1 Material Accounting Policies
(a) Statement of compliance and basis of preparation and presentation
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards notified under section 133 of the
Companies Act, 2013 read along with Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the
Act.
(b) Basis of measurement
The financial statements have been prepared on an accrual basis and in accordance with the historical cost basis except for certain financial
instruments which are measured at fair values.
(c) Measurement of fair values
A number of Company's accounting policies and disclosures require the measurement of fair values, both financial and non-financial assets and
liabilities.
Fair value measurements under Ind AS are categorized as below based on the degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value measurement in its entirety:
• Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at
measurement date;
• Level 2: Inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly;
• Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Above levels of fair value hierarchy are applied consistently and generally, there are no transfers between level of the fair value hierarchy unless
the circumstances change warranting such transfers.
(d) Use of estimates and judgements
The Financial Statements are prepared in conformity with Ind AS, which requires management to make judgements, estimates and assumptions.
This may affect the reported amount of assets, liabilities and disclosures of contingent liabilities on the date of the financial statements and the
reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Accounting estimates are reviewed at each Balance sheet date. Appropriate changes in estimates reflected in the financial statements in the
period in which revisions are made and future period affected.
(e) Operating cycle for current and non-current classification
Operating cycle for the current business activities of the Company covers the duration of the specific project / contract / product line / service
including the defect liability period wherever applicable and others are disclosed as non-current.
(f) Revenue recognition
The Company recognises revenue from the following major sources:
(i) Sale of products
(ii) Construction Contracts
Construction revenue and
Operations and maintenance Income
(iii) Revenue from land development
(i) Sale of products
The Company recognizes revenue from contracts with customers related to sale of goods, when the Company satisfies performance
obligation. Performance obligation are satisfied at the point of time when the customer obtains control of the goods. Indicators that control
has been transferred include, the establishment of the Company's present right to receive payment for the goods sold, transfer of legal title
to the customer, transfer of significant risks and rewards of ownership in the goods to the customer, and the acceptance of the goods by
the customer.
Control is considered to be transferred to customer when customer has ability to direct the use of such goods and obtain substantially all
the benefits from it and has the primary responsibility when on selling the goods and it bears the risks of obsolescence and loss in relation
to the goods.
(ii) Construction Contracts
The Company recognizes revenue from contracts with customers related to construction contracts over a period of time when the
Company's performance under contract does not create an asset with alternative use to the Company and the Company has enforceable
right to the payment for performance completed to date.
Contract revenue is recognised in Statement of profit and loss in proportion to the stage of completion of the contract. The stage of
completion is based on percentage of actual cost incurred / revenue recognised up to the reporting date to the total estimated cost /
estimated revenue of the contract. If the contract is in its early stage such that it may not be able to reasonably measure the outcome of a
performance obligation, but the Company expects to recover the costs incurred in satisfying the performance obligation, contract revenue
is recognised only to the extent of contract costs incurred that are likely to be recoverable.
Expected loss, if any, on the project is recognised as an expense in the period in which it is foreseen, irrespective of the stage of completion
of the contract
1 Performance obligation and transaction price (Fixed and Variable)
At inception of the contract, Company assesses the goods or services promised in a contract with a customer and identifies each
promise to transfer to the customer as a performance obligation which is either:
a. a good or service (or a bundle of goods or services) that is distinct; or
b. a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.
Based on the terms of the contract and as per business practice, the Company determines the transaction price considering
the amount it expects to be entitled in exchange of transferring promised goods or services to the customer. It excludes amount
collected on behalf of third parties such as taxes. To separate performance obligation/s and for allocating transaction price significant
judgement and estimates are applied.
The consideration includes both fixed and variable components. The fixed component refers to the contractually agreed price for
completing construction contract. The variable component mainly includes escalations, liquidated damages and reimbursement if
any. The Company estimates the amount of variable consideration based on current forecast information available by most likely
method, as appropriate, consistently throughout the contract when estimating the effect of an uncertainty on an amount of variable
consideration to which the Company will be entitled.
Variable consideration is included in the transaction price only to the extent that it is highly probable that a significant reversal in
the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is
subsequently resolved. This is assessed based on likelihood and the magnitude of the revenue reversal.
2 Contract modifications
Contract modifications are accounted for when there is change in contract scope or contract price. Modifications or variations are
recognised based on amount of estimate that the Company is entitled to and up to the extent that it is highly probable that significant
reversals in amount of cumulative revenue will not occur.
Further, contract variations are considered as a part of a single performance obligation that is partially satisfied at the date of contract
variations.
The effect that contract variation has on transaction price, and on the entities/ Company's measure of progress towards performance
obligation, is recognised on cumulative catch up basis.
