2. Material Accounting Policies
A summary of the material accounting policies adopted in the
preparation of the financial statements are as given below.
These accounting policies have been applied consistently to
all periods presented in the financial statements.
2.1 Statement of Compliance
The financial statements have been prepared on going concern
basis following accrual system of accounting in accordance
with the Indian Accounting Standards ('Ind AS') notified under
the Companies (Indian Accounting Standards) Rules 2015 and
subsequent amendments thereto, read with Section 133 of
the Companies Act, 2013 and other Accounting principles
generally accepted in India.
These Standalone Financial Statements have been approved
by Board of Directors (BOD) of the company on 28.04.2025.
2.2 Basis for preparation of financial statements
The financial statements have been prepared on the historical
cost basis except for certain financial instruments that are
measured at fair values at the end of each reporting period, as
explained in the accounting policies below. Unless otherwise
stated, all amounts are stated in Crore of Rupees.
Historical cost is the amount of cash or cash equivalents paid
or the fair value of the consideration given to acquire assets
at the time of their acquisition or the amount of proceeds
received in exchange for the obligation, or at the amounts of
cash or cash equivalents expected to be paid to satisfy the
liability in the normal course of business.
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. Fair value for measurement
and/or disclosure purpose in these financial statements is
determined on such basis except for, leasing transactions that
are within the scope of Ind AS 17, and measurements that
have some similarities to fair value but are not fair value.
In addition, for financial reporting purposes fair value
measurements are categorized into Level 1, 2 or 3 based on the
degree to which the inputs for the fair value measurements are
observable and the significance of the inputs to the fair value
measurements in its entirety, which are described as follows:
• Level 1 - Inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity
can access at the measurement date;
• 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; and
• Level 3- inputs are unobservable inputs for the
asset or liability.
2.3 Use of estimates
The preparation of financial statements requires management
to make judgments, estimates and assumptions that may
impact the application of accounting policies and the
reported value of assets, liabilities, income, expenses and
related disclosures concerning the items involved as well as
contingent assets and liabilities at the balance sheet date.
The estimates and management's judgments are based on
previous experience & other factors considered reasonable
and prudent in the circumstances. Actual results may differ
from these estimates.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimates are revised
and in any future periods affected.
In order to enhance understanding of the financial statements,
information about material areas of estimation, uncertainty
and critical judgments in applying accounting policies that
have the most material effect on the amounts recognized in
the financial statements is as under:
a) Formulation of accounting policies
The accounting policies are formulated in a manner that
results in financial statements containing relevant and
reliable information about the transactions, other events and
conditions to which they apply. Those policies need not be
applied when the effect of applying them is immaterial.
b) Post-employment benefit plans
Employee benefit obligations are measured on the basis
of actuarial assumptions which include mortality and
withdrawal rates as well as assumptions concerning
future developments in discount rates, the rate of salary
increases and the inflation rate. The Company considers
that the assumptions used to measure its obligations are
appropriate and documented. However, any changes in
these assumptions may have a material impact on the
resulting calculations.
c) Provisions and contingencies
The assessments undertaken in recognizing provisions
and contingencies have been made in accordance
with Ind AS 37 'Provisions, contingent liabilities and
contingent assets'. The evaluation of the likelihood of
the contingent events has required best judgment by
management regarding the probability of exposure to
potential loss. Should circumstances change following
unforeseeable developments, this likelihood could alter.
d) Income taxes
Material estimates are involved in determining the
provision for income taxes, including amount expected
to be paid/ recovered for uncertain tax positions.
2.4 Revenue
Company's revenues arise from lease income, dividend
income, interest on lease advance, loans, deposits and
investments. Revenue from other income comprise
miscellaneous income etc.
Rental income from operating lease is recognised on a
straight-line basis over the term of the relevant lease. Finance
lease income in respect of finance leases is allocated to the
accounting periods so as to reflect a constant periodicrate of
return on the net investment outstanding in respect of the
lease.(Also see accounting policy on leases at 2.14).
Interest income from financial assets is recognised when it is
probable that the economic benefits will flow to the Company
and the amount of income can be measured reliably. Interest
income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable,
which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to that
asset's net carrying amount on initial recognition.
