significant modifications to
observable related market data or Company's
assumptions about pricing by market participants.
Fair values are determined in whole or in part using
a valuation model based on assumptions that are
neither supported by prices from observable
current market transactions in the same instrument
nor are they based on available market data.
2.5. Investments in subsidiaries and jointly controlled
entities
The Company records the investments in subsidiaries,
associates and joint ventures at cost.
When the Company issues financial guarantees on
behalf of subsidiaries associates and joint ventures,
initially it measures the financial guarantees at their fair
values and subsequently measures at the higher of the
amount of loss allowance determined as per impairment
requirements of Ind AS 109 and the amount recognised
less cumulative amortisation.
The Company records the initial fair value of financial
guarantee as deemed investment with a corresponding
liability recorded as deferred revenue. Such deemed
investment is added to the carrying amount of
investment in subsidiaries, associates and joint ventures.
Deferred revenue is recognised in the Statement of
Profit and Loss over the remaining period of financial
guarantee issued.
2.6. Non-current assets held for sale
The Company classifies non-current assets as held
for sale if their carrying amounts will be recovered
principally through a sale / distribution rather than
through continuing use and the sale is considered highly
probable. Management must be committed to the sale
within one year from the date of classification.
The Company treats sale to be highly probable when:
• The appropriate level of management is committed
to a plan to sell the asset,
• An active programme to locate a buyer and
complete the plan has been initiated,
• The assets (disposal group) is being actively
marketed for sale at a price that is reasonable in
relation to its current fair value,
• The sale is expected to qualify for recognition as
a completed sale within one year from the date of
classification, and
• Action required to complete the plan indicated that
it is unlikely that significant change to the plan will
be made or that the plan will be withdrawn.
Non-current assets held for sale are measured at the
lower of their carrying amount and the fair value less
costs to sell/distribute. Assets and liabilities classified
as held for sale/ distribution are presented separately in
the balance sheet.
Property, plant and equipment and intangible assets
once classified as held for sale / distribution to owners
are not depreciated or amortised.
2.7. Property Plant and Equipment
The Company had elected to continue with the carrying
value of all of its Property, Plant and Equipment (PPE)
recognised as of April 1,2015 (transition date) measured
as per the Previous GAAP and used that carrying value
as its deemed cost as of the transition date.
Items of PPE acquired/constructed are initially
recognised at actual cost. Actual cost is inclusive
of freight, installation cost, duties, taxes and other
incidental expenses for bringing the asset to its working
conditions for its intended use (net of eligible input
taxes) and any cost directly attributable to bring the
asset into the location and condition necessary for it to
be capable of operating in the manner intended by the
Management. It includes professional fee and borrowing
cost for qualifying assets.
Following initial recognition, freehold land is stated at
actual cost. All other items of PPE are stated at actual
cost less accumulated depreciation and impairment loss.
Amounts paid towards the acquisition of PPE
outstanding as of each reporting date and the cost of
PPE not ready for intended use before such date are
disclosed under capital advances and capital work-in¬
progress (CWIP) respectively.
Significant Parts of an item of PPE (including major
inspections) having different useful lives & material
value or other factors are accounted for as separate
components. All other repair and maintenance costs
are recognised in the Statement of Profit and Loss
as incurred.
Depreciation of these PPE commences when the assets
are ready for their intended use. PPE and intangible
assets are not depreciated or amortised once classified
as held for sale.
Depreciation is provided for on Buildings (including
buildings taken on lease) and Plant & Machinery on
straight line method and on other PPE on written down
value method on the basis of useful life. On assets
acquired on lease (including improvements to the
leasehold premises), amortisation has been provided
for on Straight Line Method over the period of lease.
The estimated useful lives and residual values are
reviewed on an annual basis and if necessary, changes
in estimates are accounted for prospectively.
Depreciation on subsequent expenditure on PPE arising
on account of capital improvement or other factors is
provided for prospectively over the remaining useful life.
Assets held under finance leases are depreciated over
their expected useful lives on the same basis as owned
assets or over the shorter of the assets useful life and the
lease term if there is an uncertainty that the Company
will obtain ownership at the end of the lease term.
