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Univastu India Ltd. कंपली की लेखा नीति
Mar 31, 2025
2 Significant Accounting Policies
2.01 Basis of preparation
The financial statements have been prepared in accordance with the provisions of Indian Accounting Standards (Ind-AS) notified
under the Companies Act, 2013 (âthe Act") (to the extent notified) and guidelines issued by the Securities and Exchange Board of
India (SEBI). The Ind AS have been prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting
Standards) Rules, 2015.
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.
Company maintains it''s accounts on accrual basis following historical cost convention except for the Plan Assets in the case of
Defined benefit plan, which are valued using fair value basis. The financial statements have been prepared on accrual and going
concern basis.
These standalone financial statements are approved for issue by the Company''s Board of Directors on May 27, 2025.
2.02 Use of estimates
The preparation of financial statements in conformity with Ind AS requires management to make judgements, estimates and
assumptions that affect the application of the accounting policies and the reported amounts of assets and liabilities, the disclosure
of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses
during the year. Actual results could differ from those estimates. The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised prospectively.
Key sources of estimation uncertainty
Actuarial Valuation:
The determination of Company''s liability towards defined benefit obligation to employees is made through independent actuarial
valuation including determination of amounts to be recognised in the Statement of Profit and Loss and in Other Comprehensive
Income. Such valuation depends upon assumptions determined after taking into account inflation, seniority, promotion and other
relevant factors such as supply and demand factors in the employment market. Information about such valuation is provided in
notes to the financial statements.
Claims, Provisions and Contingent Liabilities:
The Company has ongoing litigations with various regulatory authorities and third parties. Where an outflow of funds is believed
to be probable and a reliable estimate of the outcome of the dispute can be made based on management''s assessment of specific
circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability. Such accruals
are by nature complex and can take number of years to resolve and can involve estimation uncertainty. Information about such
litigations is provided in notes to the financial statements
Estimation of provision for loss on long term contract
The provision is recognised when the estimated cost exceeds the estimated revenue for constructions contracts as per Ind AS 115.
2.03 Property, plant and equipment and Intangible assets
Measurement:
Property, plant and equipment (PPE) are stated at cost of acquisition or construction less accumulated depreciation and impairment,
if any. For this purpose, cost includes deemed cost which represents the carrying value of PPE recognised as at April 1, 2015
measured as per the previous Generally Accepted Accounting Principles (GAAP).
The cost of an item of PPE comprises its purchase price, including import duties net of credits and other non-refundable taxes or
levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any discounts and rebates
are deducted in arriving at the purchase price.
An item of PPE is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use
of asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the
difference between the sales proceeds and the carrying amount of the asset and is recognised in Statement of Profit and Loss.
When parts of an item of PPE have different useful lives, they are accounted for as separate items (major components) of PPE.
PPE under construction are disclosed as capital work-in-progress.
Advances paid towards the acquisition of PPE outstanding at each reporting date are disclosed under âOther non-current assets".
Subsequent costs
The cost of replacing a part of an item of PPE is recognised in the carrying amount of the item if it is probable that the future
economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount
of the replaced part is derecognized. The costs of the day-to-day servicing of PPE are recognised in the statement of profit and loss
as incurred.
Disposal
An item of PPE is derecognized upon disposal or when no future benefits are expected from its use or disposal. Gains and losses
on disposal of an item of PPE are determined by comparing the proceeds from disposal with the carrying amount of PPE, and are
recognised within other income/ expenses in the statement of profit and loss.
2.04 Intangible assets
Recognition and measurement
Intangible assets are recognised when the asset is identifiable, is within the control of the Company and it is probable that the
future economic benefits that are attributable to the asset will flow to the Company and cost of the asset can be reliably measured.
Intangible assets acquired by the Company that have finite useful lives are measured at cost less accumulated amortisation and
accumulated impairment losses (if any).
Subsequent measurement
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which
it relates.
2.05 Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its
residual value.
The residual values, useful lives and method of depreciation of PPE are reviewed at each financial year end and adjusted prospectively,
if appropriate. Depreciation on additions to / deductions from owned assets are calculated pro rata to the period of use. Further,
extra shift depreciation is provided wherever applicable. Depreciation charge for impaired assets if any is adjusted in future periods
in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life.
Depreciation is recognised in the statement of profit and loss on a straight-line basis over the estimated useful lives of each part of
an item of PPE as prescribed in Schedule II of the Act.
2.06 Amortisation
Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residual value. Amortisation is
recognised in statement of profit and loss on a straight-line basis over the estimated useful lives of intangible assets from the date
that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits
embodied in the asset. The method of amortisation and useful life is reviewed at the end of each accounting year with the effect of
any changes in the estimate being accounted for on a prospective basis.
The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence,
demand, competition, and other economic factors (such as the stability of the industry, and known technological advances), and
the level of maintenance expenditures required to obtain the expected future cash flows from the asset.
The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the
amortisation period is revised to reflect the changed pattern, if any.
Computer Software is amortised over a period of three years.
Leasehold improvements are amortised over the remaining lease term.
2.07 Investments
Investment in subsidiaries, associates and partnership firms are carried at cost less accumulated impairment, if any..
2.08 Revenue recognition
i) Revenue from operations
Revenue from contracts with customers is recognised when a performance obligation is satisfied by transfer of promised goods or
services to a customer.
For performance obligation satisfied over time, the revenue recognition is done by measuring the progress towards complete
satisfaction of performance obligation. The progress is measured in terms of a proportion of actual cost incurred to-date, to the
total estimated cost attributable to the performance obligation.
Sale of goods
Sales are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer. Sales
are exclusive of indirect taxes.
Income from services
Revenue is recognized over the time as and when customer receives the benefit of Company''s performance and the Company has
an enforceable right to payment for services transferred.
Revenue from construction / project related activity
Contract revenue includes initial amount agreed in the contract plus any variations in contract work, claims and incentive payments,
to the extent that it is probable that they will result in revenue and can be measured reliably.
Contract revenues arising from fixed price contract are recognized in accordance with the percentage completion method.
The Company has set 25% of estimated project cost as as the benchmark for deciding the reliability of the outcome until which the
revenue recognised will be equal to the cost incurred.
Full provision is made for any loss estimated on a contract in the year in which it is first foreseen.
Where the Company is involved in providing operation and maintenance services under a single construction contract, then the
consideration is allocated on a relative stand-alone price basis between various obligations of a contract.
Work done and certified by the client for which invoices are raised is shown as progress billing.
