2. Material accounting policies
2.1 Basis of preparation
The financial statements of the Company have been
prepared in accordance with the Indian Accounting
Standards (Ind AS) notified under the Companies (Indian
Accounting Standards) (Amendment) Rules, 2015 (as
amended from time to time) under the provisions of
the Companies Act, 2013 (the 'Act') and presentation
requirements of Division II of Schedule III to the
Companies Act, 2013, (Ind AS compliant Schedule III),
as applicable to the financial statements. These financial
statements are prepared under the historical cost
convention on the accrual basis except for derivative
financial instruments and certain other financial assets
and liabilities which have been measured at fair value
(refer accounting policy regarding financial instruments).
The financial statements have been prepared on a going
concern basis.
The financial statements are presented in INR and all
values are rounded to the nearest lakhs ( INR 00,000)
except when otherwise indicated.
Current versus non-current classification
The Company presents assets and liabilities in the balance
sheet based on current / non-current classification.
An asset is treated as current when it is:
- Expected to be realised or intended to be sold or
consumed in normal operating cycle,
- Held primarily for the purpose of trading,
- Expected to be realized within twelve months after
the reporting period, or
- Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least
twelve months after the reporting period
All other assets are classified as non-current.
A liability is treated as current when it is:
- It is expected to be settled in normal operating cycle,
- It is held primarily for the purpose of trading,
- It is due to be settled within twelve months after the
reporting period, or
- There is no unconditional right to defer the settlement
of the liability for at least twelve months after the
reporting period
All other liabilities as classified as non-current.
The operating cycle is the time between the acquisition
of assets for processing and their realisation in cash and
cash equivalents. The Company has identified twelve
months as its operating cycle.
Deferred tax assets and liabilities are classified as non¬
current assets and liabilities.
2.2 Summary of material accounting policies
a. Investment in associates and joint ventures
An associate is an entity over which the Company has
significant influence. Significant influence is the power to
participate in the financial and operating policy decisions
of the investee but is not control or joint control over those
policies.
A joint venture is a type of joint arrangement whereby
the parties that have joint control of the arrangement
have rights to the net assets of the joint venture. Joint
control is the contractually agreed sharing of control of
an arrangement, which exists only when decisions about
the relevant activities require unanimous consent of the
parties sharing control.
The considerations made in determining whether
significant influence or joint control are similar to those
necessary to determine control over the subsidiaries. The
Company's Investments in its associate and joint venture
is recognised at cost less impairment loss (if any).
Upon loss of significant influence over the associate
or joint control over the joint venture, the Company
measures and recognises any retained investment at its
fair value. Any difference between the carrying amount
of the associate or joint venture upon loss of significant
influence or joint control and the fair value of the retained
investment and or proceeds from disposal is recognised in
profit or loss.
b. Foreign currencies:
Transactions in foreign currencies are initially recorded
at their respective functional currency (i.e. Indian rupee)
spot rates at the date the transaction first qualifies for
recognition.
Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency
spot rates of exchange at the reporting date. Exchange
differences arising on settlement or translation of
monetary items are recognised in the statement of profit
and loss.
Exchange differences arising on settlement or translation
of monetary items are recognised in profit or loss with the
exception of the following:
a) Exchange differences arising on monetary items
that form part of a reporting entity's net investment
in a foreign operation are recognised in profit
or loss in the separate financial statements of
the reporting entity or the individual financial
statements of the foreign operation, as appropriate.
In the financial statements that include the foreign
operation and the reporting entity (e.g., consolidated
financial statements when the foreign operation
is a subsidiary), such exchange differences are
recognised initially in OCI. These exchange
differences are reclassified from equity to profit or
loss on disposal of the net investment.
b) Tax charges and credits attributable to exchange
differences on those monetary items are also
recorded in OCI.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial
transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the
exchange rates at the date when the fair value is
determined. The gain or loss arising on translation
of non-monetary items measured at fair value is
treated in line with the recognition of the gain or
loss on the change in fair value of the item (i.e.,
translation differences on items whose fair value gain
or loss is recognised in OCI or profit or loss are also
recognised in OCI or profit or loss, respectively).