An item of PPE is de-recognised upon disposal or when
no future economic benefits are expected to arise from
the continued use of the asset. Any gain or loss arising on
the disposal or retirement of an item of PPE is determined
as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in the
Statement of Profit and Loss.
2.8. Intangible Assets
a. Goodwill
Goodwill on acquisitions of subsidiaries is included
in intangible assets. Goodwill is not amortised
but it is tested for impairment annually, or more
frequently if events or changes in circumstances
indicate that it might be impaired and is carried at
cost less accumulated impairment losses.
b. Product Development and Intangible Assets
under Development
Research costs are expensed as incurred.
Development expenditures on an individual
project are recognised as an intangible asset when
the Company can demonstrate all the following: -
• The technical feasibility of completing the
intangible asset so that the asset will be
available for use or sale
• Its intention to complete and its ability and
intention to use or sell the asset
• How the asset will generate future
economic benefits
• The availability of adequate resources to
complete the development and to use or sell
of the asset, The ability to measure reliably
the expenditure attributable to the intangible
asset during development
Internally generated intangible asset arising
from development activity is recognised at cost
on demonstration of its technical feasibility, the
intention and ability of the Company to complete,
use or sell it, only if, it is probable that the asset
would generate future economic benefit and
to use or sell of the asset, adequate resources to
complete the development are available and the
expenditure attributable to the said assets during
its development can be measured reliably. In
which case such expenditure is initially recorded
as intangible assets under development and is
subsequently capitalised when the asset is ready
for its intended use.
Following initial recognition of the development
expenditure as an asset, the asset is carried at
cost less any accumulated amortisation and
accumulated impairment losses. Amortisation of
the asset begins when development is complete
and the asset is available for use. It is amortised
on straight line basis over the period of expected
future benefit, i.e. the estimated useful life of
the intangible asset. Amortisation expense is
recognised in the Statement of Profit and Loss.
During the period of development, the asset is
tested for impairment annually
c. Other Intangible assets:
The Company had elected to continue with
the carrying value of all of its Intangible Assets
recognised as of April 1, 2015 (transition date)
measured as per the Previous GAAP and used
that carrying value as its deemed cost as of the
transition date.
Cost of other intangible assets or software
comprises its purchase price, including any
import duties and other taxes (other than those
subsequently recoverable from the taxation
authorities), and any directly attributable
expenditure on making the asset ready for its
intended use. Subsequent expenditure after
its purchase is recognised as an expense when
incurred unless it is probable that such expenditure
will enable the asset to generate future economic
benefits in excess of its originally assessed
standards of performance and such expenditure
can be measured and attributed to the asset
reliably, in which case such expenditure is added
to the cost of the asset.
Intangible assets are measured on initial recognition
at cost. Following initial recognition, intangible
assets are carried at cost less any accumulated
amortisation and accumulated impairment losses.
An item of Intangible assets is derecognised upon
disposal or when no future economic benefits
are expected to arise from the continued use of
the asset. Any gain or loss arising on the disposal
or retirement of an item of Intangible assets are
determined as the difference between the sales
proceeds and the carrying amount of the asset and
is recognised in the profit or loss.
Licence Fee: Intangible assets consist of right under
licensing agreement are measured at cost as at the
date acquisition less accumulated amortisation and
impairment if any
Amortisation periods and methods: Intangible
assets are amortised on straight line basis over a
period ranging between 2-5 years which equates
its economic useful life.
2.9. Financial instruments
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity
2.9.1. Financial assets
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 (FVTPL), transaction costs
that are attributable to the acquisition of the financial
asset. However, trade receivables that do not contain
a significant financing component are measured at
transaction price. Purchases or sales of financial assets
that require delivery of assets within a time frame are
recognised on the trade date, i.e., the date that the
Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial
assets are classified in following categories based on
business model of the entity:
• Debt instruments at amortised cost
• Debt instruments at fair value through other
comprehensive income (FVTOCI)
• Debt instruments, derivatives and equity
instruments at fair value through profit or loss
(FVTPL)
• Equity instruments measured at fair value through
other comprehensive income (FVTOCI)
Debt instruments at amortised cost
A 'debt instrument' is measured at the amortised cost if
both the following conditions are met:
a) The asset is held within a business model whose
objective is to hold assets for collecting contractual
cash flows, and
b) Contractual terms of the asset give rise on specified
dates to cash flows that are solely payments
of principal and interest (SPPI) on the principal
amount outstanding.