Pre-commencement lease-interest income is determined
based on the MOU entered with Ministry of Railways and
when it is probable that the economic benefits will flow to the
Company and the amount can be determined reliably.
Dividend income is recognized in profit or loss only when
the right to receive the payment is established, it is probable
that the economic benefits associated with the dividend will
flow to the Company, and the amount of the dividend can be
measured reliably.
2.5 Foreign Currency Transaction
Functional and presentation currency
Items included in the financial statements of entity are
measured using currency of the primary economic environment
in which the entity operates ('the functional currency'). The
financial statements are presented in Indian rupee (INR),
which is entity's functional and presentation currency.
Transactions and Balances
Transactions in foreign currencies are initially recorded at
their respective functional currency spot rates at the date the
transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot rates
of exchange at the reporting date.
Differences arising on settlement or translation of monetary
items are recognised in profit or loss.
Non-monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange
rates at the dates of the initial transactions. Non-monetary
items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair
value is determined. The gain or loss arising on translation of
non-monetary items measured at fair value is treated in line
with the recognition of the gain or loss on the change in fair
value of the item.
2.6 Employee Benefits
Defined contribution plan
A Defined contribution plan is a post-employment benefit plan
under which the company pays fixed contributions in respect
of the employees into an independent fund administrated
by the government/ pension fund manager and will have
no legal or constructive obligation to pay further amounts
after its payment of the fixed contribution. Obligations for
contributions to defined contribution plans are recognized as
an employee benefit expense in statement of profit and loss in
the period during which services are rendered by employees.
The company has a defined contribution plan which includes
pension scheme and provident fund scheme. Company's
contribution towards provident fund and pension scheme
for the year are recognised as an expense and charged to the
statement of profit and loss.
Defined benefit plan
A defined benefit plan is a post-employment benefit plan
other than a defined contribution plan. The company's liability
towards gratuity and post-retirement benefits such as medical
benefits are in the nature of defined benefits plans.
The company's net obligation in respect of defined benefit
plans is determined using the projected unit credit method,
with actuarial valuations being carried out at the end of
reporting period. Actuarial gain/loss on re-measurement
of gratuity and other post-employment defined plans are
recognised in other comprehensive income (OCI). Past service
cost is recognised in the statement of Profit and Loss account
in the period of a plan amendment.
Other long-term employee benefits
The company's obligation towards leave encashment and
employee family benefit scheme are in the nature of other long
term employee benefits. Liability in respect of compensated
absences becoming due or expected to be availed more than
one year after the balance sheet date and employee family
benefit scheme are estimated on the basis of an actuarial
valuation performed by an independent actuary using the
projected unit credit method.
Actuarial gains and losses arising from past experience and
changes in actuarial assumptions are charged to statement
of profit and loss in the period in which such gains or losses
are determined.
Short-term employee benefits
Short term employee benefits such as salaries and wages
are recognised on undiscounted basis in the statement of
Profit and Loss account, on the basis of the amount paid or
payable for the period during which services are rendered
by the employee.
2.7 Taxation
Tax expense comprises Current Tax and Deferred Tax.
Current Tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from 'profit before tax' as reported
in the Statement of Profit and Loss because of items of income
or expense that are taxable or deductible in other years and
items that are never taxable or deductible.
The Company's current tax is calculated using tax rates that
have been enacted or substantively enacted by the end of the
reporting period.
Current tax is recognised in profit or loss, except when they
relate to items that are recognised in other comprehensive
income or directly in equity, in which case, the current tax is
also recognised in other comprehensive income or directly in
equity respectively.
The Company is exercising the irrevocable option as permitted
by section 115BAA of the Income - tax Act, 1961 whereby by
foregoing certain exemptions, deductions and allowances, the
tax rate applicable to the Company is lower than the normal
tax rate that would have been otherwise applicable to the
Company. Henceforth, minimum alternate tax provisions of
section 115JB of the Income - tax Act, 1961 are not applicable
to the Company.
Deferred Tax
Deferred tax is recognized using the balance sheet method,
providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, based
on the laws that have been enacted or substantively enacted
by the reporting date. Deferred tax assets and liabilities are
offset if there is a legally enforceable right to offset current
tax liabilities and assets, and they relate to income taxes levied
by the same tax authority.
