(B) Material Accounting Policies
1.1 Statement of Compliance
The Company has adopted Indian Accounting Standards (referred to as "Ind AS”) notified under the Companies (Indian
Accounting Standards) Rules, 2015 (as amended) read with Section 133 of the Companies Act, 2013 ("the Act”) with effect from
April 1, 2017 and therefore Ind AS issued, notified and made effective till the financial statements are authorised have been
considered for the purpose of preparation of these financial statements.
Accounting Policy has been consistently applied except where a newly introduced Accounting Standard is initially adopted or a
revision to an existing accounting standard requires a change in accounting policy hitherto in use.
1.2 Basis of Preparation
The financial Statements have been prepared on historical cost convention on accrual basis, except for certain financial
instruments that are measured in terms of relevant Ind AS at fair values/amortised cost at the end of each reporting period.
Historical cost convention is generally based on fair value of the consideration given in exchange for goods and services.
As the operating cycle cannot be identified in normal course, the same has been assumed to have duration of 12 months. All
Assets and Liabilities have been classified as current or non-current as per the operating cycle and other criteria set out in Ind
AS-1 'Presentation of Financial Statements' and Schedule III to the Companies Act, 2013.
The Standalone Financial Statements are presented in Indian Rupees and all values are rounded off to the nearest two decimal
lakhs except otherwise stated.
1.3 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 at the measurement date under current market conditions.
The Company categorizes assets and liabilities measured at fair value into one of three levels depending on the ability to observe
inputs employed for such measurement:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within level 1 that are observable either directly or indirectly for the asset or
liability
Level 3: inputs for the asset or liability which are not based on observable market data.
1.4 Property Plant and Equipment (PPE)
(i) All items of PPE are stated at their cost of acquisition or construction and is net of accumulated depreciation. Carrying value
of PPE on the date of transition has been considered to be deemed cost. The cost comprises purchase price, borrowing cost
if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended
use.
(ii) All project related expenses via civil works, machinery under erection, construction and erection materials, pre-operative
expenditure net of revenue incidental / attributable to the construction of project, borrowing cost incurred prior to the date
of commercial operations are shown under Capital Work -In-Progress (CWIP).
(iii) Depreciation on property plant and equipment commences when the assets are ready for their intended use.
(iv) Depreciation on PPE is provided on the straight-line method over the useful lives of the respective asset as specified in Part
C of Schedule II to Companies Act, 2013. The useful life of assets considered for depreciation as above are as follows:
(v) The residual values, useful lives and method of depreciation of assets are reviewed at each financial year end and adjusted
prospectively, if appropriate.
1.5 Intangible Assets
Recognition and initial measurement
I ntangible assets are stated at cost comprising of purchase price inclusive of duties and taxes less accumulated amount of
amortization and impairment losses. Such assets, are amortised over the useful life using straight line method and assessed for
impairment whenever there is an indication of the same.
Accordingly, cost of computer software packages has been allocated / amortised over a period of 6 years on straight line basis
1.6 Derecognition of Tangible and Intangible Assets
An item of PPE is de-recognised upon disposal or when no future economic benefits are expected to arise from its use or disposal.
Gain or loss arising on the disposal of an item of PPE is determined as the difference between the sale proceeds and the carrying
amount of the asset and is recognised in the Statement of Profit and Loss.
1.7 Impairment of Tangible and Intangible Assets
Tangible and Intangible assets are reviewed at each balance sheet date for impairment. In case events and circumstances indicate
any impairment, recoverable amount of assets is determined. An impairment loss is recognized in the statement of profit and
loss, whenever the carrying amount of assets either belonging to Cash Generating Unit (CGU) or otherwise exceeds recoverable
amount. The recoverable amount is the higher of assets fair value less cost of disposal and its value in use. In assessing value in
use, the estimated future cash flows from the use of the assets are discounted to their present value at appropriate rate.
Impairment losses recognized earlier may no longer exist or may have come down. Based on such assessment at each reporting
period the impairment loss is reversed and recognized in the Statement of Profit and Loss. In such cases the carrying amount
of the asset is increased to the lower of its recoverable amount and the carrying amount that have been determined, net of
depreciation, had no impairment loss been recognized for the asset in prior years.
1.8 Leases
The company has taken assets on short term lease. The company has elected to use the recognition exemptions for short term
leases as well as low value assets.