Work done until the reporting date/s is measured in case of constructions contracts falling in different reporting periods.
For contracts where the aggregate of contract costs incurred to-date and recognized profits (or recognized losses, as the case may
be) exceed progress billing, the deficit is shown as the amount due from customers. Amount due from customers is shown as part
of other current assets as the contractual right for consideration is dependant on completion of contractual milestones.
Amounts received before the related work is performed are disclosed in the Balance Sheet as a liability towards advance received.
Amounts billed for work performed but yet to be paid by the customer are disclosed in the Balance Sheet as trade receivables.
The amount of retention money held by the customers is disclosed as part of other trade receivables, as the case may be.
Revenue from rendering of services is recognised over time as the customer receives the benefit of the Company''s performance and
the Company has an enforceable right to payment for services transferred.
ii) Other income
Interest is recognized on a time proportion basis determined by the amount outstanding and the rate applicable using the effective
interest rate (EIR) method.
Other items of income are accounted as and when the right to receive such income arises and it is probable that the economic
benefits will flow to the Company and the amount of income can be measured reliably.
2.09 Employee benefits
Short term employee benefits:
All employee benefits payable wholly within twelve months of rendering the services are classified as short-term employee benefits.
Benefits such as salaries, wages, expected cost of bonus and short term compensated absences, leave travel allowance etc. are
recognized in the period in which the employee renders the related service.
Post-employment benefits:
Defined contribution plans:
The Company''s provident fund scheme, employee state insurance scheme and employee pension scheme are defined contribution
plans. The contribution paid / payable under these schemes is recognised during the period in which the employee renders the
service.
Defined benefit plans:
The Company makes contribution to defined benefit gratuity plan. The cost of providing benefits under the defined benefit
obligation is calculated by an independent actuary using the projected unit credit method. Service costs and net interest expense
or income is reflected in the Statement of Profit and Loss.
The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the
present value of the obligation under defined benefit plans, is based on the market yields on government securities of a maturity
period equivalent to the weighted average maturity profile of the defined benefit obligations as at the balance sheet date, having
maturity periods approximating to the terms of related obligations.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest
on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined
benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through
other comprehensive income (OCI) in the period in which they occur. Remeasurements are not reclassified to the statement of profit
and loss in subsequent periods.
The fair value of the plan''s assets is reduced from the gross obligation under the defined benefit plans, to recognise the obligation
on net basis.
When the benefits of the plan are changed or when a plan is curtailed, the resulting change in benefits that relates to past service or
the gain or loss on curtailment is recognised immediately in the statement of profit and loss. Net interest is calculated by applying
the discount rate to the net defined benefit liability or asset. The Company recognises gains/ losses on settlement of a defined plan
when the settlement occurs
Other long-term employee benefits
Compensated absences liabilities mean, the liabilities for earned leave that are not expected to be settled wholly within twelve
months after the end of the reporting period in which the employee render the related service. They are therefore measured as 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. The benefits are discounted using the market yields at the end of the reporting
period that have terms approximating the terms of the related obligation. Re-measurements as a result of experience adjustments
and change in actuarial assumptions are recognised in the statement of profit and loss.
2.10 Borrowing costs
Borrowing costs are interest and ancillary costs incurred in connection with the arrangement of borrowings and include finance
costs calculated using the effective interest method and finance charges in respect of assets acquired on lease.
2.11 Taxation
Income tax expense comprises current and deferred tax. It is recognised in the statement of profit and loss except to the extent that
it relates to items recognised directly in equity or in OCI.
Current tax
Current tax in the Statement of Profit and Loss is provided as the amount of tax payable in respect of taxable income for the period
using tax rates and tax laws enacted during the period, together with any adjustment to tax payable in respect of previous years.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities and the amounts used
for taxation purposes (tax base), at the tax rates and tax laws enacted or substantively enacted by the end of the reporting period.
Deferred tax liabilities are recognized for all timing differences.
Deferred tax assets are recognized for deductible timing differences only to the extent there is reasonable certainty that sufficient
future taxable income will be available against which such deferred tax assets can be realised.
Deferred tax assets and liabilities are offset when there is legally enforceable right to offset current tax assets and liabilities and
when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the
entity has a legally enforceable right to offset and intends either to settle on net basis, or to realize the asset and settle the liability
simultaneously.
2.12 Leases
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a define period of time in exchange for consideration. To
assess whether a contract conveys the right to control the use of an identified assets, the Company assesses whether: (i) the contact
involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through
the period of the lease and (iii) the Company has the right to direct the use of the asset.
As a lessee:
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset
or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are
determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by
impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company''s incremental
borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the
incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole.
Lease payments included in the measurement of the lease liability comprise the fixed payments.
The lease liability is measured at amortised cost using the effective interest method.
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of
12 months or less and leases of low-value assets. The Company recognises the lease payments associated with these leases as an
expense on a straight-line basis over the lease term. The Company applied a single discount rate to a portfolio of leases of similar
assets in similar economic environment with a similar end date.
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. Where the Company is a lessor under an operating lease, the asset is capitalised within property, plant and
equipment or investment property and depreciated over its useful economic life. Payments received under operating leases are
recognised in the Statement of Profit and Loss on a straight line basis over the term of the lease.
Mar 31, 2024
1 Corporate Information
Univastu India Limited (the Company) is incorporated on April 29, 2009 under the Companies Act, 1956. It has its registered office at 36B, Madhav baug, Shivtirth Nagar, Paud Road, Kothrud, Pune 411038. The Company is engaged in the business of works contract services.
2 Significant Accounting Policies2.01 Basis of preparation
The financial statements have been prepared in accordance with the provisions of Indian Accounting Standards (Ind-AS) notified under the Companies Act, 2013 ("the Act") (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS have been prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015.
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.
Company maintains it''s accounts on accrual basis following historical cost convention except for the Plan Assets in the case of Defined benefit plan, in which case, fair value basis. The financial statements have been prepared on accrual and going concern basis.
These standalone financial statements are approved for issue by the Company''s Board of Directors on May 21,2024.
The preparation of financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.
Key sources of estimation uncertainty Actuarial Valuation:
The determination of Company''s liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognised in the Statement of Profit and Loss and in Other Comprehensive Income. Such valuation depends upon assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Information about such valuation is provided in notes to the financial statements.
Claims, Provisions and Contingent Liabilities:
The Company has ongoing litigations with various regulatory authorities and third parties. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on management''s assessment of specific circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability. Such accruals are by nature complex and can take number of years to resolve and can involve estimation uncertainty. Information about such litigations is provided in notes to the financial statements.
