3. SIGNIFICANT ACCOUNTING POLICIES
3.1 Current and Non - Current Classification
The company presents assets and liabilities in the balance sheet based on current/non-current
classification. An asset is treated as current when it is:
• Expected to be realized or intended to be sold or consumed in normal operation cycle.
• Held primarily for the purpose of trading
• Expected to be realized within twelve months after the reporint period, or
• Cash or Cash equivalent unless restricted from being exchanged or used to settle a liability for atleast
twelve months after the reporting period.
All other assets are classified as non - current A liability is current when:
• It is expected to be settled in normal operating Cylce.
• It is held primarily for the purpose of trading
• It is due to be settled within twelve months after the reporing period, or
• There is no unconditional right to defer the settlement of the liability for at least twelve months after
the reporting period.
The company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realization in
cash and cash equivalents.
The company has identified twelve month as its operating cycle.
Statement of compliance
The Company’s financial statements have been prepared in accordance with the provisions of the
Companies Act, 2013 and the Indian Accounting Standards (“Ind AS”) notified under the Companies (Indian
Accounting Standards) Rules, 2015 and amendments thereof issued by Ministry of Corporate Affairs in
exercise of the powers conferred by section 133 of the Companies Act, 2013. In addition, the guidance
notes/announcements issued by the Institute of Chartered Accountants of India (ICAI) are also applied
except where compliance with other statutory promulgations require a different treatment.
3.2 Fair Value Measurement
The company measures financial instruments 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. The fair value measurement is based
on the presumption that the transaction to sell the asset or transfer the liability takes place either:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most advantageous market for the assets or liability. The
principal or the most advantageous market must be accessible by the company.
The fair value of an asset or a liability is measured using the assumptions that market participants would
use when pricing the asset or liability, assuming that market participants act in their best economic interest.
A fair value measurement of non-financial asset takes into account a market participant's ability to generate
economics 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 tis highest and best use.
The company uses valuation techniques that are appropriate in the circumstances and for which sufficient
date are available to measure fair value, maximizing the use of revevant observable inputs and minimizing
the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the Standalone Financial
Statement are categorized within the fair value hierarchy described as follow, based on the lowest level
input that is significant to the fair value measurement as a whole.
• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable
• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable
For assets and liabilities that are recognized in the Standalone Financial Statements on recurring basis,
the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing
categorization (based on the Lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities
on the basis of the nature, characteristics and risk of the assets or liability and the level of the fair value
hierarchy as explained above.
The Company determines the policies and procedures for both recurring fair value measurement, such as
unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held
for sale in discontinued operations. If any.
External valuers are involved for valuation of significant assets, such as properties and unquoted financial
assets, and significant liabilities such as contingent consideration. Involment of external valuers is decided
upon annually by the management after discussion with and approval by the Company's Audit Committee.
Selection criteria include market knowledger, reputation, independence and whether professional standards
are maintained.
At each reporting date, the management analyses the movements in the values of assets and liabilities
which are required to be remeasured or re assessed as per the Companies accounting policies. For
this analysis, the management verifies the major inputs applied in the latest valuation by agreeing the
information in the valuation computation on contracts and other relevant documents.
3.3. Property, Plant and Equipment
Property, plant and equipment (PPE) are carried at cost of acquisiton, on current cost basis less
accumulated depreciation and accumulated impairment losses, if any Cost comprises purchase price
and directly attributable cost of bringing the asset to its working condition for the intened use. Any trade
discounts and rebates are deducted in arriving at the purchase price. Such cost includes the cost of
replacing part of the plant and equipment and borrowing costs for long -term construction projects if the
recognition criteria are met. Machinery spares which can be used only in connection with an item of
property, plant and equipment and whose use is expected to be irregular are capitalized and depreciated
over the useful life of principal item of the relevant assets. When significant parts of plant and equipment
are required to be replaced at intervals, the Company depreciates them separately based on their specific
useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount
of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and
maintenance cost are recognized in Statement of Profit & Loss as incurred. The present value of the
expected cost for the decommissioning of an asset after its use included in the cost of the respective asset
if the recognition criteria for a provision are met.
Depreciation is provided on written down value method over the useful lives of property, plant and
equipment as estimated by management. Pursuant to Notification of Schedule II of the Companies
Act,2013 depreciation is provided prorata basis on written down value method at the rates determined
based on estimated useful lives of property, plant and equipment where applicable. Prescribed under
Schedule II to the Companies Act 2013.
No depreciation is provided on freehold land.
An item of property, plant and equipment and any significant part initially recognized is derecognized
upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or
loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds
and the carrying amount of the asset) is included in the Statement of profit and loss when the assets is
derecognized.