3 Operation and Maintenance income
Revenue from Operation and Maintenance is recognised in the accounting period in which the services are rendered. Invoices are
issued according to contractual terms.
(iii) Revenue from land development
1. Revenue arising on sale and/or compulsory acquisition of the land, held by the Company as property, plant and equipment or
stock-in-trade is recognized, at the point of time, on transfer of the land, on execution of the transfer deed by the Company.
2. Sale of the developed property (Development of Land)
The Company enters into development agreement with developers for the development of its land parcels. The Development
Agreement will define obligation and rights of the Company and Developers. Generally the Company's obligation is to provide its
land and also provide necessary FSI/TDR required for utilization of maximum development potential. The land contributed for such
development is treated as stock-in-trade and cost of FSI/TDR along with any other direct costs required to be incurred for such
development, forms part of stock-in-trade in the books of account.
Revenue is recognized at the point of time when developed property or part thereof is transferred by way of handing over possession
on receipt of full consideration as per the terms of the Development Agreement.
If the Company retains developed property or part thereof in lieu of its share in sale consideration then revenue is recognized at the
point of time on receipt of actual possession or receipt of Occupancy Certificate (OC) whichever is earlier.
3. Any amount received from Developer before handing over the possession in terms of the development agreement is treated as
advance moneys and shown under the head “Current Liabilities”.
(iv) Dividend income
Dividend income from investment is recognised when the shareholder's right to receive the payment is established.
(v) Interest and other income
Interest income is accrued on a time basis, by reference to the principal outstanding and the applicable effective interest rate. Other income
is accounted for on accrual basis. Where the receipt of income is uncertain, it is accounted for on receipt basis
(vi) Government grants and subsidies
Government Grants and subsidies are recognised when there is reasonable assurance that the conditions attached to them will be complied
and grant / subsidy will be received.
(g) Property, plant and equipment (PPE)
PPE are stated at original cost less net of tax / duty credits availed, if any, accumulated depreciation, and provision for impairment of losses, if
any. Self-constructed / manufactured assets are capitalised at cost including appropriate overheads. Capital work in progress comprises of the
cost of PPE that are not yet ready for their intended use as at the reporting date.
(h) Investment property
Properties held to earn rentals and / or capital appreciation are classified as investment property and measured and reported at cost less
depreciation and provision for impairment of losses if any, including transaction costs.
(i) Depreciation and Amortisation
Depreciation on the property, plant and equipment and investment property is recognised using written down value method on pro-rata basis
as per the rates prescribed in Part C of Schedule II to the Companies Act, 2013. Individual low cost assets (acquired for ' 5000/- or less)
are depreciated fully in the year of acquisition. Depreciation method is reviewed at each financial year end to reflect the expected pattern of
consumption of future economic benefit. The estimated useful lives and residual values are also reviewed at each financial year end and the effect
of any change in the estimates of useful lives / residual values is accounted on prospective basis.
I ntangible assets are amortized over their respective individual estimated useful lives on a straight line basis commencing from the date the
assets are available to the Company for its use.
Depreciation charge for impaired assets is provided on the revised carrying amount of the assets over its remaining useful life.
The management's estimate of useful lives are in accordance with the Schedule II of the Companies Act 2013, other than following asset, based
on the Company's expected usage pattern :
Asset Useful life
Mould 9 years
Freehold land is not depreciated.
(j) Employee Benefits
A Defined Contribution Plan
a Company's contribution paid/payable during the year to Provident Fund, ESIC and Labour Welfare Fund are charged to statement of
profit & loss. There are no obligations other than the contribution payable to the respective trusts.
b Provident Fund: The eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution
plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees
salary. The contributions as specified under law are paid to provident fund and pension fund set up as irrevocable trust by the
Company or to respective Regional Provident Fund Commissioner and the Central Provident Fund under the State Pension Scheme.
The Company is generally liable for annual contributions and any shortfall in the fund assets based on government specified minimum
rates of return of provident fund and recognises such contributions and shortfall, if any, as an expense in the year incurred.
B Defined Benefit Plan
a Provident Fund: In respect of certain employees covered by the Employees Provident Fund, the contributions towards shortfall in
interest rate payable as per statute and the earnings of the Provident Fund Trust is considered as Defined Benefit Plan and debited to
Statement of Profit and Loss.
b Gratuity and Compensated absences: Company's liabilities towards gratuity and compensated absences are determined using the
projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and
measures each unit separately to build up the final obligation. Past Services are recognised on a Straight Line basis over the average
period until the amended benefits becomes vested. Actuarial gain and losses are recognised immediately in the statement of Profit
and Loss as Income or Expense.
c Obligation is measured at the present value of estimated future cash flows using a discount rate that is determined by reference to
market yields at the Balance Sheet date on Government bonds where the currency and terms of Government Bonds are consistent
with the currency and estimated terms of the defined benefit obligation.