Estimation of provision for loss on long term contract
The provision is recognised when the estimated cost exceeds the estimated revenue for constructions contracts as per Ind AS 115.
2.03 Property, plant and equipment Measurement:
Property, plant and equipment (PPE) are stated at cost of acquisition or construction less accumulated depreciation and impairment, if any. For this purpose, cost includes deemed cost which represents the carrying value of PPE recognised as at April 1,2015 measured as per the previous Generally Accepted Accounting Principles (GAAP).
The cost of an item of PPE comprises its purchase price, including import duties net of credits and other nonrefundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any discounts and rebates are deducted in arriving at the purchase price.
An item of PPE is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in Statement of Profit and Loss.
When parts of an item of PPE have different useful lives, they are accounted for as separate items (major components) of PPE.
PPE under construction are disclosed as capital work-in-progress.
Advances paid towards the acquisition of PPE outstanding at each reporting date are disclosed under "Other noncurrent assets".
The cost of replacing a part of an item of PPE is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of PPE are recognised in the statement of profit and loss as incurred.
An item of PPE is derecognized upon disposal or when no future benefits are expected from its use or disposal. Gains and losses on disposal of an item of PPE are determined by comparing the proceeds from disposal with the carrying amount of PPE, and are recognised within other income/ expenses in the statement of profit and loss.
Recognition and measurement
Intangible assets are recognised when the asset is identifiable, is within the control of the Company and it is probable that the future economic benefits that are attributable to the asset will flow to the Company and cost of the asset can be reliably measured.
Intangible assets acquired by the Company that have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses (if any).
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.
The residual values, useful lives and method of depreciation of PPE are reviewed at each financial year end and adjusted prospectively, if appropriate. Depreciation on additions to / deductions from owned assets are calculated pro rata to the period of use. Further, extra shift depreciation is provided wherever applicable. Depreciation charge for impaired assets if any is adjusted in future periods in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life.
Depreciation is recognised in the statement of profit and loss on a straight-line basis over the estimated useful lives of each part of an item of PPE as prescribed in Schedule II of the Act.
Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residual value. Amortisation is recognised in statement of profit and loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The method of amortisation and useful life is reviewed at the end of each accounting year with the effect of any changes in the estimate being accounted for on a prospective basis.
The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry, and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.
The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation period is revised to reflect the changed pattern, if any.
Computer Software is amortised over a period of three years.
Investment in subsidiaries, associates and partnership firms are carried at cost less accumulated impairment, if any.
i) Revenue from operations
Revenue from contracts with customers is recognised when a performance obligation is satisfied by transfer of promised goods or services to a customer.
For performance obligation satisfied over time, the revenue recognition is done by measuring the progress towards complete satisfaction of performance obligation. The progress is measured in terms of a proportion of actual cost incurred to-date, to the total estimated cost attributable to the performance obligation.
Sales are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer. Sales are exclusive of indirect taxes.
Revenue is recognized over the time as and when customer receives the benefit of Company''s performance and the Company has an enforceable right to payment for services transferred.
Revenue from construction / project related activity
Contract revenue includes initial amount agreed in the contract plus any variations in contract work, claims and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably.
Contract revenues arising from fixed price contract are recognized in accordance with the percentage completion method.
The Company has set 25% of estimated project cost as as the benchmark for deciding the reliability of the outcome until which the revenue recognised will be equal to the cost incurred.
Full provision is made for any loss estimated on a contract in the year in which it is first foreseen.
Where the Company is involved in providing operation and maintenance services under a single construction contract, then the consideration is allocated on a relative stand-alone price basis between various obligations of a contract.
Work done and certified by the client for which invoices are raised is shown as progress billing.
Work done until the reporting date/s is measured in case of constructions contracts falling in different reporting periods.
For contracts where the aggregate of contract costs incurred to-date and recognized profits (or recognized losses, as the case may be) exceed progress billing, the deficit is shown as the amount due from customers. Amount due from customers is shown as part of other current assets as the contractual right for consideration is dependant on completion of contractual milestones.
Amounts received before the related work is performed are disclosed in the Balance Sheet as a liability towards advance received. Amounts billed for work performed but yet to be paid by the customer are disclosed in the Balance Sheet as trade receivables.
The amount of retention money held by the customers is disclosed as part of other current or non-current financial assets, as the case may be.
Revenue from rendering of services is recognised over time as the customer receives the benefit of the Company''s performance and the Company has an enforceable right to payment for services transferred.
Interest is recognized on a time proportion basis determined by the amount outstanding and the rate applicable using the effective interest rate (EIR) method.
Other items of income are accounted as and when the right to receive such income arises and it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.
Short term employee benefits:
All employee benefits payable wholly within twelve months of rendering the services are classified as short-term employee benefits. Benefits such as salaries, wages, expected cost of bonus and short term compensated absences, leave travel allowance etc. are recognized in the period in which the employee renders the related service.
Defined contribution plans:
The Company''s provident fund scheme, employee state insurance scheme and employee pension scheme are defined contribution plans. The contribution paid / payable under these schemes is recognised during the period in which the employee renders the service.
The Company makes contribution to defined benefit gratuity plan. The cost of providing benefits under the defined benefit obligation is calculated by an independent actuary using the projected unit credit method. Service costs and net interest expense or income is reflected in the Statement of Profit and Loss.
The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation under defined benefit plans, is based on the market yields on government securities of a maturity period equivalent to the weighted average maturity profile of the defined benefit obligations as at the balance sheet date, having maturity periods approximating to the terms of related obligations.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income (OCI) in the period in which they occur. Remeasurements are not reclassified to the statement of profit and loss in subsequent periods.
The fair value of the plan''s assets is reduced from the gross obligation under the defined benefit plans, to recognise the obligation on net basis.
When the benefits of the plan are changed or when a plan is curtailed, the resulting change in benefits that relates to past service or the gain or loss on curtailment is recognised immediately in the statement of profit and loss. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises gains/ losses on settlement of a defined plan when the settlement occurs.
Other long-term employee benefits:
Compensated absences liabilities mean, the liabilities for earned leave that are not expected to be settled wholly within twelve months after the end of the reporting period in which the employee render the related service. They are therefore measured as 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. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating the terms of the related obligation. Re-measurements as a result of experience adjustments and change in actuarial assumptions are recognised in the statement of profit and loss.
