B. Summary of Material Accounting Policies
1. Basis of preparation
The Company's standalone financial statements
('financial statements') have been prepared in
accordance with the provisions of the Companies Act,
2013 and the Indian Accounting Standards (Ind AS)
notified under the Companies (Indian Accounting
Standards) Rules, 2015 read with Section 133 of the
Companies Act, 2013 (as amended).
These financial statements include Balance sheet,
Statement of Profit and Loss, Statement of Changes
in Equity and Statement of Cash Flow and notes,
comprising a summary of material accounting policies
and other explanatory information and comparative
information in respect of the preceding period. The
Company has prepared the financial statements on
the basis that it will continue to operate as a going
concern.
The financial statements have been prepared on a
historical cost basis, except for the following assets
and liabilities which have been measured at fair value
or revalued amount:
- Derivative financial instruments,
- Certain other financial assets and liabilities
which have been measured at fair value
(refer accounting policy regarding financial
instruments).
2. Presentation of financial statements
The financial statements (except for Statement
of Cash Flow) are prepared and presented in the
format prescribed in Division II - Ind AS Schedule
III (“Schedule III”) to the Companies Act, 2013.
The Statement of Cash Flow has been prepared
and presented as per the requirements of Ind AS 7
“Statement of Cash flows”. Amounts in the financial
statements are presented in Indian Rupees in Lakhs
as per the requirements of Schedule III. “Per share”
data is presented in Indian Rupees upto two decimals
places.
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 realised 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 current when:
• 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 are classified as non-current.
The terms of the liability that could, at the option of
the counterparty, result in its settlement by the issue of
equity instruments do not affect its classification.
Deferred tax assets and liabilities are classified as
non-current assets and liabilities.
The operating cycle is the time between the acquisition
of assets for processing and their realisation in cash
and cash equivalents. The Company has identified
twelve months as its operating cycle.
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
takes into account 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 is available to measure fair value,
maximizing the use of relevant observable inputs and
minimizing the use of unobservable inputs.
Fair value measurements are categorized into Level
1, 2 or 3 based on the degree to which the inputs to
the fair value measurements are observable and the
significance of the inputs to the fair value measurement
in its entirety, which are described as follows:
• Level 1 inputs are quoted prices in active markets
for identical assets or liabilities that entity can
access at measurement date;
• Level 2 inputs are inputs, other than quoted prices
included in Level 1, that are observable for the
asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the
asset or liability.
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.
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.
4. Foreign Currency
a. Functional and presentation currency
The financial statements of the Company are
presented using Indian Rupee (?), which is also
the functional currency i.e., currency of the
primary economic environment in which the
Company operates.
b. Transactions and balances
Foreign currency transactions are translated
into the respective functional currency using the
exchange rates at the dates of the transactions.
Foreign exchange gains and losses resulting from
the settlement of such transactions and from the
translation of monetary assets and liabilities
denominated in foreign currencies at year end
exchange rates are recognised in profit or loss.
5. Property, Plant and Equipment (PPE)
PPE is recognized 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. All items of PPE are stated at cost
net of tax/duty credits availed, if any, less accumulated
depreciation and cumulative impairment. Cost
includes expenditure that is directly attributable to
the acquisition and installation of such assets, if any.
Subsequent expenditure relating to Property, Plant
and Equipment is capitalised 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. 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 repairs and maintenance costs are charged to
the Statement of Profit and Loss as incurred.
Items such as spare parts and servicing equipment
are recognised as PPE if they meet the definition of
property, plant and equipment and are expected to be
used for more than one year. All other items of spares
and servicing equipment’s are classified as item of
Inventories.
PPE not ready for the intended use on the date of
the Balance Sheet is disclosed as “Capital Work-
In-Progress” and carried at cost net of accumulated
impairment loss, if any, comprising of directly
attributable costs and related incidental expenses.
Decommissioning cost, if any, on Property Plant and
Equipment are estimated at their present value and
capitalized as part of such assets.
An item of Property, plant and equipment’s is
derecognised upon disposal or when no future
economic benefits are expected to arise from the
continued use of the asset. Any gain or loss arising
on the disposal or retirement of an item of property,
plant and equipment’s is determined as the difference
between the sales proceeds and the carrying amount
of the asset and is recognised in the statement of profit
and loss.
