2 Material accounting policies
2.1 Basis of preparationa) Statement of compliance:
The Standalone Financial Statements of the Company have been
prepared in accordance with Indian Accounting Standards (“Ind AS”)
notified under the Companies (Indian Accounting standards) Rules,
2015 (as amended from time to time) and presentation requirements of
Division II of Schedule III to the Companies Act, 2013, (“Ind AS Compliant
Schedule III"), as applicable to the standalone financial statements.
b) Basis of measurement:
The Standalone financial statements have been prepared under the
historical cost basis, except for the following items:
(i) Financial instrument carried at fair value through profit or loss and
fair value through OCI
(ii) Net defined benefit(asset)/ liability - Fair value of plan assets less
present value of defined benefit obligation
(iii) Share based payments - Equity settled options at grant date fair
value
c) Presentation currency and rounding off
The standalone financial statements are presented in Indian Rupee
(INR) and all values are rounded to nearest lakhs (INR 00,000), except
when otherwise indicated.
d) Going concern
The Company has prepared the standalone financial statements on the
basis that it will continue to operate as a going concern.
e) Current or non-current classification
The Company segregates assets and liabilities into current and
non-current categories for presentation in the balance sheet after
considering its normal operating cycle and other criteria set out in Ind
AS 1 Presentation of Financial Statements. For this purpose, current
assets and liabilities include the current portion of non-current assets
and liabilities respectively. Deferred tax assets and liabilities are always
classified as non-current.
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 period up to twelve months as its operating
cycle.
f) Measurement of fair values
A number of assets and liabilities included in the Company’s standalone
financial statements require measurement at, and/or disclosure of, fair
value. The fair value measurement of the Company’s financial and non¬
financial assets and liabilities utilises market observable inputs and data
as far as possible. Inputs used in determining fair value measurements
are categorised into different levels based on how observable the inputs
used in the valuation technique utilised are (‘the fair value hierarchy’):
Level 1: Quoted prices (unadjusted) in active markets for identical assets
or liabilities.
Level 2: Quoted prices for similar instruments in active markets, quoted
prices for identical or similar instruments in markets that are not active
and model-derived valuations, in which all significant inputs are directly
or indirectly observable in active markets.
Level 3: Valuations derived from valuation techniques, in which one or
more significant inputs are unobservable inputs which are supported
by little or no market activity.
The classification of an item into the above levels is based on the
lowest level of the inputs used that has a significant effect on the fair
value measurement of the item. Transfers of items between levels
are recognised in the period they occur and 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.
2.2 Material accounting policiesa) Property, plant and equipment
Recognition and measurement:
Property, plant and equipment are stated at cost of acquisition, less
accumulated depreciation and impairment losses, if any. Cost comprises
the purchase price and any costs attributable to bringing the asset to
their working condition for their intended use.
Subsequent expenditures related to an item of fixed asset are added to
its carrying amount or recognised as a separate asset, as appropriately
only when it is probable that the future economic benefits associated
with 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 Standalone Statement of Profit and
Loss during the reporting period in which they are incurred.
An item of property, plant and equipment and any significant part initially
recognised is derecognised upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising
on de-recognition of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the asset) is included
in the income statement when the asset is derecognised.
Depreciation methods and estimated useful lives:
Depreciation on property, plant and equipment is provided on the
straight-line method over their estimated useful lives, as determined by
the management. Depreciation is charged on a pro-rata basis for assets
purchased/sold during the year.
The residual values are not more than 5% of the original cost of the
assets. The asset’s residual values and useful lives are reviewed and
adjusted if appropriate.
The useful lives as given above best represent the period over which
the management expects to use these assets, based on technical
assessment. The estimated useful lives for Map survey vehicles & IOT
devices on rent are therefore different from the useful lives prescribed
under Part C of Schedule II of the Companies Act 2013.
In respect of Map survey vehicles and IOT devices on rent, the useful
lives are lower than those specified by Schedule II to the companies
Act,2013 and are depreciated over the estimated useful lives of 3 years
each, in order to reflect the actual usage of the assets.
