Note 44: Summary of other accounting policies
This note provides a list of other accounting policies adopted in the preparation of these financial statements to the extent
they have not already been disclosed in the other notes. These policies have been consistently applied to all the years
presented, unless otherwise stated.
a) Property, plant and equipment
The historical cost of property, plant and equipment comprises its purchase price and other attributable expenditure
incurred in making the asset ready for its intended use and interest on borrowings attributable to acquisition of
qualifying property, plant and equipment up to the date the asset is ready for its intended use.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Company and the cost
of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is
derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting
period in which they are incurred.
Property, Plant and Equipment retired from active use and held for sale are stated at the lower of their net book value
and net realizable value and are disclosed separately.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in
the statement of profit and loss.
b) Leases
Lease payments to be made under reasonably certain extension options are also included in the measurement of the
liability.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over
the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each
period.
Payments associated with short-term leases are recognised on a straight-line basis as an expense in profit or loss.
Short-term leases are leases with a lease term of 12 months or less.
c) Financial Instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual
provisions of the instruments
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities
at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial
assets or financial liabilities at fair value through profit or loss are recognized immediately in Statement profit and loss.
(i) Financial assets carried at amortized cost: - Assets that are held for collection of contractual cash flows where
those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest
income from these financial assets is included in Other income using the effective interest rate method. Any
gain or loss arising on derecognition is recognized directly in statement of profit and loss. Impairment losses are
presented as separate line item in the statement of profit and loss.
(ii) Financial assets at fair value through other comprehensive income (FVOCI): - Assets that are held for collection
of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely
payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken
through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange
gains and losses which are recognised in statement of profit and loss. When the financial asset is derecognised,
the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and
recognised in other gains/(losses). Interest income from these financial assets is included in other income using
the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses).
(iii) Financial assets at fair value through profit or loss: - Assets that do not meet the criteria for amortised cost or
FVOCI are measured at fair value through profit or loss. A gain or loss on a financial assets that are subsequently
measured at fair value through profit or loss is recognized in statement of profit and loss and presented net in
the period in which it arises. Interest income from these financial assets is included in other income.
(iv) Financial liabilities: - Financial liabilities are measured at amortized cost using the effective interest method.
Derecognition of Financial Assets
A financial asset is derecognized only when
1. The Company has transferred the rights to receive cash flows from the financial asset or
2. Retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual
obligation to pay the cash flows to one or more recipients.
Where the Company has transferred an asset, the Company evaluates whether it has transferred substantially
all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized.
Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset,
the financial asset is not derecognized.
Where the Company has neither transferred a financial asset nor retains substantially all risks and rewards of
ownership of the financial asset, the financial asset is derecognized if the Company has not retained control
of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be
recognized to the extent of continuing involvement in the financial asset.
Offsetting financial instruments
Financial Assets and Liabilities are offset and the net amount is reported in the Balance Sheet where there is
a legally enforceable right to offset the recognized amounts and there is an intention to settle on net basis or
realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on
future events and must be enforceable in the normal course of business and in the event of default, insolvency
or bankruptcy of the Company or the counterparty.
d) Revenue recognition
Determination of transaction price and its subsequent assessment:
The Company assesses the transaction price considering the contract price as agreed with the customer in the contract
document, that includes Letter of Acceptance/Intent or any document evidencing the contractual arrangement. Where
consideration is not specified within the contract and is variable, the Company estimates the amount of consideration
to be received from its customer. The consideration recognized is the amount which the Company assesses to be
highly probable not to result in a significant reversal in future periods.
Modification to existing contracts, if any, are assessed to be either a separate performance obligation or an extension
of existing scope and transaction price is determined accordingly. The Company considers the retention moneys
held by customer to be protection money in the hands of the customers and hence are not subjected to discounting
pursuant to para 61 and 62(c) of Ind AS 115. The mobilisation advances received, free of interest, from customers,
also are not subjected to discounting, as the Company considers the objective behind the transaction to be that of
ensuring and protecting timely execution of the project and not deriving financial benefit in the nature of interest.
The significant payment terms are as per the terms and conditions agreed as per the contract.
