Summary of significant accounting policies
1.1 Basis of preparation & presentation of financial statements
The financial statements of the company have been prepared under historical cost convention
on the accrual basis of accounting, are in accordance with the applicable requirements of the
Companies Act 2013 and comply in all material aspects with the Indian Accounting Standards
(hereinafter referred as to 'Ind. AS') as notified by ministry of corporate affairs in pursuant to
section 133 of Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting
Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules
2016.
The accounting policies have been consistently applied unless otherwise stated. All assets and
liabilities have been classified as current or non-current as per the Company's normal
operating cycle and other criteria set out in the Division II of Schedule III to the Act 2013. The
Company considers 12 months to be its normal operating cycle for the purpose of current or
non-current classification of assets and liabilities.
1.2 Summary of significant accounting policies
a. Use of estimates
The preparation of financial statements in conformity with Indian Accounting Standards
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 management's 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.
b. Property Plant & Equipment's
Tangible assets
Property, Plant and Equipment is stated at cost, net of accumulated depreciation and
accumulated impairment losses, if any. Cost comprises of purchase price inclusive of taxes etc.
up to the date the asset is ready for its intended use. Depreciation is provided under the
written down value method at the rates and in the manner prescribed under Schedule II to
the Companies Act, 2013.
Intangible assets
Intangible assets are stated at cost, net of accumulated depreciation and impairment of losses,
if any. Depreciation is provided under written down value method at the rate and in the
manner prescribed under Schedule II to the companies Act, 2013. Currently company does
not hold any intangible assets.
c. Depreciation/amortization
Tangible assets
Depreciation on fixed assets is calculated on a written down value method at based on the
useful lives estimated by the management, or those prescribed under the Schedule II of the
Companies Act, 2013.
Depreciation method, useful life and residual value are reviewed periodically.
Leasehold land and improvements are amortised on the basis of duration and other terms of
lease.
The carrying amount of PPE is reviewed periodically for impairment based on internal /
external factors. An impairment loss is recognised wherever the carrying amount of assets
exceeds its recoverable amount. The recoverable amount is the greater of the asset's net
selling price and value in use.
De-recognition
PPE 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 de-recognition.
Intangible assets
Depreciation on Intangible assets is calculated on a written down value method at based on
the useful lives estimated by the management, or those prescribed under the Schedule II of
the Companies Act, 2013.
d. Borrowing costs
Borrowing cost includes interest, amortization of ancillary 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.
e. Investments
Investments are classified as current investments and long-term investments as per
information and explanation given by the management.
On initial recognition, all investments are measured at cost. The cost comprises purchase
price and directly attributable acquisition charges such as brokerage, fees and duties.
Current investments are carried in the financial statements at cost or FMV whichever is
lower and Long-term investments are carried at FMV. FMV of Long-term Investment is
determined by the management from the latest audited report of the Investment companies
if it is not listed in Stock-Exchange of India. On disposal of an investment, the difference
between it carrying amount and net disposal proceeds is charged or credited to the
statement of profit and loss. Investments transfer to holding company at cost gain or loss on
said investment book by holding company.
f. Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow
to the company and the revenue can be reliably measured.
Interest
Interest income is recognized on a time proportion basis taking into account the amount
outstanding and the applicable interest rate. Interest income is included under the head
"other income" in the statement of profit and loss.
Dividend Income
Revenue is recognised when the Company's right to receive the payment is established,
which is generally when shareholders approve the dividend.
Other Income
Other incomes are accounted on accrual basis, except interest on delayed payment by
debtors and liquidated damages which are accounted on acceptance of the Company's
claim.
g. Inventories
Inventories comprise of traded goods, stores and spares are valued at cost or at net
realisable value whichever is lower. Cost of traded goods, stores and spares is determined
on weighted average basis. Stores and spares, which do not meet the definition of property,
plant and equipment, are accounted as inventories. Net realizable value is the estimated
selling price in the ordinary course of business and estimated costs necessary to make the
sale.
The Company has valued its construction materials and consumables at lower of cost or net
realizable value. The construction materials and consumables purchased for construction
work, issued to construction are treated as consumed.
h. Accounting for taxes on income
Tax expense comprises of current and deferred tax. Current income tax is measured at the
amount expected to be paid to the tax authorities in accordance with the Income Tax Act,
1961. Current and deferred tax shall be recognized as income and expenses and included
in profit and loss for the period, except to the extent that the tax arises from (a) a
transaction or event which is recognized in the same or a different period, outside profit
or loss, either in other comprehensive Income or directly in equity or (b) a business
combination. Deferred taxes recognized in respect of temporary differences between the
carrying amount of assets and liabilities for financial reporting purpose and corresponding
amounts used for taxation purpose except to the extent it relates to business combination
or to an item which is recognized directly in equity and in other comprehensive Income.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively
enacted at the balance sheet date. Deferred tax assets are recognized only to the extent
that it is probable that future taxable profit will be available against which the assets can
be utilized. A deferred tax asset shall be recognized for the carry-forward of unused tax
losses and unused tax credits to the extent that it is probable that future taxable profit will
be available against which the unused tax losses and unused tax credits can be utilized.
Deferred tax assets are reviewed at each reporting date and Reduced to the extent that it
is no longer probable that the related tax benefit will be Realize. A deferred tax liability is
recognized based on the expected manner of realization or settlement of carrying amount
of assets and liabilities
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists
to set-off current tax assets against current tax liabilities and the deferred tax assets and
deferred taxes relate to the same taxable entity and the same taxation authority.
Minimum alternate tax (MAT) paid in a period is charged to the statement of profit and
loss as current tax. The Group recognizes MAT credit available as an asset only to the extent
that there is convincing evidence that the Group will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to be carried forward. In
the period in which the company recognizes MAT credit as an asset in accordance with the
Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax
under the Income-tax Act, 1961, the said asset is created by way of credit to the statement
of profit and loss and shown as "MAT Credit Entitlement." The Group reviews the "MAT
credit entitlement" asset at each reporting date and writes down the asset to the extent
the Group does not have convincing evidence that it will pay normal tax during the
specified period.
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