(k) Financial instruments
Financial assets and / or financial liabilities are recognised when the Company becomes party to the contractual provisions of the financial
instruments.
A Financial assets
a Initial Recognition
In the case of financial assets, not recorded at fair value through profit or loss (FVTPL), financial assets are recognised initially at
fair value plus or minus transaction costs that are directly attributable to the acquisition or issue of the financial asset. Purchases
or sales 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 recognised on the trade date, i.e. the date that the Company commits to purchase or sell the asset.
However, trade receivables that do not contain significant financing component are measured at transaction price.
b Subsequent Measurement
For purposes of subsequent measurement, financial assets are classified in following categories:
Financial Assets at Amortised Cost
Financial assets are measured at amortised cost if these financial assets are held within a business model with an objective to hold
these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal amount outstanding. Interest income from these financial
assets is included in finance income using the effective interest rate (“EIR”) method. Impairment gains or losses arising on these
assets are recognised in the Statement of Profit and Loss.
Financial Assets Measured at Fair Value
Financial assets are measured at fair value through OCI if these financial assets are held within a business model with an objective to
hold these assets in order to collect contractual cash flows or to sell these financial assets and the contractual terms of the financial
asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue
and foreign exchange gains and losses which are recognised in the Statement of Profit and Loss. In respect of equity investments
which are not held for trading, the Company has made an irrevocable election to present subsequent changes in the fair value of
such instruments in OCI. Such an election is made by the Company on an instrument by instrument basis at the time of transition for
existing equity instruments / initial recognition for new equity instruments.
Financial asset not measured at amortised cost or at fair value through OCI is carried at FVTPL.
Impairment of Financial Assets
I n accordance with Ind AS 109, the Company applies the expected credit loss (“ECL’) model for measurement and recognition
of impairment loss on financial assets and credit risk exposures. The Company follows ‘simplified approach' for recognition of
impairment loss allowance on trade receivables and contract work-in-progress. Simplified approach recognises impairment loss
allowance based on lifetime ECL at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been
a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to
provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit
quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the
Company reverts to recognising impairment loss allowance based on 12-month ECL.
ECL is the difference between after contractual cash flows that are due to the Company in accordance with the contract and all the
cash flows that the entity expects to receive (i.e. all cash shortfalls), discounted at the original EIR. Lifetime ECL are the expected
credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion
of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the Statement of Profit
and Loss.
B Financial Liabilities
All financial liabilities including loans and borrowings are measured at amortised cost. A financial liability is derecognised when the related
obligation expires or is discharged or cancelled.
Financial liabilities issued by the Company are classified according to the substance of the contractual arrangements entered into and the
definitions of a financial liability.
C Equity Instruments
Equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the
definitions of an equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the Company
after deducting all of its liabilities. Equity instruments which are issued for cash are recorded at the proceeds received, net of direct issue
costs. Equity instruments which are issued for consideration other than cash are recorded at fair value of the equity instrument.
(l) Inventories
The stock of raw materials, stores and bought out goods are valued at cost (FIFO basis) or net realisable value whichever is lower.
Certain items of Pipe Laying and Auxiliary Equipment are classified as Loose Tools and 95% of their original cost is amortised equally over a
period of five years.
Finished Goods including bought-out items not allocated to any particular contracts are valued at lower of cost on absorption method or net
realisable value.
Uncovered finished pipes lying at Factory are devalued @25% annually.
Work-in-process is valued at cost or net realisable value whichever is lower.
Stock-in-trade of land is valued at cost or net realisable value whichever is lower.
(m) Earnings per Share
Basic earnings per share are calculated by dividing the profit or loss 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 profit or loss for the year
attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effect of all dilutive
potential equity shares.
(n) Taxation
Income tax expenses comprise of current tax, deferred tax charge/credit. Current tax is recognised on the basis of taxable income determined in
accordance with the provisions of the Income Tax Act, 1961.
The deferred tax credit/charge is recognised on all timing differences subject to consideration of prudence, applying the tax rates that have been
enacted or substantively enacted by the balance sheet date. Deferred tax assets are generally recognized for all taxable temporary differences to
the extent probable taxable profits that will be available against which those deductible temporary differences can be utilized. Deffered tax assets
/ liabilities are reviewed as at each balance sheet date based on developments during the year and then available legal positions to re-assess
realization / liabilities.
|