A deferred tax asset is recognized to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilized. Deferred tax
assets are reviewed at each reporting date and are reduced
to the extent that it is no longer probable that the related tax
benefit will be realized.
The Company does not recognize deferred tax asset or deferred
tax liability because as per Gazette Notification no. S.O. 529(E)
dated 5th February 2018 as amended by notification no. S.O.
1465 dated 2 April 2018 issued by Ministry of Corporate
Affairs, Government of India, read with their communication
no. Eoffice F.No.17/32/2017 - CL - V dated 20th March 2020,
the provisions of Indian Accounting Standards 12 relating to
Deferred Tax Assets (DTA) or Deferred Tax Liability (DTL) does
not apply to the Company.
2.8 Property, Plant and Equipment (PPE)
An item of property, plant and equipment is recognized as an
asset if and only if it is probable that future economic benefits
associated with the item will flow to the Company and the
cost of the item can be measured reliably.
Items of property, plant and equipment are initially recognized
at cost. Subsequent measurement is done at cost less
accumulated depreciation/amortization and accumulated
impairment losses. Cost includes expenditure that is directly
attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner
intended by management.
When parts of an item of property, plant and equipment have
different useful lives, they are recognized separately.
Subsequent expenditure is recognized as an increase in
the carrying amount of the asset when it is probable that
future economic benefits deriving from the cost incurred
will flow to the enterprise and the cost of the item can be
measured reliably.
De-recognition
Property, plant and equipment is derecognized when no future
economic benefits are expected from their use or upon their
disposal. Gains and losses on de-recognition of an item of
property, plant and equipment are determined by comparing
the proceeds from disposal, if any, with the carrying amount
of property, plant and equipment, and are recognized in the
statement of profit and loss.
Depreciation
Depreciation on property, plant and equipment has been
provided on the straight-line method as per the useful life
prescribed in Schedule II to the Companies Act, 2013.
2.9 Intangible assets
An intangible asset is recognized if and only if it is probable that
the expected future economic benefits that are attributable to
the asset will flow to the Company and the cost of the asset
can be measured reliably.
Intangible assets that are acquired by the Company, which
have finite useful lives, are recognized at cost. Subsequent
measurement is done at cost less accumulated amortization
and accumulated impairment losses. Cost includes any directly
attributable incidental expenses necessary to make the assets
ready for its intended use.
Subsequent expenditure is recognized as an increase in
the carrying amount of the asset when it is probable that
future economic benefits deriving from the cost incurred
will flow to the enterprise and the cost of the item can be
measured reliably.
De-recognition
An intangible asset is derecognized when no future economic
benefits are expected from their use or upon their disposal.
Gains & losses on de-recognition of an item of intangible
assets are determined by comparing the proceeds from
disposal, if any, with the carrying amount of intangible assets
and are recognized in the statement of profit and loss.
Amortization
Software is amortized over 5 years on straight-line method.
2.10 Borrowing costs
Borrowing costs consist of interest expense calculated using
the effective interest method as described in Ind AS 109
'Financial Instruments' and exchange differences arising
from foreign currency borrowings to the extent that they are
regarded as an adjustment to interest costs.
Borrowing costs that are directly attributable to the acquisition,
construction/development or erection of qualifying assets are
capitalized as part of cost of such asset until such time the
assets are substantially ready for their intended use. Qualifying
assets are assets which necessarily take substantial period of
time to get ready for their intended use or sale.
When the Company borrows funds specifically for the purpose
of obtaining a qualifying asset, the borrowing costs incurred
are capitalized. When Company borrows funds generally and
uses them for the purpose of obtaining a qualifying asset, the
capitalization of the borrowing costs is computed based on the
weighted average cost of all borrowing that are outstanding
during the period and used for the acquisition, construction/
exploration or erection of the qualifying asset.
Income earned on temporary investment of the borrowings
pending their expenditure on the qualifying assets is deducted
from the borrowing costs eligible for capitalization.
Capitalization of borrowing costs ceases when substantially all
the activities necessary to prepare the qualifying assets for
their intended uses are complete.
All other borrowing costs are recognized as an expense in the
year in which they are incurred.
2.11 Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise
cash at banks, cash on hand and short-term deposits with an
original maturity of three months or less, which are subject to
an insignificant risk of changes in value.
|