Capital Work in Progress
Cost of assets not ready for intended use, as the balance sheet date, is shown as capital work in progress.
Capital Work in Progress is stated at cost, net of accumulated impairment loss, if any
3.4. Intangible Assets
Intangible Assets are recognized only when future economic benefits arising out of the assets flow to
enterprise and are amortized over their useful life ranging from 3 to 5 year. Intangible assets acquired
separately are measured on initial recognitions at cost. Following initial recognition, intangible assets are
carried at cost less any accumulated amortization and accumulated impairment losses, if any Internally
generated intangibles, excluding capitalized development cost, are not capitalized and the related
expenditure is reflected in Statement of Profit and Loss in the period in which the expenditure is incurred.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment
whenever there is an indication that the intangible asset may be impaired. The amortization period and
the amortization method for an intangible assets with a finite useful life are reviewed at least at the end
of each reporting period. Changes in the expected useful life or expected pattern of consumption of future
economic benefits embodied in the asset are considered to modify the amortization period or method as
appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible
assets with finite lives is recognized in the statement of profit and loss unless such expenditure from part
of carrying value of another asset.
An intangible asset is derecognized upon disposal (i.e. at the date the recipient obtains control) or when no
future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition
of an intangible asset are measured as the difference between the net disposal proceeds and the carrying
amount of the asset and recognized in the Statement of Profit and Loss when the asset is derecognized.
3.5 Revenue Recognition - Revenue from Contracts:
(i) Income from construction contracts is recognized on the basis of work certified in accordance with
percentage completion method. All other income and expenditure are recognized and accounted for
on an accrual basis. Losses on contracts are fully accounted for as and when incurred.
(ii) Hire Charges is accounted for as per terms of the lease agreement.
Dividend Income
(iii) Dividend Income is accounted for when the right to receive has been established.
Interest Income
(iv) Interest income on deposits is recognized on accrual basis
3.6. Inventories -
The stock of stores, spares and embedded goods and fuel is valued at cost (weighted average basis), or
net realizable value whichever is lower. Cost includes cost of purchase and costs incurred in bringing the
inventories to their present location and conditions. Cost is determined on weighted average basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs
of completion and estimated costs necessary to mark the sale.
Work in Progress is valued at the contract rates and site mobilization expenditure of incomplete contracts
is stated at cost. All the inventories of stores, spares and embedded goods and fuel and work in progress
have been physically verified by the Management at the year end.
3.7. Investment -
Investments which are readily realizable and intended to be held for not more than one year from the date
on which such investments are made, are classified as current investments. All other investments are
classified as Long-Term Investments. Current Investments are carried in the financial statements at lower
of cost and fair value determined on an individual investment basis. Long Term Investments are measured
at Cost. However, provision for diminution in value is made to recognize a decline other than temporary in
the value of the investment.
3.8. Borrowing Costs -
Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period of time to get ready for its intended use (known as Qualifying
assets) or sale are capitalized as part of the cost of the asset. Borrowing Costs include interest,
amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowings
to the extent they are regarded as an adjustment to the borrowing costs. Discount on Commercial papers
is amortized over the tenor of the underlying instrument. Borrowing Costs, allocated to and utilized for
qualifying assets, pertaining to the period from commencement of activities relating to construction /
development of the qualifying asset upto the date the asset is ready for its intended use is added to the
cost of the assets. Capitalization of Borrowing Costs is suspended and charged to the Statement of Profit
and Loss during extended periods when active development activity on the qualifying assets is interrupted
All other borrowing costs are expensed in the period they occur."
3.9 Taxes
Current Income Tax
Current income tax assets and liabilities are measured at the amount expected to be recovered or paid
to the taxation authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws
prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used
to compute the amount are those that are enacted or substantively enacted at the reporting date
Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss
(either in other comprehensive income or in equity). Current tax items are recognized in correlation to the
underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken
in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation
and establishes provisions where appropriate. The Company shall reflect the effect of uncertainty for each
uncertain tax treatment by using either most likely method or expected value method, depending on which
method predicts better resolution of the treatment.
Deferred Tax
Deferred tax is provided using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the Standalone Financial Statements at the reporting
date. Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the time of the transaction affects neither accounting
profit nor taxable profit (tax loss).
Deferred tax liabilities are recognized for all taxable temporary differences, except:
When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.
In respect of taxable temporary differences associated with investments in subsidiaries and interests in
joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it
is probable that future taxable amounts will be available to utilize those temporary differences and losses
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are
recognized to the extent that it has become probable that future taxable profits will allow the deferred tax
asset to be recovered.
