2 Summary of significant accounting policies
2.1 Basis of preparation
The Standalone financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ‘Ind
AS’) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (‘the Act’) read with the Companies
(Indian Accounting standards) Rules, 2015 and other relevant provisions of the Act.
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
i. Historical cost convention
The financial statements have been prepared under the historical cost convention, as modified by the following:
a. Certain financial assets and financial liabilities at fair value;
b. Defined benefit plans-plan assets that are measured at fair value;
ii Fair value measurement
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 on
the measurement date. The Company uses valuation techniques that are appropriate in the circumstances for which sufficient data are available to
measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized 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
iii. Current vis-a-vis non-current classification
The assets and liabilities reported in the balance sheet are classified on a “current/non-current basis”, with separate reporting of assets held for
sale and liabilities. Current assets, which include cash and cash equivalents, are assets that are intended to be realized, sold or consumed during
the normal operating cycle of the Company or in the 12 months following the balance sheet date; current liabilities are liabilities that are expected
to be settled during the normal operating cycle of the Company or within the 12 months following the close of the financial year. The deferred tax
assets and liabilities are classified as non-current assets and liabilities.
2.2 Property, plant and equipment:
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation and
impairment loss, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
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.
Depreciation methods, estimated useful lives and residual value:
Depreciation is calculated using the straight line method to allocate their cost, net of their residual values, over their estimated useful lives which
are as follows:
2.3 Capital work in progress
Expenditure incurred on assets which are not ready for their intended use comprising direct cost, related incidental expenses and attributable
borrowing cost are disclosed under Capital Work-in-Progress.
2.4 Intangible assets:
Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization / depletion and impairment loss, if any.
The cost comprises of purchase price, cost of construction, borrowing costs and any cost directly attributable to bringing the asset to its working
condition for the intended use.
2.5 Amortization method and periods
Amortization is charged on a straight-line basis over the estimated useful lives. The estimated useful lives, residual value and amortization
method are reviewed at the end of each annual reporting period, with the effect of any changes in the estimate being accounted for on a
prospective basis.
Amortization of intangible assets (toll roads) created under BOT projects; the revenue based methodology is adopted
Computer software is amortized over an estimated useful life of 3 years.
2.6 Lease
Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate
the lease, if the use of such option is reasonably certain. The company make an assessment on the expected lease term on lease-by-lease basis and
thereby assess whether it is reasonably certain that any options to extend or terminate the contract will be exercised in. In evaluating the lease
term, the company consider factors such as any significant leasehold improvement undertaken over the lease term, cost relating to termination of
recognized in the statement of profit and loss when incurred . The cost and related accumulated depreciation are eliminated from the financial
statement upon sale or retirement of the asset and the resultant gains or losses are recognized in the Statement of Profit and Loss
Accounting policy
The company as lessee
The Company’s lease asset classes primarily consist of leases for buildings. The Company assesses whether a contract contains a lease at the
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 period of
time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company
assesses whether: (i) the contract 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.
At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a corresponding lease liability for all lease
arrangements in which it is a lessee, except for leases with a term of 12 months or less (short-term leases) and low-value leases. For these short¬
term and low-value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities
include these options when it is reasonably certain that they will be exercised.
ROU assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or
prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less
accumulated depreciation and 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. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the
value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from
other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted
using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of
these leases. Lease liabilities are remeasured with a corresponding adjustment to the related ROU asset if the Company changes its assessment of
whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash
flows.
The company as lessor
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. The sublease is classified
as a finance or operating lease by reference to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on a straight-line basis over the term of the relevant lease.
2.7 Investment properties:
Property that is held for long term rental yields or for capital appreciation or both, and that is not occupied by the Company is classified as
investment property. Investment property is measured initially at cost, including related transaction costs and where applicable borrowing costs.
Subsequent expenditure is capitalized to the asset’s carrying amount only when it is probable that the future economic benefits associated with
the 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. When part of an investment property is replaced, the carrying amount of the replaced part is derecognized.
Investment properties are depreciated using the straight line method over their estimated useful lives. Investment properties which are buildings
generally have a useful life of 60years.
2.8 Impairment of non-financial assets:
Assets which are subject to depreciation or amortization are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered an impairment
are reviewed for possible reversal of the impairment at the end of each reporting period.
2.9 Investments in subsidiaries, Joint ventures and Associates
Investments in subsidiaries, Joint ventures and associates are measured at cost less provision for impairment, if any.
2.10 Trade Receivable:
Trade receivables which do not contain significant financing component is measured at its transaction price (as defined in Ind AS 115 Revenue
on Contract with Customers). The company uses simplied approach to measuring impairment at an amount equal to life time expected credit
losses method.
