2. Significant accounting policies
2.1 Basis of preparation of Financial Statements
The financial statements are prepared in accordance with Indian Generally Accepted Accounting
Principles (“GAAP”) under the historical cost convention on the accrual basis. GAAP comprises
mandatory accounting standards specified under Section 133 of the Act, read with Companies
(Accounting Standards) Rules,2021 and the provisions of the Companies Act, 2013.
The accounting policies adopted in the preparation of the financial statements are consistent with
those followed in the previous year.
The Company has rounded off all the amounts in these financial statements to nearest lacs and two
decimal thereof, unless otherwise specifically stated.
2.2 Use of estimates
The preparation of the financial statements in conformity with Indian GAAP requires the
Management to make estimates and assumptions considered in the reported amounts of assets and
liabilities (including contingent liabilities) and the reported income and expenses during the period. The
Management believes that the estimates used in preparation of the financial statements are prudent and
reasonable. Future results could differ due to these estimates and the differences between the actual
results and the estimates are recognised in the periods in which the results are known / materialise.
2.3 Cash and cash equivalents
Cash comprises cash in hand and demand deposits with banks. Cash equivalents are short-term
balances (with an original maturity of three months or less from the date of acquisition), highly liquid
investments that are readily convertible into known amounts of cash and which are subject to
insignificant risk of changes in value.
2.4 Cash flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items
and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past
or future cash receipts or payments. The cash flows from operating, investing and financing activities of
the Company are segregated based on the available information.
2.5 Property, Plant and equipments and Intangible Assets
a. Property, Plant and equipments
Fixed assets are carried at cost less accumulated depreciation / amortisation and impairment losses,
if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any
import duties and other taxes (other than those subsequently recoverable from the tax authorities), any
directly attributable expenditure on making the asset ready for its intended use, other incidental expenses
and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is
ready for its intended use. Machinery spares which can be used only in connection with an item of fixed
asset and whose use is expected to be irregular are capitalised and depreciated over the useful life of the
principal item of the relevant assets.
Subsequent expenditure on fixed assets after its purchase / completion is capitalised only if such
expenditure results in an increase in the future benefits from such asset beyond its previously assessed
standard of performance.
b. Depreciation
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its
estimated residual value. Depreciation on tangible fixed assets has been provided on the Written Down
Method as per the useful life prescribed in Schedule II to the Companies Act, 2013.
Intangible assets are amortised over their estimated useful life on written down method.
The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of
each financial year and the amortisation period is revised to reflect the changed pattern, if any.
c. Intangible assets
Computer software developed are amortised on a straight line basis over the shorter of the useful
economic life or 3 years, whichever is lower.
d. Borrowing Costs
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the
arrangement of borrowings and exchange difference arising from foreign currency borrowings to the
extent they are regarded as an adjustment to the interest cost.
Borrowings Costs directly attributable to the acquisition, construction or production of an asset that
necessarily taken a substantial period of time to get ready for its intended use or sale are capitalized as part
of the cost of the respective asset. All other borrowings costs are expensed in the period they occur.
2.6 Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Company and revenue can be reliably measured. The following specific recognition criteria must also be
met before revenue is recognized:
a. Sale of goods
Revenue from Sale of goods is recognised when all the Significant risks and rewards or ownership of
the goods have been passed to the buyer. The Company collects Goods & Services Tax (GST) on behalf
of the Government and therefore, these are not economic benefits flowing to the company. Hence, they
are excluded from revenue. Goods & Services Tax (GST) deducted from revenue (gross) is the amount
that is included in the revenue (gross) and not the entire amount of liability arising during the year.
b. Sale of Services
Revenue from Service transactions is recognised as the service is performed. The Completed service
contract method is used for the revenue recognition.
In case of indivisible works contracts, revenues are recognized on percentage completion method,
synchronised to the billing schedules agreed by the customers.
Revenue in respect of billed and unbilled contracts/property development in progress includes
recognised profits based on percentage of completion and retention on bills. Provision for expected
losses is made irrespective of percentage of completion.
c. Other income
Interest income is recognized on a time proportion basis taking into account the amount outstanding
and the applicable interest rate. Interest income is included under the head “other income" in the
statement of profit and loss.
2.7 Employee benefits
Employee benefits include provident fund, employee state insurance scheme, gratuity and
compensated absences. The Payment of gratuity Act' 1972 is applicable on the company.
2.8 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax
effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during
the period. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the
post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to
expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the
weighted average number of equity shares considered for deriving basic earnings per share and the
weighted average number of equity shares which could have been issued on the conversion of all dilutive
potential equity shares.
2.9 Taxes on income
Income-tax expense comprises current tax, deferred tax charge or credit.
Current tax is the amount of tax payable on the taxable income for the period as determined in
accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other
applicable tax laws.
Deferred tax is recognised on timing differences, being the differences between the taxable income
and the accounting income that originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively
enacted as at the reporting date.
Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised
for timing differences of items other than unabsorbed depreciation and carry forward losses only to the
extent that reasonable certainty exists that sufficient future taxable income will be available against
which these can be realised. However, if there are unabsorbed depreciation and carry forward of losses
and items relating to capital losses, deferred tax assets are recognised only if there is virtual certainty
supported by convincing evidence that there will be sufficient future taxable income available to realise
the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the
same governing tax laws and the Company has a legally enforceable right for such set off.
Deferred tax assets are reviewed at each balance sheet date for their realisability.
2.10 Inventories
Inventories are valued at the lower of cost and the net realisable value after providing for
obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the
goods to the point of sale, including octroi and other levies, transit insurance and receiving charges.
Work-in-progress and finished goods include appropriate proportion of overheads.
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