A. Significant Accounting Policies Corporate Information
CCL INTERNATIONAL LIMITED (“The Company”) bearing CIN L26940DL1991PLC044520 was originally incorporated on 04th July 1991 under Companies Act, 1956 as “Gupta Cements Private Limited”. The company after passing necessary resolution as specified in Companies Act, 1956, got converted into Public Limited Company. Later the name was changed to “Chirawa Cement Company” and finally the name was changed to its present name “CCL International Limited” and Certificate for change of name was obtained from ROC on 11th December 2008. The registered office of the company is situated at M-4, Gupta Tower, B-1/1, Commercial Complex, Azadpur, New Delhi-110033 and corporate office is situated at C-42, RDC Raj Nagar, Ghaziabad -201002. The company's equity shares are listed on Bombay Stock Exchange (BSE). The company is Infrastructure company executing major civil works including Roads, bridge, highway across India.
1.1 Basis of Preparation of Financial Statements
A) The financial statements of the company have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under the Section 133 of the Companies Act, 2013 (“the Act”) and the relevant provisions and amendments, as applicable as amended from time to time as notified by Ministry of Corporate Affairs, Government of India vide Notification dated February 16, 2015. Accounting policies have been applied consistently to all periods presented in these financial statements.
B) The financial statements are prepared on a going concern basis, as the Management is satisfied that the Company shall be able to continue its business for the foreseeable future and no material uncertainty exists that may cast significant doubt on the going concern assumption. In making this assessment, the Management has considered a wide range of information relating to present and future conditions, including future projections of profitability, cash flows and capital resources.
C) These Standalone Financial Statements are presented in Indian rupees (INR), which is also the functional currency of the Company. The Company has decided to round off the figures to the nearest Lakhs according to the provisions of the Companies Act, 2013. Transactions and balances with values below the rounding off norm (after two decimals) adopted by the Company have been reflected as “0” in the standalone financial statements.
D) These financial statements have been prepared on historical cost basis except certain financial instruments and defined benefit plans measured at fair value.
1.2 Use of Estimation
The preparation of the Standalone Financial Statements in conformity with IND AS requires management to make estimations, judgement & assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during
the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.
A) Significant management judgment
When preparing the financial statements, management undertakes a number of judgments, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenditure. The following are the significant management judgment in applying accounting policies of the company that has the most significant effect on the financial statements.
Revenue
The company recognizes revenue using Percentage of Completion method. This requires estimation of projected revenue, projected profit, projected costs, cost to completion and foreseeable losses. These are reviewed periodically by the management and any effect of changes in estimates is recognized in the period in which such changes are determined.
Recognition of deferred tax assets
The extent to which deferred tax assets can be recognized is based on assessment of the probability of the Company's future taxable income against which deferred tax assets can be utilized otherwise deferred tax is not recognized.
B) Estimation of uncertainty Recoverability of advances/ receivables
At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding advances and receivables.
Provisions
At each balance sheet date on the basis of management judgement, changes in facts and legal aspects, the company assesses the requirement of provisions against the outstanding warranties and guarantees. However, the actual future outcome may be different from this judgment.
1.3 Property, Plant and Equipment
Items of property, plant and equipment, other than Freehold Land, are recognized and measured at cost less accumulated depreciation and impairment losses, if any. Freehold Land is carried at cost and is not depreciated.
Cost includes the acquisition cost or the cost of construction, expenses directly related to bringing the asset to the location and condition necessary for making them operational for their intended use and, in the case of qualifying assets, the attributable borrowing costs.
Subsequent costs are included in the asset's carrying amount or recognised 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.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized net within other income/other expenses in statement of profit and loss.
1.4 Depreciation & Amortization
Depreciation has been provided on Straight Line basis, at the rate determined with reference to the useful lives specified in Schedule II of the Companies Act, 2013. The impact of the change in useful life of Property, Plant and Equipment has been considered in accordance with the provision of Schedule II.
1.5 Current and non-current classification
The Company present all the items of Financial Statements by classified as either Current or Non-current and be reflected as such as per IND AS-1.
Assets-: The Company classified its assets as current assets if assets fall in any of the following criteria-:
• It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle.
• It holds the asset primarily for the purpose of trading.
• It expects to realize the asset within twelve months after the reporting period.
• The asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
The company shall classify all other assets as non-current.
Liabilities-: The Company classified its liabilities as current liabilities if it is fall in any of the following criteria-:
• It expects to settle the liability in its normal operating cycle.