Depreciation methods, estimated useful lives and
residual value
Depreciation has been provided on the written down
value method, as per the useful lives specified in
Schedule II to the Companies Act, 2013, or in the
case of assets where the useful life was determined by
technical evaluation carried out by the management’s
expert, in order to reflect the actual usage of the assets.
The asset’s useful lives are reviewed and adjusted, if
appropriate, at the end of each reporting period. The
useful lives of PPE are as under:
6. Intangible assets
a. Intangible Assets Under Service Concession
Arrangements (Appendix C to Ind AS 115 -
Revenue from Contracts with Customers)
In respect of Public to Private Arrangements
(PPA), on a Built-Operate-Transfer (BOT) basis,
Intangible Assets i.e. Right to collect toll/tariff are
recognised when the Company has been granted
rights to charge a toll/tariff from the users of such
public services and such rights do not confer an
unconditional right on the Company to receive
cash or another Financial Asset and when it is
probable that future economic benefits associated
with the rights will flow to the Company and the
cost of the asset can be measured reliably.
The Company constructs or upgrades
infrastructure (construction or upgrade services)
used to provide a public service and operates and
maintains that infrastructure (operation services)
for a specified period of time. These arrangements
may include infrastructure used in a public-to-
private service concession arrangement for its
entire useful life.
Under the Concession Agreements, where the
Company has received the right to charge users of
the public service, such rights are recognised and
classified as “Intangible Assets” in accordance
with Appendix C to Ind AS 115 - Service
Concession Arrangements. Such right is not
an unconditional right to receive consideration
because the amounts are contingent to the extent
that the public uses the service and thus are
recognised and classified as intangible assets.
Such an intangible asset is recognised by the
Company at cost (which is the fair value of
the consideration received or receivable for the
construction services delivered) and is capitalized
when the project is complete in all respects and
when the subsidiary companies receives the
completion certificate from the authority as
specified in the Concession Agreement.
An asset carried under concession arrangements
is derecognised on disposal or when no future
economic benefits are expected from its future
use or disposal.
Service Concession Arrangements that meet the
definition of an Intangible Asset are recognised
at cumulative construction cost, including
related margins. Till completion of construction
of the project, such arrangements are recognised
as “Intangible Assets Under Development” and
are recognised at cumulative construction cost,
including related margins.
b. Other Intangible assets
Intangible assets are recognized when it is
probable that future economic benefits attributable
to the assets will flow to the Company and the
cost of the asset can be measured reliably. Such
Intangible Assets acquired by the Company are
measured at cost less accumulated amortisation
and any accumulated impairment losses. Cost
includes expenditure that is directly attributable
to the acquisition and installation of such assets.
Amortisation
Right to collect tariff is amortised on a Straight¬
Line basis over the concession period.
Amortisation on software has been provided on
the written down value method, as per the useful
lives specified in Schedule II to the Companies
Act, 2013.
7. Impairment of Non-Financial Assets
Assets are tested for impairment whenever events or
changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss
is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount and
the impairment loss is recognized in the Statement of
Profit and Loss. The recoverable amount is the higher
of an asset’s fair value less costs of disposal and value
in use. The recoverable amount is determined for an
individual asset, unless the asset does not generate
cash inflows that are largely independent of those
from other assets or group of assets. In assessing value
is use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate
that reflects current market assumptions of the time
value of money and the risks specified to the asset.
In determining net selling price (fair value less cost
of disposal), recent market transactions are taken into
account, if available. If no such transactions can be
identified, an appropriate valuation model is used.
In respect of assets for which impairment loss has been
recognised in prior periods, the Company reviews at
each reporting date whether there is any indication
that the loss has decreased or no longer exists. An
impairment loss is reversed if there has been a change
in the estimates used to determine the recoverable
amount. Such a reversal is made 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.
8. Non-current assets held for sale
The Company classifies non-current assets and
disposal groups as ‘Held For Sale’ if their carrying
amounts will be recovered principally through a
sale rather than through continuing use and sale is
highly probable and the asset or disposal Company is
available for immediate sale in its present condition.
Non-current assets held for sale and disposal groups
are measured at the lower of their carrying amount and
the fair value less costs to sell. Assets and liabilities
classified as held for sale are presented separately in
the balance sheet.