2.11 Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprises cash at banks and on hand and Short-term deposits with an original maturity of three
months or less, which are subject to an insignificant risk of change in value. For the purpose of financial statement of cash flow, cash and cash
equivalent consists of cash and Short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part
of the Company’s cash management
2.12 Inventories
Inventories are valued as follows:
Construction materials, components, stores, spares and tools:
Lower of cost and net realizable value and includes all applicable costs in bringing goods to their present location and condition.
Work-in-progress and finished goods
Lower of cost and net realizable value. Cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on
the normal operating capacity, but excluding borrowing costs. Cost is determined on weighted average basis
Net realizable value is the estimated contract price in the ordinary course of business, less estimated costs of completion and estimated costs
necessary to complete the contract.
Land:
Land of real estate business are valued at lower of cost and net realizable value.
Cost includes land, cost of acquisition, legal cost and all other cost to transfer the legal and beneficial ownership of land in the name of the Group.
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.
2.13 Financial instruments:
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instruments of another
entity.
2.14 Investments and other financial assets
i. Classification
The Company classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value (either through Other Comprehensive Income or through profit or loss) and those measured
at amortized cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or Other Comprehensive Income. For investments in
debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments in subsidiaries,
the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through Other
Comprehensive Income.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
ii. Measurement
At initial recognition, the Company measures financial assets at its fair value plus, in the case of financial assets not at fair value through profit or
loss, transaction costs that are directly attributable to the acquisition of the financial assets. Transaction costs of financial assets carried at fair
value through profit or loss are expensed in profit or loss.
2.15 Debt instruments
Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and the cash flow characteristics
of the asset. There are three measurement categories into which the Company classifies its debt instruments:
i. 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 amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost is recognized in profit or loss
when the asset is derecognized or impaired. Interest income from these financial assets is included in other income using the effective interest rate
method.
ii. 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 revenue and foreign exchange gains and losses which are recognized in profit and loss. When the financial
asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in other
gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
iii. Fair Value through Profit or Loss (FVTPL):
Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVTPL. A gain or loss on a debt investment that is subsequently
measured at fair value through profit or loss is recognized in profit or loss in the period in which it arises. Interest income from these financial
assets is included in other income.
2.16 Impairment of financial assets:
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost. The impairment
methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109-‘Financial Instruments’, which requires
expected lifetime losses to be recognized from initial recognition of the receivables.
2.17 Derecognition of financial assets
A financial asset is derecognized only when:
I. The Company has transferred the rights to receive cash flows from the financial asset or
ii. 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 entity 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 entity has not transferred substantially all risks and rewards of
ownership of the financial asset, the financial asset is not derecognized. Where the entity 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 group retains control of the financial asset, the asset is continued to be recognized to the extent of continuing
involvement in the financial asset.
2.18 Contributed equity:
Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax from the proceeds.
2.19 Financial liabilities:
i. Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the
contractual arrangements and the definition of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
ii. Initial recognition and measurement:
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable
transaction costs.
The Company’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and financial guarantee
contracts.
iii. Subsequent measurement:
The measurement of financial liabilities depends on their classification, as described below:
iv. Borrowings:
Borrowings are subsequently carried at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is
recognized in the Statement of Profit and Loss over the period of the borrowings using the effective interest rate method.
Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the
facility will be drawn down. In this case, the fee is deferred until the drawdown occurs. To the extent there is no evidence that it is probable that
some or all of the facility will be drawn down, the fee is capitalized as a pre-payment for liquidity services and amortized over the period of the
facility to which it relates.
v. Trade and other payables:
These amounts represent obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Those
payable are classified as current liabilities if payment is due within one year or less otherwise they are presented as non-current liabilities. Trade
and other payables are subsequently measured at amortized cost using the effective interest rate method.
vi. Financial guarantee contracts:
Financial guarantee contracts are recognized as a financial liability at the time when guarantee is issued. The liability is initially at fair value and
subsequently at the higher of the amount determined in accordance with Ind AS 37 and the amount initially recognized less cumulative
amortization, where appropriate.
Where guarantees in relation to loans of subsidiaries are provided for no compensation, the fair values as on the date of transition are accounted
for as contribution and recognized as part of the cost of the equity investment.
vii. Derecognition:
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 profit or loss as other gains (losses). 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 recognized in the Statement of Profit and Loss.
2.20 Borrowing costs:
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are
capitalized 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. Investment income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. Other
borrowing costs are expensed in the period in which they are incurred.
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