Borrowing costs are interest and ancillary costs incurred in connection with the arrangement of borrowings and include finance costs calculated using the effective interest method and finance charges in respect of assets acquired on lease.
Income tax expense comprises current and deferred tax. It is recognised in the statement of profit and loss except to the extent that it relates to items recognised directly in equity or in OCI.
Current tax in the Statement of Profit and Loss is provided as the amount of tax payable in respect of taxable income for the period using tax rates and tax laws enacted during the period, together with any adjustment to tax payable in respect of previous years.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities and the amounts used for taxation purposes (tax base), at the tax rates and tax laws enacted or substantively enacted by the end of the reporting period.
Deferred tax liabilities are recognized for all timing differences.
Deferred tax assets are recognized for deductible timing differences only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets and liabilities are offset when there is legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on net basis, or to realize the asset and settle the liability simultaneously.
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a define period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified assets, the Company assesses whether: (i) the contact involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
As a lessee:
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company''s incremental borrowing rate. For leases with reasonably similar characteristics, the
Company, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole.
Lease payments included in the measurement of the lease liability comprise the fixed payments.
The lease liability is measured at amortised cost using the effective interest method"
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. The Company applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date.
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Where the Company is a lessor under an operating lease, the asset is capitalised within property, plant and equipment or investment property and depreciated over its useful economic life. Payments received under operating leases are recognised in the Statement of Profit and Loss on a straight line basis over the term of the lease.
2.12 Provisions and contingencies
A Provision is recognized when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are discounted using a current pre- tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost in the statement of profit and loss.
Contingent liability is disclosed when,
⢠the Company has a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation; or
⢠present obligation arising from past events, when no reliable estimate is possible; or
⢠a possible obligation arising from past events where the probability of outflow of resources is not remote. Provisions and contingent liabilities are reviewed at each Balance Sheet date.
Impairment loss, if any, is provided to the extent, the carrying amount of assets or cash generating units exceed their recoverable amount. Recoverable amount is higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset or cash generating unit and from its disposal at the end of its useful life.
Impairment losses recognised in prior years are reversed when there is an indication that the impairment losses recognised no longer exist or have decreased. Such reversals are recognised as an increase in carrying amounts of assets to the extent that it does not exceed the carrying amounts that would have been determined (net of amortization or depreciation) had no impairment loss been recognised in previous years.
Basic EPS is calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares.
Diluted EPS adjust the figures used in the determination of basic EPS to consider:
⢠the after-income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
⢠the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares (if any).
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria as set out in the Division II of Schedule III to the Companies Act, 2013.
Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.
2.16 Financial instruments, Financial assets, Financial liabilities and Equity Instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the relevant instrument and are initially measured at fair value except for trade receivables that do not contain a significant financing component, which are measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities measured at fair value through profit or loss) are added to or deducted from the fair value on initial recognition of financial assets or financial liabilities. Purchase or sale of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date when the Company commits to purchase or sell the asset.
Recognition:
Financial assets include Investments, trade receivables, advances, security deposits, cash and cash equivalents. Such assets are initially recognised at fair value or transaction price, as applicable, when the Company becomes party to contractual obligations. The transaction price includes transaction costs unless the asset is being fair valued through the Statement of Profit and Loss.
Classification:
Management determines the classification of an asset at initial recognition depending on the purpose for which the assets were acquired. The subsequent measurement of financial assets depends on such classification.
Impairment:
The Company assesses at each reporting date whether a financial asset (or a group of financial assets) such as investments, trade receivables, advances and security deposits held at amortised cost and financial assets that are measured at fair value through other comprehensive income are tested for impairment based on evidence or information that is available without undue cost or effort. Expected credit losses are assessed and loss allowances recognised if the credit quality of the financial asset has deteriorated significantly since initial recognition.
Derecognition:
Financial assets are derecognised when the right to receive cash flows from the assets has expired, or has been transferred, and the Company has transferred substantially all of the risks and rewards of ownership. If the asset is one that is measured at amortised cost, the gain or loss is recognised in the Statement of Profit and Loss.
Income Recognition
Interest income is recognised in the Statement of Profit and Loss using the effective interest method.
Borrowings, trade payables and other financial liabilities are initially recognised at fair value and are subsequently measured at amortised cost. Any discount or premium on redemption / settlement is recognised in the Statement of Profit and Loss as finance cost over the life of the liability using the effective interest method and adjusted to the liability figure disclosed in the Balance Sheet.
Financial liabilities are derecognised when the liability is extinguished, that is, when the contractual obligation is discharged, cancelled or on expiry.
2.17 Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks, cash on hand and highly liquid short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
The deposits maintained by the Company with banks and financial institutions comprise time deposits. other bank balances include, margin money, deposits, earmarked balances with bank, and other bank balances with bank which have restrictions on repatriation.
Statement of Cash Flows is prepared segregating the cash flows into operating, investing and financing activities. Cash flow from operating activities is reported using indirect method, adjusting the profit before tax for the effects of:
⢠changes during the period in operating receivables and payables transactions of a non-cash nature;
⢠non-cash items such as depreciation, provisions, unrealized foreign currency gains and losses; and
⢠all other items for which the cash effects are investing or financing cash flows
Cash and cash equivalents (including bank balances) shown in the Statement of Cash Flows exclude items which are not available for general use as at the date of Balance Sheet.
2.19 Functional and presentation currency
These financial statements are presented in Indian Rupees (INR), which is the Company''s functional currency. All financial information is presented in INR Amount in Lakh rounded off to two decimal places, except share and per share data, unless otherwise stated.
Mar 31, 2023
Note No.: 1 Significant Accounting Policies1.1 Basis of preparation
The financial statements have been prepared in accordance with the provisions of Indian Accounting Standards (Ind-AS) notified under the Companies Act, 2013 ("the Act") (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS have been prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015.
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.
Company maintains it''s accounts on accrual basis following historical cost convention except for certain financial instruments which are measured at fair values. The financial statements have been prepared on accrual and going concern basis.
The financial statements have been approved for issue by the Board of Directors at it''s meeting held on 30th May 2023.
The financial statements have been prepared on a historical cost basis, except for the following items, which are measured on an alternative basis in accordance with Ind AS on each reporting date.
|
Items |
Measurement basis |
|
Share based payment transactions |
Fair value |
|
Defined benefit plan - plan assets |
Fair value |
1.3 Current or non-current classification
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria as set out in the Division II of Schedule III to the Companies Act, 2013.
Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities for product business. In case of project business, operating cycle is dependent on life of specific project/ contract/ service, hence current non-current bifurcation relating to project is based on expected completion date of project which generally exceeds 12 months.
1.4 Functional and presentation currency
These financial statements are presented in Indian Rupees (INR), which is the Company''s functional currency. All financial information is presented in INR Amount in Lakhs rounded off to two decimal places, except share and per share data, unless otherwise stated.
1.5 Use of judgements, estimates and assumptions
The preparation of financial statements in conformity with Ind AS requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, current assets, non-current assets, current liabilities, non-current liabilities and disclosure of the contingent liabilities at the end of each reporting period. The estimates are based on management''s best knowledge of current events and actions, however, due to uncertainty about these assumptions and estimates, actual results may differ from these estimates.
This note provides an overview of the areas that involved a higher degree of judgement or complexity and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.
Critical estimates and judgements
The areas involving critical estimates or judgements are:
⢠Estimation of defined benefit obligation - The cost of the defined benefit gratuity and pension plan, and the present value of the gratuity/pension obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future.
⢠Estimation of leave encashment provision - The cost of the leave encashment and the present value of the leave encashment obligation are determined using actuarial valuations.
⢠Impairment of receivables - The impairment provisions for financial receivables disclosed are based on assumptions about risk of default and expected credit loss.
⢠Decommissioning liability - Initial estimate of dismantling and restoration liability requires significant judgement about cost inflation index and other factors.
⢠Provision for warranty claims - Provision is recognised based on the key assumptions about likelihood and magnitude of an outflow of resources.
⢠Estimation of provision for loss on long term contract - The provision is recognised when the estimated cost exceeds the estimated revenue for constructions contracts as per Ind AS 115.
Inventory of Raw Materials, Stores and spares and land are valued at cost or net realizable value whichever is lower. Cost includes all non-refundable taxes and expenses incurred to bring the inventory to present location. Cost is determined using weighted average method of valuation. 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.
Work-in-progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and overheads
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Inventories are valued at the lower of cost and net realizable value. The cost is calculated on moving weighted average method. Costs incurred in bringing each product to its present location and conditions are accounted for as follows:
⢠Raw materials: cost includes cost of purchase excluding taxes subsequently recoverable from tax authorities and other costs incurred in bringing the inventories to their present location and condition. However, these items are considered to be realizable at cost if the finished products in which they will be used, are expected to be sold at or above cost.
⢠Finished goods and work in progress: cost includes cost of direct materials, labour and a systematic allocation of fixed and variable production overhead that are incurred in converting raw material into work in progress / finished goods based on the normal operating capacity and actual capacity respectively.
⢠Traded goods: Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
Based on ageing of inventory and it''s future potential to generate economic benefit, company provides for slow and non-moving inventory using provision matrix. This provision is reversed once such inventory is consumed or expected to be consumed.
Net realizable 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. Assessment of net- realizable value is made at regular intervals (each reporting period) and at change of events.
Cash and cash equivalents in the balance sheet comprise cash at banks, cash on hand and highly liquid short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
The deposits maintained by the Company with banks and financial institutions comprise time deposits, which can be withdrawn by the Company at any point without prior notice or penalty on the principal.
While other bank balances include, margin money, deposits, earmarked balances with bank, and other bank balances with bank which have restrictions on repatriation.
Statement of Cash Flows is prepared segregating the cash flows into operating, investing and financing activities. Cash flow from operating activities is reported using indirect method, adjusting the profit before tax for the effects of:
⢠changes during the period in inventories and operating receivables and payables transactions of a non-cash nature;
⢠non-cash items such as depreciation, provisions, unrealized foreign currency gains and losses; and
⢠all other items for which the cash effects are investing or financing cash flows.
Cash and cash equivalents (including bank balances) shown in the Statement of Cash Flows exclude items which are not available for general use as at the date of Balance Sheet.
1.9 Property, plant and equipment (PPE) Measurement
Freehold land is carried at historical cost. All other items of PPE are measured at cost of acquisition or construction less accumulated depreciation and accumulated impairment loss, if any.
The cost of an item of PPE comprises its purchase price, including import duties net of credits and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any discounts and rebates are deducted in arriving at the purchase price.
Own manufactured PPE is capitalized at cost including an appropriate share of overheads. Administrative and other general overhead expenses that are specifically attributable to construction or acquisition of PPE or bringing the PPE to working condition are allocated and capitalized as a part of the cost of the PPE.
Borrowing costs directly attributable to the construction or acquisition of a qualifying asset upto completion or acquisition are capitalised as part of the cost. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision is met.
When parts of an item of PPE have different useful lives, they are accounted for as separate items (major components) of PPE.
PPE under construction are disclosed as capital work-in-progress.
Advances paid towards the acquisition of PPE outstanding at each reporting date are disclosed under "Other noncurrent assets".
Subsequent costs
The cost of replacing a part of an item of PPE is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of PPE are recognised in the statement of profit and loss as incurred.
Disposal
An item of PPE is derecognized upon disposal or when no future benefits are expected from its use or disposal. Gains and losses on disposal of an item of PPE are determined by comparing the proceeds from disposal with the carrying amount of PPE, and are recognised within other income/ expenses in the statement of profit and loss.
Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.
The residual values, useful lives and method of depreciation of PPE is reviewed at each financial year end and adjusted prospectively, if appropriate. Depreciation on additions to/deductions from owned assets is calculated pro rata to the period of use. Further, extra shift depreciation is provided wherever applicable. Depreciation charge for impaired assets if any is adjusted in future periods in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life.
Depreciation is recognised in the statement of profit and loss on a straight-line basis over the estimated useful lives of each part of an item of PPE as prescribed in Schedule II of the Companies Act 2013 except in the case of patterns as mentioned below where the management based on the technical evaluation have estimated the life to be lower than the life prescribed in schedule II.
Patterns - Useful life 1-7 Years
Life of assets considered as per schedule II -
|
Particulars |
Life |
|
Building |
60 Years |
|
Factory Building |
30 Years |
|
Plant and Equipment |
3-22 Years |
|
Furniture and Fixtures |
10 Years |
|
Vehicles |
8 Years |
|
Office equipment |
5 Years |
|
Railway Siding |
15 Years |
Investment property is a property, being land or building or part of it, (including those under construction) that is held to earn rental income or for capital appreciation or both but not held for sale in ordinary course of business, use in manufacturing or rendering services or for administrative purposes.