• It holds the liability primarily for the purpose of trading.
• It liability is due to be settled within twelve months after the reporting period. Or
• It does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification
The company shall classify all other liability as non-current.
1.6 Fair Value
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 an asset or transfer the liability takes place either in the principal market for the asset or liability or in the absence of principal market, in the most advantageous market for the asset or liability. The Company's accounting policies and disclosures require the measurement of fair values for financial and non-financial assets and liabilities.
1.7 Inventories and work in progress
Raw material, Construction materials and consumable stores are valued at lower of weighted average cost or Net Realizable Value. Cost includes direct material, work expenditure, labor cost and appropriate overheads excluding refundable duties and taxes.
Construction work in progress is valued at contracted rates less profit margin/estimates.
1.8 Revenue Recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
Construction Projects
Revenue from Construction projects is recognized on the ‘Percentage of Completion method' (POC) of accounting which necessary involves technical estimates of Percentage of Completion, and to cost of completion, of each contract. Activity, on the basis of which profit and losses are accounted.
When the outcome of the contract is ascertained reliably, contract revenue is recognized at cost of work performed on the contract plus proportionate margin, using Percentage of Completion method. Percentage of Completion is the proportion of cost of work performed up to the date, to the total estimated contract cost.
The stage of completion under the POC method is measured on the basis of proportionate of contract cost incurred for work performed up to the reporting date bear to the estimated total estimated cost of each contract.
Price escalation and other variations in the contract work are included in contract revenue only when:-
1. Negotiations have reached an advanced stage such that it is probable that customer will accept the claim and
2. That amount that is probable will be accepted by the customer and can be measured reliably.
Income from trading sales:-
Revenue from trading activities is accounted on accrual basis.
Revenue receipts from Joint Venture Contracts:-
In work sharing Joint Venture Arrangements, revenue, expenses, asset and liabilities are accounted for in the company's book to the extent work is executed by the company.
Interest Income:-
Interest on Fixed deposit is accounted on accrual basis.
Dividend Income:-
Dividend Income is accounted in the year in which the right to receive the same is established.
1.9 Taxation
Income tax expense comprises current tax and deferred tax. It is recognized in the Standalone Statement of Profit and Loss except to the extent that it relates to items recognized directly in equity or in OCI.
Current Tax
Provision for current taxation has been made based on the liability computed in accordance with the relevant tax rates and provisions of Income Tax Act, 1961 as at the balance sheet date and any adjustment to taxes in respect of the previous years, penalties, if any, related to income tax are included in current tax expense.
Deferred Tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purpose that originates in one period using tax rates enacted or substantively enacted at the reporting date. Where there is unabsorbed depreciation, or carry forward losses, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed at each reporting date and are capable of reversal in one or more subsequent periods when the probability of future taxable profits improves.
Minimum Alternate Tax
Minimum Alternate Tax (“MAT”) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in the Guidance Note issued by Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT Credit Entitlement. Such asset is reviewed at each balance sheet date and the carrying amount is written down to the extent there is no longer a convincing evidence that the Company will be liable to pay normal income tax during the specified period.
1.10 Cash and Cash equivalents
Cash and cash equivalents comprise cash in hand, demand deposits with bank and short term highly investments that are readily convertible into cash and are subjects to an insignificant risk of change in value.
For the purpose of the statement of cash flow, cash and cash equivalents consist of cash at banks and on hand, and short term deposits, as defined above net of outstanding bank overdrafts as they are considered an integral part of company's cash management.
1.11 Employee Benefits
i. Short-term benefits
The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employees is recognized during the period when the employee renders the service.
ii. Retirement benefits
Expenses and liability in respect of employee benefits are recorded in accordance with Indian Accounting Standard 19- Employee Benefits. Not applicable in case of the company
iii. Defined Contribution Plan
Obligations for contributions to defined contribution plans such as Provident Fund and Employee State Insurance Corporations are expensed as the related service is provided.
iv. Provident Fund
The Company makes contribution to statutory provident funds with Employees Provident Fund and Miscellaneous Provision Act, 1952 which is a defined contribution plan and contributions paid or payable are recognized as an expense in the year in which services are rendered by the employee, if applicable.
1.12 Provisions, Contingent Liabilities and Contingent Assets
1. Provisions are recognised when the Company has a binding present obligation. This may be either legal because it derives from a contract, legislation or other operation of law because the Company created valid expectations on the part of the third parties by accepting certain responsibilities. To record such an obligations, it must be probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made for the amount of the obligation. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.