1.9 Investments in Subsidiaries, Associates and Joint Ventures
The Company's investment in the equity shares of its subsidiaries, associates & joint ventures are recognised at cost. The company
has elected to apply previous GAAP carrying amount of its equity investment in subsidiaries, associates & joint ventures as
deemed cost as on the date of transition to Ind AS. However, the debt instruments in subsidiaries, associates & joint ventures are
recognized at fair value.
1.10 Financial Assets and Liabilities
Financial assets and financial liabilities (financial instruments) are recognized when 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 the Statement of Profit and Loss.
The financial assets and financial liabilities are classified as current if they are expected to be realised or settled within operating
cycle of the company or otherwise these are classified as non current.
The financial instruments are classified to be measured at Amortized Cost, at Fair Value Through Profit and Loss (FVTPL) or at Fair
Value Through Other Comprehensive Income (FVTOCI) and such classification depends on the objective and contractual terms
to which they relate. Classification of financial instruments are determined on initial recognition.
(i) Cash and cash equivalents
All highly liquid financial instruments, which are readily convertible into known amounts of cash and which are subject to
an insignificant risk of change in value and are having original maturities of three months or less from the date of purchase,
are considered as cash equivalents. Cash and cash equivalents includes balances with banks which are unrestricted for
withdrawal and usage.
(ii) Financial Assets and Financial Liabilities measured at amortized cost
Financial Assets held within a business whose objective is to hold these assets in order to collect contractual cash flows and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding are measured at amortized cost.
The above Financial Assets and Financial Liabilities subsequent to initial recognition are measured at amortized cost using
Effective Interest Rate (EIR) method.
The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts (including all fees
and points paid or received, transaction costs and other premiums or discounts) through the expected life of the Financial
Asset or Financial Liability to the gross carrying amount of the financial asset or to the amortised cost of financial liability,
or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
(iii) Financial Asset at Fair Value through Other Comprehensive Income (FVTOCI)
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within
a business whose objective is achieved by both collecting contractual cash flows and selling financial assets and the
contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding. Subsequent to initial recognition, they are measured at fair value and
changes therein are recognised directly in other comprehensive income.
(iv) For the purpose of para (ii) and (iii) above, the principal is considered to be fair value of the financial asset at initial
recognition and interest consists of consideration for the time value of money and associated credit risk.
(v) Financial Assets or Liabilities at Fair value through profit or loss (FVTPL)
Financial Instruments which do not meet the criteria of amortized cost or fair value through other comprehensive income
are classified as Fair Value through Profit or loss. These are recognised at fair value and changes therein are recognized in
the statement of profit and loss.
(vi) Equity Instruments
All equity investments in scope of Ind AS 109 are measured at fair value (except equity investment in subsidiary, associates
and joint ventures). For equity instruments, the company may make an irrevocable election to present subsequent changes
in the fair value in other comprehensive income. The Company makes such election on an instrument by-instrument basis.
The classification is made on initial recognition and is irrevocable if the Company decides to classify an equity instrument
as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI.
1.11 Financial guarantee contracts
Financial guarantee contracts other than those which are in the nature of Insurance are those contracts that require a payment to
be made to reimburse the holder for a loss it incurs because the specified party 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. Subsequently, the liability is measured at the
higher of the amount of expected loss allowance determined as per impairment requirements of Ind-AS 109 and the amount
recognised less cumulative amortization.
1.12 Impairment of Financial Assets
A financial asset is assessed for impairment at each reporting date. A financial asset is considered to be impaired if objective
evidence indicates that one or more events have a negative effect on the estimated future cash flows of that asset.
The company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses
if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial
instrument has not increased significantly since initial recognition, the company measures the loss allowance for that financial
instrument at an amount equal to 12-month expected credit losses.
However, for trade receivables or contract assets that result in relation to revenue from contracts with customers, the company
measures the loss allowance at an amount equal to lifetime expected credit losses.
1.13 De-recognition of financial instruments
The Company derecognizes a financial asset or a group of financial assets when the contractual rights to the cash flows from
the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to
another party.
On derecognition of a financial asset (except for equity instruments designated as FVTOCI), the difference between the asset's
carrying amount and the sum of the consideration received and receivable are recognized in statement of profit and loss.
On derecognition of assets measured at FVTOCI the cumulative gain or loss previously recognised in other comprehensive
income is reclassified to profit or loss as a reclassification adjustment unless the asset represents an equity investment, in which
case the cumulative gain or loss previously recognised in other comprehensive income are reclassified within equity.
Financial liabilities are derecognized if the Company's obligations specified in the contract expire or are discharged or cancelled.
The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is
recognized in Statement of Profit and Loss.
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