Exchange differences arising on translation /
settlement of foreign currency monetary items are
recognised as income or expenses in the period in
which they arise.
In determining the spot exchange rate to use on
initial recognition of the related asset, expense or
income (or part of it) on the derecognition of a non¬
monetary asset or non-monetary liability relating to
advance consideration, the date of the transaction is
the date on which the Group initially recognises the
non-monetary asset or non-monetary liability arising
from the advance consideration. If there are multiple
payments or receipts in advance, the Company
determines the transaction date for each payment or
receipt of advance consideration.
c. Fair value measurement
The Company measures financial instruments, such as,
derivatives at fair value at each balance sheet date.
Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability
takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most
advantageous market for the 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 market participant that
would use the asset in its highest and best use.
The Company uses valuation techniques that are
appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the
use of relevant observable inputs and minimising the use
of unobservable inputs.
All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows, based
on the lowest level input that is significant to the fair value
measurement as a whole:
- Level 1 — Quoted (unadjusted) market prices in
active markets for identical assets or liabilities
- Level 2 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is directly or indirectly observable
- Level 3 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is unobservable
For assets and liabilities that are recognised in the
financial statements on a recurring basis, the Company
determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to the
fair value measurement as a whole) at the end of each
reporting period.
External valuers are involved for valuation of significant
assets, such as properties and unquoted financial assets,
and significant liabilities, such as contingent consideration.
For the purpose of fair value disclosures, the Company has
determined classes of assets and liabilities on the basis of
the nature, characteristics and risks of the asset or liability
and the level of the fair value hierarchy as explained above.
d. Revenue recognition
Revenue from contracts with customers is recognised
when control of the goods or services are transferred to
the customer at an amount that reflects the consideration
to which the Company expects to be entitled in exchange
for those goods or services.
The specific recognition criteria described below must
also be met before revenue is recognised.
Multimodal transport income
Export revenue and import revenue is recognised when
the vessel arrives at the port of destination which is the
Company's completion of performance obligation.
Others
Reimbursement of cost is netted off with the relevant
expenses incurred, since the same are incurred on behalf
of the customers.
Interest income is recognised on time proportion basis.
Interest income is included in finance income in the
Statement of Profit and Loss.
Dividend income is recognised when the Company's right
to receive the payment is established i.e. the date on
which shareholders approve the dividend.
Business support charges are recognized as and when the
related services are rendered.
e. Contract balances
Contract balances include trade receivables, contract
assets and contract liabilities.
Trade receivables
A receivable represents the Company's right to an
amount of consideration that is unconditional (i.e., only
the passage of time is required before payment of the
consideration is due). Trade receivables are separately
disclosed in the financial statements.
Contract assets
Contract asset includes the costs deferred for multimodal
transport operations relating to export freight & origin
activities where the Company's performance obligation is
yet to be completed.
Additionally, a contract asset is the right to consideration
in exchange for goods or services transferred to the
customer. If the Company performs by transferring
services to a customer before the customer pays
consideration or before payment is due, a contract asset is
recognised for the earned consideration that is conditional.
Contract liabilities
A contract liability is the obligation to transfer services
to a customer for which the Company has received
consideration (or an amount of consideration is due) from
the customer. If a customer pays consideration before the
Company transfers services to the customer, a contract
liability is recognised when the payment is made or the
payment is due (whichever is earlier). Contract liabilities
are recognised as revenue when the Company performs
under the contract.
f. Taxes
Current Income tax
Current income tax assets and liabilities are measured
at the amount expected to be recovered from or paid to
the taxation authorities in accordance with the Income
tax Act, 1961. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively
enacted, at the reporting date.