2. Contingent Liability is disclosed in case of;
a) A present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle that obligation;
b) A present obligation when no reliable estimate is possible; and
c) A possible obligation arising from past events where the probability of outflow of resources is remote.
3. Disclosures of the contingent assets are made when it is probable that there is an inflow of future economic benefits. However, when the realisation of income is virtually certain, then the related asset is no longer a contingent asset, but it is recognised as an asset.
1.13 Foreign currency transactions and translations
Foreign currency transactions are recorded in the functional currency, by applying the exchange rate between the functional currency and the foreign currency at the date of the transaction.
Foreign currency monetary items outstanding at the balance sheet date are converted to functional currency using the closing rate. Non-monetary items denominated in a foreign currency which are carried at historical cost are reported using the exchange rate at the date of the transactions.
Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognized in the Standalone Statement of Profit and Loss in the year in which they arise.
Initial recognition and measurement Financial assets are recognised when and only when, the Company becomes a party to the contractual provisions of the financial instrument. The Company determines the classification of its financial assets at initial recognition.
When financial assets are recognised initially, they are measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets, which are not at fair value through profit or loss, are adjusted to the fair value on initial recognition.
Classification:
a) Cash and Cash Equivalents
Cash comprises cash/cheques on 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 investment that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
b) Debt Instruments
The Company classifies its debt instruments, as subsequently measured at amortised cost or fair value through Other Comprehensive Income or fair value through profit or loss based on its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
I. Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost using the effective interest rate method if these financial assets are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest.
Amortized cost is calculated by taking into account any discount or premium and fees or costs that are an integral part of the EIR. The EIR amortization is included in Interest income in the Standalone Statement of Profit and Loss. The losses arising from impairment are recognized in the Standalone Statement of Profit and Loss.
II. Financial assets at fair value through Other Comprehensive Income (FVOCI)
Financial assets are subsequently measured at fair value through Other Comprehensive Income if these financial assets 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. Movements in the carrying value are taken through Other Comprehensive Income, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains or losses which are recognised in the Statement of Profit and Loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in Other Comprehensive Income is reclassified from Other Comprehensive Income to the Statement of Profit and Loss. Interest income on such financial assets is included as a part of the Company's income in the Statement of Profit and loss using the effective interest rate method.
III. Financial assets at fair value through profit or loss (FVTPL)
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 such debt instrument that is subsequently measured at FVTPL and is not part of a hedging relationship as well as interest income is recognised in the Statement of Profit and Loss.
c) Equity Instruments
The Company subsequently measures equity investment in a wholly owned subsidiary at cost. Dividends from such investments are recognised in the Statement of Profit and Loss as other income when the Company's right to receive payment is established.
The Company assesses, at each reporting date, whether a financial asset or a group of financial assets is impaired and allowance for losses on such assessment is made in the Statement of Profit and Loss.
De-recognition
A financial asset is de-recognised only when the Company has transferred the rights to receive cash flows from the financial asset. 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 de-recognised. Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not de-recognised. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
2) Financial liabilities
Initial recognition and measurement
Financial liabilities are recognised when and only when, the Company becomes a party to the contractual provisions of the financial instrument. The Company determines the classification of its financial liabilities at initial recognition.
All financial liabilities are recognised initially at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial liabilities, which are not at fair value through profit or loss, are adjusted to the fair value on initial recognition.
Subsequent measurement
After initial recognition, financial liabilities that are not carried at fair value through profit or loss are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in the Statement of Profit and Loss when the liabilities are derecognised, and through the amortisation process.
De-recognition
A financial liability is de-recognised 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 a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset, and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle them on a net basis or to realize the assets and settle the liabilities simultaneously.
1.15 Borrowing Costs
Borrowing costs that are directly attributable to the acquisition and construction of qualifying assets are capitalised. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are treated as period cost and charged to statement of profit and loss in the year in which it is incurred.
1.16 Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet date, to assess any indication of impairment. If any such indication exists, the recoverable amount of such assets is estimated. An impairment loss is recognized wherever the carrying amount of the assets exceed its recoverable amount. The recoverable amount is greater of the net selling price or value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, based on an appropriate discounting factor.
After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.
1.17 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
1.18 Earnings Per Share
Basic earnings per share are computed, by dividing the profit or loss after tax by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed by dividing the profit / (loss) after tax 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.
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