Upon initial recognition, investment property is measured and reported at cost, including transaction costs. The cost of investment property includes its purchase price and directly attributable expenditure, if any. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that future economic benefits associated with expenditure will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred.
Subsequent to initial recognition, investment property is stated at cost less accumulated depreciation and accumulated impairment loss, if any. The estimated useful life and residual values are reviewed at each financial year end and the effect of any change in the estimates of useful life/ residual value is accounted on prospective basis. Investment property in the form of land is not depreciated.
Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the statement of profit and loss in the period of derecognition.
1.11 Intangible assets Recognition and measurement
Intangible assets are recognised when the asset is identifiable, is within the control of the Company and it is probable that the future economic benefits that are attributable to the asset will flow to the Company and cost of the asset can be reliably measured.
Intangible assets acquired by the Company that have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses (if any).
Intangible assets with indefinite useful lives (Goodwill) are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level.
Subsequent measurement
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.
Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residual value. Amortisation is recognised in statement of profit and loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The method of amortisation and useful life is reviewed at the end of each accounting year with the effect of any changes in the estimate being accounted for on a prospective basis.
The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry, and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.
Computer software is amortised over the period of three years.
Amortization on impaired assets is provided by adjusting the amortization charge in the remaining periods so as to allocate the asset''s revised carrying amount over its remaining useful life.
Research and development costs -
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Company can demonstrate:
⢠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 resources to complete the asset
⢠The ability to measure reliably the expenditure during development
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 over the period of expected future benefit. Amortisation expense is recognised in the statement of profit and loss.
During the period of development, the asset is tested for impairment annually.
1.12 Interest in joint operations
The company as joint operator recognizes in relation to its interest in a joint operation, it''s share in the assets/ liabilities held / incurred jointly with the other parties of the joint arrangements. Revenue is recognised for it''s share of revenue from the sale of output by the joint operator. Expenses are recognised for it''s share of expenses incurred jointly with the other parties of the joint arrangements.
Borrowing costs are interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences in relation to the foreign currency borrowings to the extent those are regarded as an adjustment to the borrowing costs.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised in the cost of that asset. Qualifying assets are those assets which necessarily takes a substantial period of time to get ready for its intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are expensed in the period in which they are incurred.
Revenue from contracts with customers is recognised when a performance obligation is satisfied by transfer of promised goods or services to a customer.
For performance obligation satisfied over time, the revenue recognition is done by measuring the progress towards complete satisfaction of performance obligation.
The progress is measured in terms of a proportion of actual cost incurred to-date, to the total estimated cost attributable to the performance obligation.
Revenue from construction/project related activity is recognised as follows:
1. Cost plus contracts: Revenue from cost plus contracts is recognised over time and is determined with reference to the extent performance obligations have been satisfied. The amount of transaction price allocated to the performance obligations satisfied represents the recoverable costs incurred during the period plus the margin as agreed with the customer.
2. Fixed price contracts: Contract revenue is recognised over time to the extent of performance obligation satisfied and control is transferred to the customer.
3. Contract revenue is recognised at allocable transaction price which represents the cost of work performed on the contract plus proportionate margin, using the percentage of completion method.
4. Percentage of completion is the proportion of cost of work performed to-date, to the total estimated contract costs.
Progress Billing : Work done and certified by the client for which invoices are raised is shown as progress billing.
Workign In Progress : work done on total point of completion basis is shown as work in Progress for long term construction contracts
For contracts where the aggregate of contract cost incurred to-date plus recognised profits (or minus recognised losses as the case may be exceeds the progress billing, the surplus is shown as contract asset and termed as "Due from customers"
For contracts where progress billing exceeds the aggregate of contract costs incurred to-date plus recognised profits (or minus recognised losses, as the case may be, the surplus is shown as contract liability and termed as "Due to customers".
Amounts received before the related work is performed are disclosed in the Balance Sheet as contract liability and termed as "Advances from customer"
for work performed and are unconditionally due for payment i.e. only passage of time is required before payment falls due, are disclosed in the Balance Sheet as trade receivables.
Revenue from rendering of services is recognised over time as the customer receives the benefit of the Company''s performance and the Company has an enforceable right to payment for services transferred
Sale of goods
Revenue from the sale of goods is recognized when control of the goods is transferred to the buyer. For contracts that permit the customer to return an item, revenue is recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Amounts included in revenue are net of returns, trade allowances, rebates, goods and service tax, value added taxes.
Customer loyalty programs
The Company allocates a portion of the consideration received to loyalty points. This allocation is based on the relative stand-alone selling prices. The amount allocated to the loyalty programs is deferred, and is recognized as revenue when loyalty points are redeemed or the likelihood of the customer redeeming the loyalty points becomes remote. The deferred revenue is included in contract liabilities.
Rendering of services
Revenue is recognized over the time as and when customer receives the benefit of company''s performance and the company has an enforceable right to payment for services transferred.
Contract revenue includes initial amount agreed in the contract plus any variations in contract work, claims and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably.
Contract revenue and contract cost arising from fixed price contract are recognized in accordance with the percentage completion method (POC).
The stage of completion is measured with reference to cost incurred to date as a percentage of total estimated cost of each contract. Until such time (50% of project cost in case of civil projects outside India and 25% of project cost in case of other projects) where the outcome of the contract cannot be ascertained reliably, the Company recognizes revenue equal to actual cost.
Full provision is made for any loss estimated on a contract in the year in which it is first foreseen.
Where the Company is involved in providing operation and maintenance services under a single construction contract, then the consideration is allocated on a relative stand-alone price basis between various obligations of a contract.
For contracts where progress billing exceeds the aggregate of contract costs incurred to-date and recognized profits (or recognized losses, as the case may be), the surplus is shown as the amount due to customers.
For contracts where the aggregate of contract costs incurred to-date and recognized profits (or recognized losses, as the case may be) exceed progress billing, the deficit is shown as the amount due from customers. Amount due from customers is shown as part of other non-financial assets as the contractual right for consideration is dependant on completion of contractual milestones.
Amounts received before the related work is performed are disclosed in the Balance Sheet as a liability towards advance received. Amounts billed for work performed but yet to be paid by the customer are disclosed in the Balance Sheet as trade receivables.
The amount of retention money held by the customers is disclosed as part of other current assets
Interest is recognized on a time proportion basis determined by the amount outstanding and the rate applicable using the effective interest rate (EIR) method. Dividend income and export benefits are recognised in the statement of profit and loss on the date that the Company''s right to receive payment is established.