In assessing the recoverability of deferred tax assets, the Company relies on the same forecast
assumptions used elsewhere in the financial statements and in other management reports, which, among
other things, reflect the potential impact of climate-related development on the business, such as increased
cost of production as a result of measures to reduce carbon emission.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset when there is a 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 a net basis, or to realize the asset and settle the liability simultaneously.
Current and deferred tax is recognized in Statement of Profit and Loss, except to the extent that it relates
to items recognized in Other Comprehensive Income (OCI) or directly in equity. In this case, the tax is also
recognized in OCI or directly in equity, respectively.
Goods and Service tax paid on acquisition of assets or on incurring expenses
• When the tax incurred on a purchase of assets or services is not recoverable from the taxation
authority, in which case, the tax paid is recognized as part of the cost of acquisition of the asset or as
part of the expense item, as applicable.
• When receivables and payables are stated with the amount of tax included, the net amount of tax
recoverable from, or payable to, the taxation authority is included as part of receivables or payables in
the balance sheet
i. Provision for current tax is made after taking into consideration benefits admissible under the
provision of the Income Tax Act, 1961.
ii. Current Tax is calculated in accordance with the tax laws applicable to the current financial year.
For Financial Year 2021-22 the company has exercised option to pay income tax under the provisions
of Section 115BAA of the Income tax Act, 1961 and as such provisions for payment of Minimum
Alternate tax (MAT) is not applicable to the company.
The company proposes to pay Tax under the Provisions of Section 115BAA of Income Tax Act 1961.
iii. Advance tax and provision for current income, if any, are presented in the balance sheet after setting
off advance tax paid and income tax provision arising in the same tax jurisdiction.
3.10. Foreign Exchange Transaction -
Items included in the Standalone Financial Statements of the Company are measured using the currency
of the primary economic environment in which the Company operates ('the functional currency'). The
Standalone Financial Statements are presented in Indian Rupee (INR), which is the Company's functional
and presentation currency.
Transactions in foreign currencies are initially recorded by the Company at the functional currency spot
rates (i.e., INR) 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.
Foreign exchange gains and losses resulting from the settlement of transactions in foreign currencies
and from the translation of monetary assets and liabilities denominated in foreign currencies at year end
exchange rates are generally recognized in Statement of Profit and 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 that are 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 (i.e., translation
differences on items whose fair value gain or loss is recognized in OCI or Statement of Profit and Loss are
also recognized in OCI or Statement of Profit and Loss, respectively).
In determining the spot exchange rate to use on initial recognition of the related asset, expense or income
(or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance
consideration, the date of the transaction is the date on which the Company initially recognizes the non¬
monetary asset or non-monetary liability arising from the advance consideration. If there are multiple
payments or receipts in advance, the Company determines the transaction date for each payment or
receipt of advance consideration.
Employee Retirement Benefits -
3.11. Short-term Employee Benefits:
Liabilities for short-term employee 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 recognized 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 'Employee Benefits Payable' within
'Other Financial Liabilities' in the Balance Sheet.
Post-employment Benefits:
I. Defined Contribution Plan
a. Superannuation
Contribution made to Superannuation Fund for certain of employees are recognized in the Statement
of Profit and Loss as and when services are rendered by employees. The Company has no liability
for future Superannuation Fund benefits other than its contribution.
b. Provident Fund
Contributions in respect of Employees who are not covered by Company’s Employees Provident Fund
Trust are made to the Fund administered by the Regional Provident Fund Commissioner as per the
provisions of Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 and are charged to
Statement of Profit and Loss as and when services are rendered by employees. The Company has
no obligation other than the contribution payable to the Regional Provident fund.
II. Defined Benefit Plan
a. Gratuity
Every employee who has completed five years or more of service is entitled to Gratuity as per the
provisions of The Payment of Gratuity Act, 1972. Retirement Gratuity for employees, is funded
through a scheme of Life Insurance Corporation of India. The costs of providing benefits under this
plan are determined on the basis of actuarial valuation using the projected unit credit method at
each year-end. Actuarial gains/losses are immediately recognized in retained earnings through Other
Comprehensive Income in the period in which they occur. Re-measurements are not re-classified to
Statement of Profit and Loss in subsequent periods. The excess/shortfall in the fair value of the plan
assets over the present value of the obligation calculated as per actuarial methods as at balance
sheet dates is recognized as a gain / loss in the Statement of Profit and Loss. Any asset arising out
of this calculation is limited to the past service cost plus the present value of available refunds and
reduction in future contributions.
b. Provident Fund
In respect of the employees covered by the Company’s Employee Provident Fund Trust in Point
I b above, contributions to the Company’s Employees Provident Fund Trust (administered by the
Company as per the provisions of Employees' Provident Fund and Miscellaneous Provisions Act,
1952) are made in accordance with the fund rules. The interest rate payable to the beneficiaries every
year is being notified by the Government
In the case of contribution to the Trust, the Company has an obligation to make good the shortfall,
if any, between the return from the investments of the Trust and the notified interest rate and
recognizes such obligation, if any, determined based on an actuarial valuation as at the balance sheet
date, as an expense.