After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method.
Debt instrument at FVTOCI
A 'debt instrument' is classified as at the FVTOCI if both
of the following criteria are met:
a) The objective of the business model is achieved
both by collecting contractual cash flows and
selling the financial assets, and
b) The asset's contractual cash flows represent SPPI
Debt instruments included within the FVTOCI category
are measured initially as well as at each reporting date
at fair value. Fair value movements are recognised in
the other comprehensive income (OCI). However, the
Company recognises interest income, impairment losses
& reversals and foreign exchange gain or loss in the P&L.
On derecognition of the asset, cumulative gain or loss
previously recognised in OCI is reclassified from the
equity to P&L. Interest earned whilst holding FVTOCI
debt instrument is reported as interest income using
the EIR method.
Debt instrument at FVTPL
Any debt instrument, that does not meet the criteria
for categorisation as at amortised cost or as FVTOCI, is
classified as at FVTPL.
In addition, the Company may elect to designate a debt
instrument, which otherwise meets amortised cost or
FVTOCI criteria, as at FVTPL. However, such election
is allowed only if doing so reduces or eliminates a
measurement or recognition inconsistency (referred
to as 'accounting mismatch'). The Company has not
designated any debt instrument as at FVTPL.
Debt instruments included within the FVTPL category
are measured at fair value with all changes recognised
in the P&L.
Debt Investment - Investment in subsidiaries and jointly
controlled entities are measured at cost less impairment
loss, if any.
Equity instruments
(i) Investment in subsidiaries and jointly controlled
entities are measured at costless impairment loss,
if any.
(ii) All other equity investments are measured at fair
value. For Equity instruments, the Company may
make an irrevocable election to present in other
comprehensive income subsequent changes
in the fair value. The Company makes such an
election on an instrument-by-instrument basis.
The classification is made on initial recognition and
is irrevocable.
I f the Company decides to classify an equity
instrument as at FVTOCI, then all fair value changes
on the instrument, excluding dividends, are
recognised in the OCI. This amount is not recycled
from OCI to P&L, even on sale of investment.
However, the Company may transfer the cumulative
gain or loss within equity.
Financial assets are measured at fair value through
profit or loss unless they are measured at amortised
cost or at fair value through other comprehensive
income on initial recognition. The transaction costs
directly attributable to the acquisition of financial
assets and liabilities at fair value through profit or
loss are immediately recognised in Statement of
Profit and Loss.
Equity instruments included within the FVTPL
category are measured at fair value with all changes
recognised in the Statement of Profit and Loss.
De-recognition
A financial asset is de-recognised only when
• The Company has transferred the rights to receive
cash flows from the financial asset or
• retains the contractual rights to receive the
cash flows of the financial asset, but assumes a
contractual obligation to pay the cash flows to one
or more recipients.
Where the Company has transferred an asset, it evaluates
whether it has transferred substantially all risks and
rewards of ownership of the financial asset. In such
cases, the financial asset is de-recognised.
Where the Company has neither transferred a financial
asset nor retains substantially all risks and rewards of
ownership of the financial asset, the financial asset is
de-recognised if the Company has not retained control
of the financial asset. Where the Company retains
control of the financial asset, the asset is continued to
be recognised to the extent of continuing involvement
in the financial asset.
Impairment of financial assets
The Company assesses at each date of balance sheet
whether a financial asset or a group of financial assets is
impaired. Ind AS 109 requires expected credit losses to
be measured through a loss allowance. In determining
the allowances for doubtful trade receivables, [the
Company has used a practical expedient by computing
the expected credit loss allowance for trade receivables
based on a provision matrix. The provision matrix takes
into account historical credit loss experience and is
adjusted for forward looking information. For all other
financial assets, expected credit losses are measured
at an amount equal to the 12-months expected credit
losses or at an amount equal to the life time expected
credit losses if the credit risk on the financial asset has
increased significantly since initial recognition.
ECL Impairment Loss allowance (or reversal) recognised
during the period is recognised as income/ expense in
the Statement of Profit and Loss (P&L)].