Interest receivable on customer dues is recognised as income in the Statement of Profit and Loss on accrual basis provided there is no uncertainty towards its realization
Other items of income are accounted as and when the right to receive such income arises and it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.
Exceptional items
An item of income or expense which by its size, type or incidence requires disclosure in order to improve an understanding of the performance of the Company is treated as an exceptional item and disclosed as such in the financial statements. If any.
1.16 Foreign currencies transactions and balances
Transactions in foreign currency are recorded at exchange rates prevailing at the date of transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the statement of profit and loss of the year.
Monetary assets and liabilities denominated in foreign currencies which are outstanding, as at the reporting period are translated at the closing exchange rates and the resultant exchange differences are recognised in the statement of profit and loss.
Non-monetary assets and liabilities denominated in foreign currencies that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction.
1.17 Employee benefits Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering the services are classified as short-term employee benefits. Benefits such as salaries, wages, expected cost of bonus and short term compensated absences, leave travel allowance etc. are recognized in the period in which the employee renders the related service.
Post-employment benefits Defined contribution plans
The company''s superannuation scheme, state governed provident fund scheme related to employee state insurance scheme are defined contribution plans. The company has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expenses when they are due.
The employees'' gratuity fund schemes and provident fund scheme managed by a trust and pension scheme are the Company''s defined benefit plans. The present value of the obligation under such defined benefit plans is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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.
The obligation is measured at the present value of the estimated future cash flows.The discount rates used for determining the present value of the obligation under defined benefit plans, is based on the market yields on government securities of a maturity period equivalent to the weighted average maturity profile of the defined benefit obligations as at the balance sheet date, having maturity periods approximating to the terms of related obligations.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income (OCI) in the period in which they occur. Remeasurements are not reclassified to the statement of profit and loss in subsequent periods.
In case of funded plans, the fair value of the plan''s assets is reduced from the gross obligation under the defined benefit plans, to recognise the obligation on net basis.
When the benefits of the plan are changed or when a plan is curtailed, the resulting change in benefits that relates to past service or the gain or loss on curtailment is recognised immediately in the statement of profit and loss. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The company recognises gains/ losses on settlement of a defined plan when the settlement occurs.
The Company pays contribution to a recognized provident fund trust in respect of above-mentioned PF schemes. Other long-term employee benefit
Compensated absences liabilities mean, the liabilities for earned leave that are not expected to be settled wholly within twelve months after the end of the reporting period in which the employee render the related service. They are therefore measured as 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. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating the terms of the related obligation. Re-measurements as a result of experience adjustments and change in actuarial assumptions are recognised in the statement of profit and loss.
Income tax expense comprises current and deferred tax. It is recognised in the statement of profit and loss except to the extent that it relates to a business combination or items recognised directly in equity or in OCI.
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that were enacted at the reporting date in the country where the company operates and generates taxable income. Current tax assets and liabilities are offset only if certain criteria are met and such offsetting is legally enforceable.
Deferred tax is provided using the balance sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year. The tax effect is calculated on the accumulated timing differences at the end of the accounting period based on prevailing enacted or subsequently enacted regulations.
Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.
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 recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised 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 only if certain criteria are met.
Share based compensation benefits are provided to the employees (including senior executives) of the company under the Company''s Employee Stock Option Scheme, whereby employees render services as consideration for equity instruments (equity-settled transactions).
Equity-settled transactions
The fair value of the options granted to employees is recognised as an employee benefit expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted:
That cost is recognised, together with a corresponding increase in share-based payment (SBP) reserves in equity, over the period in which the performance and/or service conditions are fulfilled in employee benefits expense. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. The statement of profit and loss expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense.
When the terms of an equity-settled award are modified, the minimum expense recognised is the expense had the terms had not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.
A Provision is recognized when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are discounted using a current pre- tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost in the statement of profit and loss.
A provision for warranty is recognised when the underlying products and services are sold to the customer based on historical warranty data and at its best estimate using expected value method. The initial estimate of warranty-related costs is revised annually.
Provision for decommissioning and site restoration
The Company has a legal obligation for decommissioning of windmills and restoring the site back to its original condition. Decommissioning and restoration costs are measured initially at its best estimate using expected value method. The present value of initial estimates is provided as a liability and corresponding amount is capitalised as a part of the windmill. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.
Contingent liabilities
Contingent liability is disclosed when,
⢠company has a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation; or
⢠present obligation arising from past events, when no reliable estimate is possible; or
⢠A possible obligation arising from past events where the probability of outflow of resources is not remote. Provisions and contingent liabilities are reviewed at each Balance Sheet date.
Company has adopted Ind AS 116 ''Leases'' from 1 April 2019. On transition, company has recognized right-to-use asset equal to lease liability which is the present value of the remaining lease payments, discounted using incremental borrowing rate at the date of initial application i.e. 1 April 2019.
Lease is a contract that provides to the customer (lessee) the right to use an asset for a period of time in exchange for consideration.
A Company as a Lessee
A lessee is required to recognise assets and liabilities for all leases with a term that is greater than 12 months, unless the underlying asset is of low value, and to recognise depreciation of leased assets separately from interest on lease liabilities in the statement of Profit and Loss.
Initial Measurement Right to use asset
At the commencement date, the Company measures the right-of-use asset at cost. The cost of the right-of-use asset shall comprise:
⢠the amount of the initial measurement of the lease liability
⢠any lease payments made at or before the commencement date, less any lease incentives received;
⢠any initial direct costs incurred by the lessee; and
⢠an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories. The lessee incurs the obligation for those costs either at the commencement date or as a consequence of having used the underlying asset during a particular period.
Lease liability
At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses its incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise the following payments:
⢠Fixed payments (including in-substance 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 Company under residual value guarantees;
⢠The exercise price of a purchase option if the Company 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
Subsequent measurement Right to use assets
Subsequently the Company measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses. ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
Lease Liability
Subsequently the Company measures the lease liability by:
⢠increasing the carrying amount to reflect interest on the lease liability at the interest rate implicit in the lease, if that rate can be readily determined or the Company''s incremental borrowing rate.
⢠reducing the carrying amount to reflect the lease payments made; and
⢠re-measuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in substance fixed lease payments.
B Company 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 unless the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases or another systematic basis is available. 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.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the company''s net investment in the leases. Finance lease income is allocated to accounting periods to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
1.22 Impairment of non-financial assets
The company assesses at each balance sheet date whether there is any indication that an asset or cash generating unit (CGU) may be impaired. If any such indication exists, the company estimates the recoverable amount of the asset. The recoverable amount is the higher of an asset''s or CGU''s fair value less costs of disposal or its value in use. 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.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognised in the statement of profit and loss.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
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 asset 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 economic best interest.