The useful lives of property, plant and equipment’s are reviewed by the
management at each financial year-end and revised, if appropriate. In
case of a revision, the unamortized depreciable amount is charged over
the revised remaining useful life.
b) LeasesCompany as a lessee
The Company recognizes a right-of-use asset and a lease liability at the
lease commencement date. The right-of-use asset is initially measured
at cost, which comprises the initial amount of the lease liability adjusted
for any lease payments made at or before the commencement date,
plus any initial direct costs incurred and restoration cost, less any lease
incentives received.
The right-of-use assets are subsequently depreciated over the shorter
of the asset’s useful life and the lease term on a straight-line basis. In
addition, the right-of-use asset is reduced by impairment losses, if any.
The lease liability is initially measured at amortised cost at the present
value of the future lease payments. When a lease liability is remeasured,
the corresponding adjustment of the lease liability is made to the
carrying amount of the right-of-use asset or is recorded in profit or loss
if the carrying amount of the right-of-use asset has been reduced to
zero.
The Company evaluates if an arrangement qualifies to be a lease as
per the requirements of Ind AS 116 and this may require significant
judgment. The Company also uses significant judgement in assessing
the lease term (including anticipated renewals) and the applicable
discount rate.
The Company determines the lease term as the non-cancellable year
of a lease, together with both years covered by an option to extend
or terminate the lease if the Company is reasonably certain based on
relevant facts and circumstances that the option to extend or terminate
will be exercised. If there is a change in facts and circumstances, the
expected lease term is revised accordingly.
The discount rate is generally based on the interest rate specific to
the lease being evaluated or if that cannot be easily determined the
incremental borrowing rate for similar term is used.
The Company has elected not to recognize right-of-use assets and lease
liabilities for short-term leases that have a lease term of 12 months or
less and leases of low-value assets. The Company recognizes the lease
payments associated with these leases as an expense on a straight-line
basis over the lease term.
c) Investment Property
Investment property is a property held either to earn rental income or
for the capital appreciation or for both, but not for sale in the ordinary
course of business, use in supply of services or for administrative
purpose. Upon, initial recognition, an investment property is measured
at cost. Subsequent to initial recognition, investment property is
measured at cost less accumulated depreciation.
Depreciation methods and estimated useful lives:
Depreciation on investment property is provided on the straight¬
line method over their estimated useful lives, as determined by the
management. Depreciation is charged on a pro-rata basis for investment
property purchased/sold during the year. The estimated economic life of
building is 60 years.
Any gain or loss on disposal of an investment property is recognised in
profit or loss.
d) Intangible assets
Recognition and measurement:
Intangible assets acquired separately are measured on initial recognition
at cost. The Company has a policy of capitalising direct and indirect costs
of intangible assets comprising self- generated map database and/or
software based on management estimate of the costs attributable to
the creation of the asset. Direct costs that are capitalized as part of the
intangible assets include employee costs and the indirect costs include
general and administrative expenses which can be directly attributable
to making of the asset for its intended use.
The Company recognizes an intangible asset when the following criteria
are met:
i) Technically feasible of completing the intangible assets so that it will
be available for use or sale
ii) Management intends to complete the intangible assets
iii) Its ability to use or sell the assets
iv) It can be demonstrated how the intangible assets will generate
probable future economic benefits
v) Adequate technical, financial and other resources to complete the
development and to use or sell the intangible assets are available, and
vi) The expenditure attributable to the intangible assets during its
development can be reliably measured.
If the expenditure that do not meet the above-mentioned criteria are
recognized as an expense as incurred.
Subsequent expenditure is capitalised only when it increases the future
economic benefits from the specific assets to which it relates.
Amortization:
The intangible assets are amortised using the straight-line method over
their estimated useful lives and is recognized in Standalone statement
of profit and loss. The useful lives of intangible assets are reviewed by
the management at each financial year-end and revised, if appropriate.