2.9.2. Financial liabilities
Financial liabilities and equity instruments issued by
the Company are classified according to the substance
of the contractual arrangements entered into and the
definitions of financial liability and an equity instrument.
Initial recognition and measurement
Financial liabilities are recognised when the Company
becomes a party to the contractual provisions of the
instrument. Financial liabilities are initially measured at
the amortised cost unless at initial recognition, they are
classified as fair value through profit and loss.
Subsequent measurement
Financial liabilities are subsequently measured at
amortised cost using the effective interest rate method.
Financial liabilities carried at fair value through profit or
loss are measured at fair value with all changes in fair
value recognised in the Statement of Profit and Loss.
These amounts represent liabilities for goods and
services provided to the Company prior to the end of
the financial period which are unpaid. Trade and other
payables are presented as current liabilities unless
payment is not due within 12 months after the reporting
period. They are recognised initially at their fair value
and subsequently measured at amortised cost using the
effective interest rate method.
Loans and borrowings
After initial recognition, interest-bearing loans
and borrowings are subsequently measured at
amortised cost using the EIR method. Gains and
losses are recognised in profit or loss when the
liabilities are derecognised as well as through the EIR
amortisation process.
Operational Buyers'/Supplier's Credit and Vendor
Financing
The Company enters into arrangements whereby banks
make direct payments to suppliers for raw materials. The
banks are subsequently repaid by the Company at a later
date providing working capital timing benefits. These
are normally settled between 120 days to 240 days. The
economic substance of the transaction is determined
to be operating in nature and these are recognised as
operational buyer's / suppliers' credit and disclosed
on the face of the balance sheet. Interest expense on
these are recognised in the finance cost. Payments
made by banks to the operating vendors are treated as
a non-cash item and settlement of due to operational
buyer's / suppliers' credit by the Company is treated as
an operating cash outflow reflecting the substance of
the payment.
Financial guarantee contracts
Financial guarantee contracts are recognised initially
as a liability at fair value, adjusted for transaction costs
that are directly attributable to the issuance of the
guarantee. Subsequently, the liability is measured at
the higher of the amount of loss allowance determined
as per impairment requirements of Ind AS 109 and the
amount recognised less cumulative amortisation.
Derecognition
Financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
2.10. Impairment of non-financial assets
The Company assesses, at each reporting date, whether
there is an indication that an asset may be impaired.
If any indication exists, or when annual impairment
testing for an asset is required, the Company estimates
the asset's recoverable amount. An asset's recoverable
amount is the higher of an asset's or cash-generating
unit's (CGU) fair value less costs of disposal and its value
in use.
Recoverable amount is determined for an individual
asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets
or group of assets.
When the carrying amount of an asset or CGU exceeds
its recoverable amount, the asset is considered impaired
and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows
are 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
asset. In determining fair value, less costs of disposal,
recent market transactions are taken into account. If
no such transactions can be identified, an appropriate
valuation model is used.
Impairment losses of continuing operations, including
impairment on inventories, are recognised in the
Statement of Profit and Loss.
A previously recognised impairment loss (except for
goodwill) is reversed only if there has been a change
in the assumptions used to determine the asset's
recoverable amount since the last impairment loss
was recognised. The reversal is limited to the carrying
amount of the asset.
2.11. Inventories
I nventories are valued at the lower of cost or net
realisable value. Costs incurred in bringing each product
to its present location and conditions are accounted for
as follows:
• Raw materials: Cost includes cost of purchase and
other costs incurred in bringing the inventories
to their present location and condition. Cost is
determined on Weighted Average Cost Method.
• Finished goods and work in progress: Cost includes
cost of direct materials and labour and a proportion
of manufacturing overheads based on the normal
operating capacity but excluding borrowing costs.
Cost is determined on Standard Cost Method.
• Traded goods: Cost includes cost of purchase and
other costs incurred in bringing the inventories
to their present location and condition. Cost is
determined on weighted average basis.
• Contract Work in Progress : It is valued at cost
• Loose Tools (Consumable) : It is valued at cost after
write-off at 27.82% p.a.
Net realisable value is the estimated selling price in
the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make
the sale.