Performance obligations in a contract with customer
Company determines the performance obligations, considering the nature and scope of each contract.
Measuring Progress of a construction contract
When the outcome of individual contracts can be estimated reliably, contract revenue and contract costs are recognized
as revenue and expenses respectively by reference to the stage of completion as at the reporting date. The stage of
completion is determined on the basis of proportion of cost of work performed to-date, to the total estimated contract
costs. Costs are recognized as incurred and revenue is recognized on the basis of the proportion of total actual costs
as at the reporting date, to the estimated total costs of the contract.
For the purpose of recognising revenue, contract revenue comprises the initial amount of revenue agreed in the
contract, the variations in contract work, claims and incentive payments to the extent that is probable they will result
in revenue, and they are capable of being reliably measured.
The percentage of completion method is applied on a cumulative basis in each accounting year to the current estimates
of contact revenue and contract costs. The effect of a change in the estimate of the outcome of a contract is accounted
for as a change in accounting estimates and the effect of which is recognized in the Statement of Profit and Loss in
the year in which the change is made and in subsequent years.
When the outcome of a construction contract cannot be estimated reliably, revenue is recognized only to the extent of
contract costs incurred of which recovery is probable and the related contract costs are recognized as an expense in
the year in which they are incurred.
When it is probable that the total contract cost will exceed total contract revenue, the expected loss is recognized as
an expense in the Statement of Profit and Loss in the year in which such probability occurs.
Provision is made for all known or expected losses on individual contracts once such losses are foreseen. Revenue in
respect of variations to contracts and incentive payments is recognized when it is probable it will be agreed by the customer.
Contract assets and Contract liabilities
If the Company performs by transferring goods or services to a customer before the customer pays consideration
or before payment is due, such amount is recognized as a contract asset, excluding any amounts presented as a
receivable. The contract asset becomes receivable when the entity’s right to consideration is unconditioned, which is
the case when only passage of time is required before payment of consideration is due. The contract asset represents
the Company’s right to consideration in exchange for goods or services that the Company has transferred to the
customer. The Company shall assess a contract asset for impairment in accordance with Ind AS 109. An impairment
of a contract asset shall be measured, presented and disclosed on the same basis as a financial asset that is within
the scope of Ind AS 109.
If the customer pays consideration, or an Company has a right to an amount of consideration that is unconditional,
before the Company transfers a good or service to the customer, such amount is recognized as a contract liability.
The contract liability represents the Company’s obligation to transfer goods or services to the customer for which the
Company has received consideration from the customer.
e) Other income
(i) Interest income is accrued on a time basis using the effective interest method by reference to the principal
outstanding and the effective interest rate, which is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to that asset’s net carrying amount.
(ii) Any amount received/receivable in respect of Arbitration Awards in favour of the Company is treated as income
of the year of receipt of the final award or any update to the current outstanding award.
f) Taxation
The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of
the reporting period in India in accordance with the provisions of the Income Tax Act, 1961. Management periodically
evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred income tax
is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred
income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of
the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax
liabilities are offset where the Company has a legally enforceable right to offset and intends either to settle on a net
basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognized in statement of profit and loss, except to the extent that it relates to items
recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other
comprehensive income or directly in equity, respectively.
g) Impairment of assets
All Property, Plant and Equipment are tested for impairment at the end of each financial year. The impairment loss
being the excess of carrying value over the recoverable value of the assets, if any, is charged to the Statement of
Profit and Loss in the respective financial year. The impairment loss recognized in prior years is reversed in cases
where the recoverable value exceeds the carrying value, upon reassessment in the subsequent years.
h) Cash and cash equivalents
For the purpose of presentation in the Statement of cash flows, cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of
three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant
risk of changes in value.
i) Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year
which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12
months after the reporting period.
j) Borrowings
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognized in profit or loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled
or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred
to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is
recognized in statement of profit and loss.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of
a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes
payable on demand on the reporting date, the Company does not classify the liability as current, if the lender agreed,
after the reporting period and before the approval of the financial statements for issue, not to demand payment as a
consequence of the breach.
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