In case of a revision, the unamortized depreciable amount is charged
over the revised remaining useful life.
e) Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Company
estimates the asset’s recoverable amount. An asset’s recoverable
amount is the higher of an assets or cash-generating unit’s (CGU) fair
value less costs of disposal and its 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
groups of assets. When the carrying amount of an asset or CGU exceeds
its recoverable amount, the asset is considered impaired and is written
down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to
the asset. In determining fair value less costs of disposal, recent market
transactions are taken into account. If no such transactions can be
identified, an appropriate valuation model is used. These calculations
are corroborated by valuation multiples, quoted share prices for publicly
traded companies or other available fair value indicators.
Impairment charges are included in profit or loss, except to the extent
they reverse gains previously recognised in other comprehensive
income. An impairment loss recognised for goodwill is not reversed.
f) Inventories
Inventories which comprise raw material, finished goods, stock-in-trade,
stores and spares and project work-in-progress are carried at the lower
of cost and net realisable value (NRV).
Cost of inventories comprises all costs of purchase, duties and taxes
(Other than subsequently recoverable from tax authorities) costs of
conversion and other costs incurred in bringing the inventories to their
present location and condition. In determining the cost, FIFO (First in
First Out) method is used.
Project work-in-progress represents cost incurred on projects/portion of
projects when revenue is yet to be recognized. Such costs include field
survey expenses and salary costs for technical team working on these
projects.
Net realisable value is the estimated selling price in the ordinary course
of business, less the estimated costs of completion and the estimated
costs necessary to make the sale. The comparison of cost and net
realisable value is made on an item-by-item basis.
g) Cash and cash equivalents
Cash and cash equivalents in the Standalone Balance Sheet comprise
cash in banks and short-term deposits and investments with an original
maturity of three months or less, which are subject to an insignificant
risk of changes in value.
h) Financial Instruments
A financial instrument is a contract that gives rise to a financial asset
of one entity and a financial liability or equity instrument of another
entity.
A.) Financial assets
On initial recognition, a financial asset is classified as measured at:
i) amortised cost;
ii) fair value through other comprehensive income (FVOCI)-debt
investment;
iii) fair value through other comprehensive income (FVOCI)-equity
investment; or
iv) FVTPL
Financial assets are not reclassified subsequent to their initial
recognition, except if and in the period the Company changes its
business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the
following conditions and is not designated as FTVPL:
a) the asset is held within a business model whose objective is to hold
assets to collect contractual cash flows, and
b) 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.
A instrument is measured at FVOCI if it meets both of the following
conditions and is not designated as FVTPL:
a) the asset is held within a business model whose objective is achieved
by both collecting contractual cash flows and selling financial assets,
and
b) 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.
All financial assets not classified as measured at amortised cost or FVOCI
as described above are measured at FVTPL. On initial recognition, the
Company may irrevocably designate a financial asset that otherwise
meets the requirements to be measured at amortised cost or at FVOCI
as at FVTPL if doing so eliminates or significantly reduces an accounting
mismatch that would otherwise arise.
Financial assets at FVTPL
These assets are subsequently measured at fair value. Net gains and
losses, including any interest or dividend income, are recognised in
profit or loss. However, C.E. Info Systems International Inc., USA, a wholly
owned subsidiary of C.E. Info Systems Ltd, has made an investment in
MFV Ventures, USA. The investment is not measured at Net Asset Value
(NAV), as the units are not publicly traded and do not have an active
secondary market. Accordingly, the valuation reflects the illiquid nature
of the investment and is in line with applicable accounting standards for
non-marketable securities.
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using
the effective interest method. The amortised cost is reduced by
impairment losses. Interest income, foreign exchange gains and losses
and impairment are recognised in profit or loss. Any gain or loss on
derecognition is recognised in profit or loss.
Financial assets at FVOCI
These assets are subsequently measured at fair value. Interest income
under the effective interest method, foreign exchange gains and
losses and impairment are recognised in profit or loss. Other net gains
and losses are recognised in OCI. On derecognition, gains and losses
accumulated in OCI are reclassified to profit or loss.