2.12. Revenue recognition
A. Revenue is recognised upon transfer of control of
promised products or services to customers in an
amount that reflects the consideration that the
Company expects to receive in exchange for those
products or services.
B. Revenues in excess of invoicing are classified as contract
assets (which may also refer as unbilled revenue) while
invoicing in excess of revenues are classified as contract
liabilities (which may also refer to as unearned revenues).
C. The Company presents revenues net of indirect taxes in
its Statement of Profit and loss.
D. The following is a description of the principal activities
- separated by reportable segments - from which the
Company generates its revenue.
i. Telecom Products segments
The Telecom Product segments of the Company
principally generate revenue from sale of Optical
Fibre Cable, Optical Fibre and Telecom Equipment's.
Revenues from Products are recognised at a point
in time when control of the goods passes to the
customer, usually upon delivery of the goods.
ii. Defence Electronics Products and allied Services
This segment provides advanced communication
and surveillance technologies, offering a range of
products such as electronic fuzes, electro optics,
ground and coastal surveillance radars, tactical
cables and integrated wire harness solutions
designed for mission critical applications. Revenues
from Products are recognised at a point in time
when control of the goods passes to the customer,
usually upon delivery of the goods.
iii. Turnkey Contracts for System Integration and
allied Services
This segment of the Company generates revenue
from creating and delivering telecom infrastructure
and communication network systems for Telecom
Operators, Defence Services, Railways, Safe & Smart
Cities, Projects of Jal Jeevan Mission etc. Most of
the turnkey contracts include a standard warranty
clause to guarantee that telecom infrastructure
and communication network systems comply with
agreed specifications.
Revenue from Turnkey Projects/Contracts
is recognised over time as the performance
obligation is satisfied. This is because the customer
controls the asset as it is being constructed, and
the Company has an enforceable right to payment
for performance completed to date.
When the outcome of such contracts can be
estimated reliably, revenue is recognised using
the percentage of completion method, determined
by reference to the stage of completion of the
contract activity. The stage of completion is
measured based on work certified, which reflects
the Company's efforts or inputs toward fulfilling
the performance obligation
Contract revenue is recognised based on the
progress of work performed. If the revenue
recognised exceeds the amount billed to the
customer through interim or progressive invoices,
the difference is classified as a Contract Asset
(Unbilled Revenue). This represents the Company's
right to consideration for work completed but not
yet billed.
On the other hand, if the amount billed to the
customer exceeds the revenue recognised to
date, the excess is recorded as a Contract Liability.
This reflects the Company's obligation to perform
further work under the contract or refund excess
amounts received.
Customer prepayments—amounts received
in advance before performance obligations are
satisfied—are also presented as liabilities until the
related work is completed.
Retention money, which is the portion of the
contract amount withheld by the customer until
satisfactory completion of the project, is classified
as earnest money recoverable. It does not include a
significant financing element, as it primarily serves
as security for the proper execution of the contract.
• Contracts with government
The Company recognises revenue, when or as
control over distinct goods or services is transferred
to the customer; i.e. when the customer is able to
direct the use of the transferred goods or services
and obtains substantially all of the remaining
benefits provided a contract with enforceable
rights and obligations exists and amongst others
collectability of consideration is probable taking
into account our customer's credit worthiness.
Revenue is the transaction price the Company
expects to be entitled to.
I f a contract contains more than one distinct
good or service, the transaction price is allocated
to each performance obligation based on
relative standalone selling prices. If stand-alone
selling prices are not observable, then Company
reasonably estimates those. Revenue is recognised
for each performance obligation either at a point
in time or over time. Determining the timing of the
transfer of control at a point in time or over time
requires judgment.
If the Company has recognised revenue, but not
issued a bill, then the entitlement to consideration
is recognised as a contract asset. The contract asset
is transferred to receivables when the entitlement
to payment becomes unconditional.
Under certain turnkey contracts, customers do
not take control of the telecom infrastructure and
communication network systems until they are
completed. In such case, revenue is recognised on
formal acceptance by the customer.
• Warranty
Most of the turnkey contracts include a standard
warranty clause to guarantee that telecom
infrastructure and communication network
systems comply with agreed specifications. Based
on historical data and arrangement entered with
respective vendors of equipment's supplied under
contract, the Company recognises provisions for
this warranty.