Property, plant and equipment and intangible assets
once classified as held for sale are not depreciated or
amortised.
9. Financial instruments
Initial Recognition
Financial instruments i.e. Financial Assets and
Financial Liabilities are recognised when the
Company becomes a party to the contractual
provisions of the instruments. Financial instruments
are initially measured at fair value. Transaction costs
that are directly attributable to the acquisition or
issue of financial instruments (other than financial
instruments at fair value through profit or loss)
are added to or deducted from the fair value of the
financial instruments, as appropriate, on initial
recognition. Transaction costs directly attributable
to the acquisition of financial instruments assets or
financial liabilities at fair value through profit or loss
are recognised in profit or loss.
Financial Assets
Subsequent Measurement
All recognised financial assets excluding trade
receivable. are subsequently measured at amortized
cost using effective interest method except for
financial assets carried at fair value through Profit
and Loss (FVTPL) or fair value through Other
Comprehensive Income (FVOCI). Trade receivables
that do not contain a significant financing component
or for which the Company has applied the practical
expedient are measured at the transaction price
determined under Ind AS 115. Refer to the accounting
policies of revenue from contracts with customers.
a. Equity investments in Subsidiaries, Associates
and Joint Venture
The Company accounts for its investment in
subsidiaries, joint ventures and associates and
other equity investments in subsidiary companies
at cost in accordance with Ind AS 27 - ‘Separate
Financial Statements’.
Investment in Compulsory Convertible
Debentures of subsidiary company is treated as
equity investments, since they are convertible
into fixed number of equity shares of subsidiary.
Investment made by way of Financial Guarantee
contracts in subsidiary, associate and joint
venture companies are initially recognised at fair
value of the Guarantee.
Interest free loans given by the Company to its
subsidiaries, associates and joint venture are in
the nature of perpetual debt which are repayable
at the discretion of the borrowers. The borrower
has classified the said loans as equity under Ind
AS - 32 'Financial Instruments Presentation'.
Accordingly, the Company has classified
this investment as Equity Instrument and has
accounted at cost as per Ind AS - 27 'Separate
Financial Statements'.
b. Equity investments (other than investments in
subsidiaries, associates and joint venture)
All equity investments falling within the scope
of Ind-AS 109 are mandatorily measured at Fair
Value through Profit and Loss (FVTPL) with all
fair value changes recognized in the Statement of
Profit and Loss.
The Company has an irrevocable option of
designating certain equity instruments as FVOCI.
Option of designating instruments as FVOCI
is done on an instrument-by-instrument basis.
The classification made on initial recognition is
irrevocable.
Dividends are recognised as other income in
the statement of profit and loss when the right
of payment has been established, except when
the Company benefits from such proceeds as
a recovery of part of the cost of the financial
asset, in which case, such gains are recorded
in OCI. Equity instruments designated at fair
value through OCI are not subject to impairment
assessment.
If the Company decides to classify an equity
instrument as FVOCI, then all fair value changes
on the instrument are recognized in Statement of
Other Comprehensive Income (SOCI). Amounts
from SOCI are not subsequently transferred to
profit and loss, even on sale of investment.
c. Investment in preference shares
Investment in preference shares are classified as
debt instruments and carried at amortised cost if
they are not convertible into equity instruments.
Investment in convertible preference shares of
subsidiary, associate and joint venture companies
are treated as equity instruments and carried at
cost. Other Investment in convertible preference
shares which are classified as equity instruments
are mandatorily carried at FVTPL.
d. De-recognition
A financial asset is primarily derecognized when
the rights to receive cash flows from the asset
have expired, or the Company has transferred its
rights to receive cash flows from the asset or has
assumed an obligation to pay the received cash
flows in full without material delay to a third
party under a pass-through arrangement; and with
that a)the Company has transferred substantially
all the risks and rewards of the asset, or b) the
Company has neither transferred nor retained
substantially all the risks and rewards of the
asset, but has transferred control of the asset.
e. Impairment of financial assets
The Company assesses at each date of balance
sheet whether a financial asset or a group of
financial assets is impaired. Ind AS 109 requires
expected credit losses to be measured through a
loss allowance. The Company recognises lifetime
expected losses for all trade receivables and/or
contract assets that do not constitute a financing
transaction. For all other financial assets,
expected credit losses are measured at an amount
equal to the 12 month expected credit losses or at
an amount equal to the lifetime expected credit
losses if the credit risk on the financial asset has
increased significantly since initial recognition.