A fair value measurement of a non-financial asset considers 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.
The company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
⢠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 recognised in the financial statements on a 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 based on the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
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.
Initial recognition and measurement
All financial assets are recognised initially at fair value. 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.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
⢠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)
Financial assets are subsequently measured at amortised cost if,
⢠the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
⢠the contractual terms of instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the company neither transfers nor retain substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.
Impairment of financial asset
Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
⢠Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance
⢠Financial assets that are debt instruments and are measured as at FVTOCI
⢠Lease receivables
⢠Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18
⢠Loan commitments which are not measured as at FVTPL
⢠Financial guarantee contracts which are not measured as at FVTPL
The company follows ''simplified approach'' for recognition of impairment loss allowance on:
⢠Trade receivables or contract revenue receivables; and
⢠All lease receivables resulting from transactions within the scope of Ind AS 17
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs 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.
Initial recognition and measurement
The company initially recognises loans and advances, deposits, debt securities issued and subordinated liabilities on the date on which they are originated. All other financial instruments (including regular-way purchases and sales of financial assets) are recognised on the trade date, which is the date on which the company becomes a party to the contractual provisions of the instrument.
A financial liability is measured initially at fair value plus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue.
Financial guarantee contracts
Financial guarantee contracts issued by the company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. 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 and the amount recognised less cumulative amortisation.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Derivative financial instruments
Initial recognition and subsequent measurement
The Company uses derivative financial instruments, such as forward currency contracts to hedge its foreign currency risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Basic EPS is calculated by dividing the profit for the year attributable to equity holders of the company by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares.
Diluted EPS adjust the figures used in the determination of basic EPS to consider
⢠The after-income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
⢠The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares (if any).
Operating segments are reporting in a manner consistent with the internal reporting to the chief operating decision maker (CODM).
The board of directors of the company assesses the financial performance and position of the company and makes strategic decisions. The Board of Directors, which are identified as a CODM, consists of chief executive officer, chief financial officer and all other executive directors.
Company operates in single reporting segment.
1.27 Key sources of estimation
The preparation of financial statements in conformity with Ind AS requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. The estimates and underlying assumptions made by management are explained under respective policies. Revisions to accounting estimates include useful lives of property, plant and equipment & intangible assets, allowance for expected credit loss, future obligations in respect of retirement benefit plans, expected cost of completion of contracts, provision for rectification costs, fair value/recoverable amount measurement, etc. Difference, if any, between the actual results and estimates is recognised in the period in which the results are known.
Mar 31, 2018
1. Basis of preparation
The company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accounting principles (''âGAAPââ), in compliance with the provisions the Accounting Standards as issued by the Institute of Chartered Accountants of India.
The financial statement are prepared under the historical cost convention on an accrual basis in accordance with the generally accepted accounting principles and comply with the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared in accordance with the GAAP under the historical cost convention on an accrual basis and comply in all material respects with the mandatory Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government in consultation with the National Advisory Committee on Accounting Standards. The accounting policies have been consistently applied by the company and are consistent with those used in the previous year.
2. Presentation and disclosure of financial statements
The presentation and disclosure of the financial statements have been made in accordance with the revised Schedule VI notified by the Central Government vide notification no. S.O 447(E), dated 28th February 2011 (as amended by notification no. F No. 2/6/2008-CL-V, dated 30th March 2011) which has become effective for accounting periods commencing on or after 1st April 2011. The adoption of revised schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.
3. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in India requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the managementâs best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.
4. Fixed Assets
Tangible assets are stated at their original cost of acquisition including taxes, duties, freight, and other incidental expenses related to acquisition and installation of the concerned assets less accumulated depreciation and impairment losses, if any. Fixed assets are further adjusted by the amount of CENVAT credit, VAT credit and GST wherever applicable and subsidy directly attributable to the cost of fixed assets. Interest and other borrowing costs during construction period to finance qualifying fixed assets is capitalised.
5. Depreciation and Amortisation
Depreciation has been provided on Straight Line Method at the rates and in the manner as prescribed in Schedule of the Companies Act, 2013.
The cost and the accumulated depreciation on fixed assets sold or otherwise disposed off are removed from the stated values and resulting gain and losses are recognised in statement of profit and loss.
6. Investments
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 carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.
On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.
7. Inventories
Raw materials, components, stores and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a first-in-first-out basis.
Work-in-progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty and is determined on a first-in-first-out 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 make the sale.
8. Revenue Recognition
Current tax is determined on the basis of taxable income computed in accordance with the provisions of the Income Tax Act, 1961.
Deferred Tax is recognised, subject to the consideration of prudence in respect of deferred tax asset, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.
9. Taxes on Income
Current tax is determined on the basis of taxable income computed in accordance with the provisions of the Income Tax Act, 1961.
Deferred Tax is recognised, subject to the consideration of prudence in respect of deferred tax asset, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.
10. Foreign Currency Transactions
Foreign currency transactions on initial recognition in the reporting currency are accounted for at the exchange rates prevailing on the date of transaction.
Foreign exchange gain or loss, resulting on account of reinstatement of monetary items on the date of balance sheet using exchange rate as on the date of balance sheet is recognized as income or expense for the period.
11. Provision and Contingent Liabilities:
Provisions are recognised when the company has a present legal or constructive obligation as a result of past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. Provisions are determined based on the best estimate required to settle the obligation at the balance sheet date. Provisions are reviewed at each balance sheet date and adjusted to reflect current best estimates. A disclosure of contingent liability is made where there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources.
12. Impairment of Assets
The management periodically assesses, using external and internal sources whether there is any indication that an asset may be impaired. If an asset is impaired, the company recognizes an impairment loss as an excess of the carrying amount of the asset over the recoverable amount.
13. Earnings per share
Basic earnings per share are 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 are adjusted for the effects of all dilutive potential equity shares. The number of shares and dilutive shares are adjusted by issue of bonus shares, if any.
14. Borrowing costs
Borrowing cost includes interest and other costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. 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 or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.
15. IPO Expenses
Company has made initial public offer (IPO) in current year and expenses incurred during year Rs 47,57,447/-relating to IPO are adjusted against the securities premium collected.
16. Construction Expenses
The Company has separately shown all the direct expenses and taxes directly attributable to projects under the Construction expenses.
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