• Financial Components
The transaction price is also adjusted for the effects
of the time value of money if the contract includes
a significant financing component and considering
practical expedient.
• Interest income
Interest income on deposits with banks is
recognised at effective interest rate applicable.
I nterest income from other financial assets is
recognised at the effective interest rate method
on initial recognition.
• Dividends
Dividend income is recognised when the right to
receive payment is established.
• Rental income
Rental income arising from operating leases or
on investment properties is accounted for on
a straight-line basis over the lease terms and is
included in other non-operating income in the
Statement of Profit and Loss.
• Insurance Claims
Insurance claims are accounted for as and when
admitted by the concerned authority.
• Export Incentives
The export incentives from the Government are
recognised at their fair value where there is a
reasonable assurance that the incentive will be
received and the company will comply with all
attached conditions.
2.13. Leases
As a lessee
The Company implemented a single accounting
model as per Ind AS 116 with effect from April 01, 2019,
requiring lessees to recognise assets and liabilities for
all leases excluding exceptions listed in the standard.
The Company elected to apply exemptions to short term
leases or for leases for which the underlying asset is of
low value.
Based on the accounting policy applied, the Company
recognises a right-of-use asset and a lease liability at
the commencement date of the contract for all leases
conveying the right to control the use of an identified
assets for a period of time. The commencement date is
the date on which a lessor makes an underlying asset
available for use by a lessee.
The right-of-use assets are initially measured at cost,
which comprises:
• the amount of the initial measurement of the lease
liability,
• any lease payments made at or before the
commencement date, less any lease incentives,
• any initial direct costs incurred by the lessee,
• an estimate of costs to be incurred by the lessee in
dismantling and removing the underlying assets or
restoring the site on which the assets are located.
After the commencement date the right-of-use assets
are measured at cost less any accumulated depreciation
and any accumulated impairment losses and adjusted for
any re-measurement of the lease liability. Depreciation
is calculated using the straight-line method over the
shorter of lease term or useful life of underlying assets.
The lease liability is initially measured at the present
value of the lease payments that are not paid at that
date. These include:
• fixed payments, less any 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;
• amounts expected to be payable by the lessee
under residual value guarantees;
• the exercise price of a purchase option if the lessee
is reasonably certain to exercise that option; and
• payments of penalties for terminating the lease,
if the lease term reflects the lessee exercising an
option to terminate the lease.
The lease payments exclude variable elements which are
dependent on external factors. Variable lease payments
not included in the initial measurement of the lease
liability are recognised directly in the profit and loss.
The lease payments are discounted using the Company's
incremental borrowing rate or the rate implicit in the
lease contract.
As a lessor
At the inception of the lease the Company classifies each
of its leases as either an operating lease or a finance
lease. The Company recognises lease payments received
under operating leases as income on a straight-line basis
over the lease term. In case of a finance lease, finance
income is recognised over the lease term based on a
pattern reflecting a constant periodic rate of return on
the lessor's net investment in the lease.
If an arrangement contains lease and non-lease
components, the Company applies Ind AS 115
Revenue from contracts with customers to allocate the
consideration in the contract.
2.14. Foreign currency transactions
The functional currency of the Company is Indian
Rupees which represents the currency of the economic
environment in which it operates.
Transactions in currencies other than the Company's
functional currency are recognised at the rates of
exchange prevailing at the dates of the transactions.
Monetary items denominated in foreign currency at the
year end are translated at the functional currency spot
rate of exchange at the reporting date.
Any income or expense on account of the exchange
difference between the date of transaction and on
settlement or on translation is recognised in the
Statement of Profit and Loss as income or expense.
Non-monetary items that are measured at fair value in
a foreign currency are translated using the exchange
rates at the date when the fair value was determined.
Translation differences on such assets and liabilities
carried at fair value are reported as part of fair value gain
or loss.
2.15. Employee Benefits
Employee benefit obligations are measured in
accordance with the principles of Ind AS 19 - Employee
Benefits. Changes in the present value of defined benefit
obligations resulting from legislative amendments are
treated as plan amendments. Past service cost arising
from such amendments is recognised immediately in
the Statement of Profit and Loss in the period in which
the amendment occurs.