Financial Liabilities - Initial recognition and
measurement
Classification
Financial liabilities and equity instruments issued by
the Company are classified according to the substance
of the contractual arrangements entered into and
the definitions of a financial liability and an equity
instrument.
Loans and borrowings are subsequently measured at
amortised cost using Effective Interest Rate (EIR),
except for financial liabilities at fair value through
profit or loss. Amortised cost is calculated by taking
into account any discount or premium on acquisition
and fees or costs that are an integral part of the EIR.
Amortisation arising on unwinding of the financial
liabilities as per EIR is included as a part of Finance
Costs in the Statement of Profit and Loss.
Financial liabilities recognised at FVTPL, including
derivatives, are subsequently measured at fair value.
a. Compound financial instruments
Compound financial instruments issued by
the Company is an instrument which creates a
financial liability on the issuer and which can be
converted into fixed number of equity shares at
the option of the holders.
Such instruments are initially recognised by
separately accounting the liability and the equity
components. The liability component is initially
recognised at the fair value of a comparable
liability that does not have an equity conversion
option. The equity component is initially
recognised as the difference between the fair
value of the compound financial instrument
as a whole and the fair value of the liability
component. The directly attributable transaction
costs are allocated to the liability and the equity
components in proportion to their initial carrying
amounts.
Subsequent to initial recognition, the liability
component of the compound financial instrument
is measured at amortised cost using the effective
interest method. The equity component of
a compound financial instrument is not re¬
measured subsequently.
b. 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. The liability is subsequently
measured at carrying amount less amortization
or amount of loss allowance determined as
per impairment requirements of Ind AS 109,
whichever is higher. Amortisation is recognised
as finance income in the Statement of Profit and
Loss.
c. De-recognition
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
and loss.
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 recognised
amounts and there is an intention to settle on a net
basis or realize the asset and settle the liability
simultaneously.
Re-classification of financial instruments
The Company determines classification of financial
assets and liabilities on initial recognition. After
initial recognition, no reclassification is made for
financial assets, such as equity instruments designated
at FVTPL or FVOCI and financial liabilities. For
financial assets which are debt instruments, a
reclassification is made only if there is a change in the
business model for managing those assets.
10. Cash dividend and non-cash distribution to equity
holders
The Company recognises a liability to make cash
or non-cash distributions to its equity holders when
the distribution is authorized and the distribution
is no longer at the discretion of the Company. As
per the corporate laws in India, a distribution is
authorized when it is approved by the shareholders.
A corresponding amount is recognised directly in
equity.
Non-cash distributions are measured at the fair value
of the assets to be distributed with fair value re¬
measurement recognised directly in equity.
Dividends paid/payable are recognised in the year
in which the related dividends are approved by the
Shareholders or Board of Directors as appropriate.
11. Earnings per share
The Company’s Earnings per Share (‘EPS’) is
determined based on the net profit attributable to the
shareholders’ of the Company.
Basic earnings per share is calculated by dividing the
profit from continuing operations and total profit, both
attributable to equity shareholders of the company
by the weighted average number of equity shares
outstanding during the period.
Diluted earnings per share is computed using the
weighted average number of common and dilutive
shares outstanding during the year including share-
based payments, except where the result would be
anti-dilutive.
12. Other Income
Dividend and Interest Income
Dividend income is recognized when the right to
receive payment is established. Interest income is
recognized using the effective interest method.
Income from profit from partnership firms
The share in profit in Partnership Firms (including
Limited Liability Partnership (LLP)) shall be
recognized as income in the statement of profit and
loss as and when the right to receive its profit share is
established.
13. Inventories
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.
For old used items are valued at cost / net releasable
value whichever is lower.
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.
14. Borrowing costs
Borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying
asset are capitalised during the period of time that
is required to complete and prepare the asset for its
intended use or sale. Qualifying assets are assets that
necessarily take a substantial period of time to get
ready for their intended use or sale. Other borrowing
costs are charged to Statement of Profit and Loss in
the period in which they are incurred.
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