Current income tax relating to items recognised outside
the Statement of Profit and Loss is recognised outside
the Statement of Profit and Loss (either in other
comprehensive income or in equity). Management
periodically evaluates positions taken in the tax returns
with respect to situations in which applicable tax
regulations are subject to interpretation and establishes
provisions where appropriate.
Deferred tax
Deferred tax is provided using liability approach 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 liabilities are recognised for all taxable
temporary differences, except:
a) When the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in a
transaction that is not a business combination and,
at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.
b) In respect of taxable temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures, when
the timing of the reversal of the temporary
differences can be controlled and it is probable that
the temporary differences will not reverse in the
foreseeable future.
Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused tax
credits and any unused tax losses. Deferred tax assets are
recognised to the extent that it is probable that taxable
profit will be available against which the deductible
temporary differences, and the carry forward of unused tax
credits and unused tax losses can be utilised, except:
a) When the deferred tax asset relating to the
deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that
is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor
taxable profit or loss
b) In respect of deductible temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures, deferred
tax assets are recognised only to the extent that it is
probable that the temporary differences will reverse
in the foreseeable future and taxable profit will be
available against which the temporary differences
can be utilised.
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
utilised. Unrecognised 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 relating to items recognised outside
statement of profit and loss is recognised outside
statement of profit and loss (either in other comprehensive
income or in equity). Deferred tax items are recognised
in correlation to the underlying transaction either in OCI
(Other Comprehensive Income) or directly in equity.
g. Property, plant and equipment
Freehold land is carried at historical cost. Other property,
plant and equipment is stated at cost, net of accumulated
depreciation and accumulated impairment losses, if
any. Cost comprises the purchase price and any cost
attributable to bringing the asset to its working condition
for its intended use. Borrowing cost relating to acquisition
of tangible assets which take substantial period of time
to get ready for its intended use are also included to the
extent they relate to the period till such assets are ready to
be put to use. Capital work in progress is stated at cost.
When significant parts of plant and equipment are
required to be replaced at intervals, the Company
depreciates them separately based on their specific useful
lives. Likewise, when a major inspection is performed,
its cost is recognised in the carrying amount of the plant
and equipment as a replacement if the recognition criteria
are satisfied. All other repair and maintenance costs are
recognised in statement of profit and loss as incurred.
The Company, based on internal assessment and
management estimate, depreciates certain items of
Office Equipment over estimated useful lives which are
different from the useful life prescribed in Schedule II to
the Companies Act, 2013. The management believes that
these estimated useful lives are realistic and reflect fair
approximation of the period over which the assets are
likely to be used.
An item of property, plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising
on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying
amount of the asset) is included in the statement of profit
and loss when the asset is derecognised.
The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.
h. Intangible assets
Intangible assets acquired separately are measured on
initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less any accumulated
amortisation and accumulated impairment losses.
Internally generated intangibles, excluding capitalised
development costs, are not capitalised and the related
expenditure is reflected in profit or loss in the period in
which the expenditure is incurred.
Intangible assets with finite lives are amortised over
the useful economic life and assessed for impairment
whenever there is an indication that the intangible asset
may be impaired. Computer software is amortised on a
straight-line basis over a period of 6 years basis the life
estimated by the management. The amortisation period
and the amortisation method for an intangible asset with
a finite useful life are reviewed at least at the end of each
reporting period. Changes in the expected useful life or
the expected pattern of consumption of future economic
benefits embodied in the asset are considered to modify
the amortisation period or method, as appropriate, and
are treated as changes in accounting estimates. The
amortisation expense on intangible assets with finite lives
is recognised in the statement of profit and loss unless
such expenditure forms part of carrying value of another
asset.
An intangible asset is derecognised upon disposal (i.e.,
at the date the recipient obtains control) or when no
future economic benefits are expected from its use or
disposal. Any gain or loss arising upon derecognition of
the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset)
is included in the statement of profit and loss. when the
asset is derecognised.
i. Impairment of non-financial assets
The Company assesses, at each reporting date, whether
there is an indication that an asset may be impaired. If any
indication exists, or when annual impairment testing for
an asset is required, the Company estimates the asset's
recoverable amount. An asset's recoverable amount is
the higher of an asset's or cash-generating unit's (CGU)
fair value less costs of disposal and its value in use.