Short-term employee benefits
Liabilities for wages and salaries and performance
incentives, 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. The liabilities are
presented as current employee benefit obligations in
the balance sheet.
The liability for earned leave is not expected to be settled
wholly within 12 months after the end of the period in
which the employees render the related service. They
are therefore measured at 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 as per
the actuarial valuation carried out at the end of each
annual reporting period. Actuarial gains and losses are
recognised in full in the standalone statement of profit
and loss in the period in which they occur.
Post-employment obligations
i. Defined contribution plans
Provident Fund and employees' state insurance
schemes:
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 (presently 12%)
of the employees' basic salary. These contributions
are made to the fund administered and managed
by the Government of India. In addition, some
employees of the Company are covered under the
employees' state insurance schemes, which are
also defined contribution schemes recognised and
administered by the Government of India.
The Company's contributions to both these
schemes are recognised as an expense in the
Statement of Profit and Loss. The Company has no
further obligations under these plans beyond its
monthly contributions.
ii. Defined benefit plans
Gratuity:
The Company provides for gratuity obligations
through a defined benefit retirement plan (the
'Gratuity Plan') covering all employees. The
Gratuity Plan provides a lump sum payment to
vested employees at retirement or termination of
employment based on the respective employee
salary and years of employment with the
Company. The Company provides for the Gratuity
Plan based on actuarial valuations in accordance
with Indian Accounting Standard 19 (revised),
"Employee Benefits "The Company makes periodic
contributions to the HDFC Standard Life Insurance
Company Ltd for the Gratuity Plan in respect of
employees. The present value of obligation under
gratuity is determined based on actuarial valuation
using Project 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.
Defined retirement benefit plans comprising of
gratuity, post-retirement medical benefits and
other terminal benefits, are recognised based on
the present value of defined benefit obligation,
which is computed using the projected unit credit
method, with actuarial valuations being carried out
at the end of each annual reporting period. These
are accounted either as current employee cost or
included in cost of assets as permitted.
iii. Actuarial gains and losses are recognised in OCI as
and when incurred.
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.
This cost is included in employee benefit expense
in the Statement of Profit and Loss.
Re-measurement, comprising actuarial gains
and losses, the effect of the changes to the asset
ceiling (if applicable) and the return on plan
assets (excluding net interest as defined above)
are recognised in other comprehensive income
except those included in cost of assets as permitted
in the period in which they occur and are not
subsequently reclassified to profit or loss.
The retirement benefit obligation recognised in
the Financial Statements represents the actual
deficit or surplus in the Company's defined benefit
plans. Any surplus resulting from this calculation
is limited to the present value of any economic
benefits available in the form of reductions in
future contributions to the plans.
Termination benefits
Termination benefits are recognised as an expense
in the period in which they are incurred.
2.16. Employee Share-based payments
The Company has adopted the policy to account for
Employees Welfare Trust as a legal entity separate
from the Company but consolidated in the Financial
Statement. Any loan from the Company to the Trust is
accounted for as a loan in accordance with its term.
The grant date fair value of options granted (net of
estimated forfeiture) to employees of the Company is
recognised as an employee benefits expense and those
granted to employees of subsidiaries is considered
as the Company's equity contribution and is added
to the carrying value of investment in the respective
subsidiaries, with a corresponding increase in equity,
over the period that the employees become entitled to
the options. The expense is recorded for each separately
vesting portion of the award as if the award was, in
substance, multiple awards. The increase in equity
recognised in connection with share-based payment
transaction is presented as a separate component
in equity under “share based payment reserve". The
amount recognised as an expense is adjusted to reflect
the actual number of stock options that are vested. For
the option awards, grant date fair value is determined
under the option-pricing model (Black-Scholes Merton).
Forfeitures are estimated at the time of grant and
revised, if necessary, in subsequent periods if actual
forfeitures materially differ from those estimates.
2.17. Borrowing Costs
Borrowing costs that are directly attributable to the
acquisition, construction or production of qualifying
assets are capitalised as part of cost of such asset. Other
borrowing costs are recognised as an expense in the
period in which they are incurred.
Borrowing costs consists of interest and other costs
that an entity incurs in connection with the borrowing
of funds.
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