3.12.lmpairment of non- financial assets
The Company assesses at each reporting date whether there is an indication that an asset (including
goodwill) may be impaired. If any indication exists, 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) net
selling price and its value in use. The 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 groups
of assets. Where 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 net selling price, recent market transactions are taken into account, if
available. If no such transactions can be identified, an appropriate valuation model is used.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether
there is an indication that previously recognized impairment losses no longer exist or have decreased.
If such indication exists, the Company estimates the asset’s or CGU’s recoverable amount. A previously
recognized impairment loss 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 recognized. The reversal
is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed
the carrying amount that would have been determined, net of depreciation, had no impairment loss been
recognized for the asset in prior years. Such reversal is recognized in the statement of profit and loss
unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation
increase.
Intangible assets with indefinite useful lives are tested for impairment annually at the CGU level, as
appropriate, and when circumstances indicate that the carrying value may be impaired.
The Company assesses where climate risks could have a significant impact, such as the introduction of
emission-reduction legislation that may increase manufacturing costs. These risks in relation to climate-
related matters are included as key assumptions where they materially impact the measure of recoverable
amount. These assumptions have been included in the cash-flow forecasts in assessing value-in-use
amounts.
The company assesses at each balance sheet date whether there is any indication that an asset may be
impaired. If any such indication exists, the company estimates the recoverable amount of the assets. If
such recoverable amount of the assets or the recoverable amount of the cash generating unit to which the
asset belong is less than its carrying amount, the carrying amount is reduced to its recoverable amount.
If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer
exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject
to a maximum of depreciated historical cost.
3.13. Earning per share -
Basic Earnings Per Share is calculated by dividing the net profit or loss for the period attributable to equity
shareholders by the weighted average number of equity shares outstanding during the period. For the
purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity
shareholders and the weighted average number of shares outstanding during the period is adjusted for the
effects of all dilutive potential equity shares.
The weighted average number of equity shares outstanding during the period and for all periods presented
is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that
have changed the number of equity shares outstanding, without a corresponding change in resources.
Basic EPS is computed using the weighted average number of equity shares outstanding during the year.
Provision, Contingent Liabilities and contingent assets -
3.14. Leases -
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
As a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term
leases and leases of low-value assets. The Company recognizes lease liabilities to make lease payments
and right-of-use assets representing the right to use the underlying assets.
i) Right-of-use assets
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the
date the underlying asset is available for use). Right-of-use assets are measured at cost, less
any accumulated depreciation and impairment losses, and adjusted for any remeasurement of
lease liabilities. The cost of right-of-use assets includes the present value of lease payments to be
made over the lease term, initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Right-of-use assets are depreciated on a
straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as
follows:
• Leasehold Land and Building 2 years to 99 years
If ownership of the leased asset transfers to the company at the end of the lease term or the
cost reflects the exercise of a purchase option, depreciation is calculated using the estimated
useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in
section 3.12 Impairment of non-financial assets.
ii) Lease Liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the
present value of lease payments to be made over the lease term. The lease payments include fixed
payments (including in substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value
guarantees. The lease payments also include the exercise price of a purchase option reasonably
certain to be exercised by the company and payments of penalties for terminating the lease, if the
lease term reflects the company exercising the option to terminate. Variable lease payments that do
not depend on an index or a rate are recognized as expenses (unless they are incurred to produce
inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing
rate at the lease commencement date because the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease payments made. In addition, the carrying amount
of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in
the lease payments (e.g., changes to future payments resulting from a change in an index or rate
used to determine such lease payments) or a change in the assessment of an option to purchase the
underlying asset.
The Company’s lease liabilities are included in Note
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of
properties taken on rent (i.e., those leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option). It has not opted for low-value assets
recognition exemption. Lease payments on short-term leases are recognised as expense on a
straight-line basis over the lease term.
As a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an
asset are classified as operating leases. Rental income from operating lease is recognised on a straight¬
line basis over the term of the relevant lease Initial direct costs incurred in negotiating and arranging an
operating lease are added to the carrying amount of the leased asset and recognised over the lease term
on the same basis as rental income. Contingent rents are recognised as revenue in the period in which
they are earned.
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