Recoverable amount is determined for an individual
asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets
or Company of assets. When 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 the value in use, the estimated future cash
flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
In determining fair value less costs of disposal, recent
market transactions are taken into account. If no such
transactions can be identified, an appropriate valuation
model is used.
The Company bases its impairment calculation on detailed
budgets and forecast calculations, which are prepared
separately for each of the Company's CGUs to which
the individual assets are allocated. These budgets and
forecast calculations generally cover a period of five years.
For longer periods, a long-term growth rate is calculated
and applied to project future cash flows after the fifth year.
After impairment, depreciation is provided on the revised
carrying amount of the asset over its remaining useful life.
For assets excluding goodwill, an assessment is made
at each reporting date to determine whether there is an
indication that previously recognised impairment losses
no longer exist or have decreased. If such indication
exists, the Company estimates the asset's or CGU's
recoverable amount. A previously recognised impairment
loss is reversed only if there has been a change in the
assumptions used to determine the asset's recoverable
amount since the last impairment loss was recognised.
The reversal is limited so that the carrying amount of the
asset exceeds neither its recoverable amount nor the
carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for
the asset in prior years. Such reversal is recognised in the
statement of profit and loss unless the asset is carried at a
revalued amount, in which case, the reversal is treated as
a revaluation increase.
j. Leases
The Company assesses at contract inception whether
a contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified asset
for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and
measurement approach for all leases, except for short¬
term leases and leases of low-value assets. The Company
recognises lease liabilities to make lease payments and
right-of-use assets representing the right to use the
underlying assets.
i. Right-of-use assets
The Company recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted
for any remeasurement of lease liabilities. The
cost of right-of-use assets includes the amount
of lease liabilities recognised, initial direct costs
incurred, and lease payments made at or before
the commencement date less any lease incentives
received. Company does not have any Right-of-use
assets which are depreciated on a straight-line basis
for the period shorter of the lease term.
If ownership of the leased asset transfers to the
Company at the end of the lease term or the
cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated
useful life of the asset. The right-of-use assets are
also subject to impairment. Refer to the accounting
policies in section (m) Impairment of non-financial
assets.
ii. Lease Liabilities
At the commencement date of the lease, the
Company recognises lease liabilities measured at
the present value of lease payments to be made over
the lease term. The lease payments include fixed
payments (including in substance fixed payments)
less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and
amounts expected to be paid under residual value
guarantees. The lease payments also include the
exercise price of a purchase option reasonably
certain to be exercised by the Company and
payments of penalties for terminating the lease, if
the lease term reflects the Company exercising the
option to terminate. Variable lease payments that
do not depend on an index or a rate are recognised
as expenses (unless they are incurred to produce
inventories) in the period in which the event or
condition that triggers the payment occurs.
In calculating the present value of lease payments,
the Company uses its incremental borrowing rate at
the lease commencement date because the interest
rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made.
In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change
in the lease term, a change in the lease payments
(e.g., changes to future payments resulting from a
change in an index or rate used to determine such
lease payments) or a change in the assessment of an
option to purchase the underlying asset.
iii. Short-term leases and leases of low-value assets
The Company applies the short-term lease
recognition exemption to its short-term leases i.e.,
those leases that have a lease term of 12 months or
less from the date of transition. It also applies the
lease of low-value assets recognition exemption to
leases that are considered to be low value. Lease
payments on short-term leases and leases of low-
value assets are recognised as expense over the
lease term.
Company as a lessor
Leases in which the Company does not transfer
substantially all the risks and rewards incidental to
ownership of an asset is classified as operating leases.
Rental income arising is accounted for on a straight-line
basis over the lease terms. 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 so as to reflect
a constant periodic rate of return on the net investment
outstanding in respect of the lease.
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