Equity investments at FVOCI
These assets are subsequently measured at fair value. Dividends
are recognised as income in profit or loss unless the dividend clearly
represents a recovery of part of the cost of the investment. Other net
gains and losses are recognised in OCI and are not reclassified to profit
or loss.
Derecognition
The Company derecognizes a financial asset when the contractual
rights to the cash flows from the financial asset expire, or it transfers
the rights to receive the contractual cash flows in a transaction in which
substantially the risks and rewards of ownership of the financial asset
are transferred or in which the Company neither transfers nor retains
substantially all of the risks and rewards of ownership and does not retain
control of the financial asset. If the Company enters into transactions
whereby it transfers assets recognised on its Standalone Balance Sheet
but retains either all or substantially all of the risks and rewards of the
transferred assets, the transferred assets are not derecognised.
Impairment
In accordance with Ind AS 109, the Company applies Expected Credit
Loss (ECL) model for measurement and recognition of impairment
loss. The Company follows ‘simplified approach’ for recognition of
impairment loss allowance on trade receivables.
The application of simplified approach does not require the Company
to track changes in credit risk. Rather, it recognises impairment loss
allowance based on lifetime ECLs at each reporting date, right from its
initial recognition.
For recognition of impairment loss on other financial assets and risk
exposure, the Company determines that whether there has been
a significant increase in the credit risk since initial recognition. If
credit risk has not increased significantly, 12-month ECL is used to
provide for impairment loss. However, if credit risk has increased
significantly, lifetime ECL is used. If in subsequent period, credit quality
of the instrument improves such that there is no longer a significant
increase in credit risk since initial recognition, then the entity reverts to
recognising impairment loss allowance based on 12-month ECL.
Lifetime ECLs are the expected credit losses resulting from all possible
default events over the expected life of a financial instrument. The
12-month ECL is a portion of the lifetime ECL which results from default
events that are possible within 12-months after the reporting date.
ECL is the difference between all contractual cash flows that are due
to the Company in accordance with the contract and all the cash flows
that the entity expects to receive (i.e. all shortfalls), discounted at the
original EIR. When estimating the cash flows, an entity is required to
consider:
(i) All contractual terms of the financial instrument (including
prepayment, extension etc.) over the expected life of the financial
instrument. However, in rare cases when the expected life of the financial
instrument cannot be estimated reliably, then the entity is required to
use the remaining contractual term of the financial instrument.
(ii) Cash flows from other credit enhancements that are integral to the
contractual terms.
ECL impairment loss allowance (or reversal) is recognised as an income/
expense in the statement of profit and loss during the period. This
amount is reflected under other expenses in the statement of profit and
loss. The balance sheet presentation for various financial instruments is
described below:
Financial assets measured at amortized cost, contractual revenue
receivable: ECL is presented as an allowance, i.e. as an integral part of
the measurement of those assets in the balance sheet. The allowance
reduces the net carrying amount. Until the asset meets write off criteria,
the Company does not reduce impairment allowance from the gross
carrying amount.
B) Financial liabilities
All financial liabilities are recognized initially at fair value and, in the
case of borrowings and payables, net of directly attributable transaction
costs.
The subsequent measurement of financial liabilities depends on their
classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities designated upon initial recognition at fair value
through profit or loss are designated as such at the initial date of
recognition, and only if the criteria in Ind AS 109 are satisfied. Changes
in fair value of such liability are recognized in the Standalone Statement
of profit or loss.
Financial liabilities at amortized cost
The Company’s financial liabilities at amortized cost includes trade
payables, borrowings including bank overdrafts and other payables.
After initial recognition, financial liabilities are subsequently measured
at amortized cost using the effective interest rate (EIR) method except
for deferred consideration recognized in a business combination which
is subsequently measured at fair value through profit and loss. Gains
and losses are recognized in the Standalone Statement of Profit and
Loss when the liabilities are derecognized as well as through the EIR
amortization process.
Amortized 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. The EIR amortization is included as finance costs in the Standalone
Statement of Profit and Loss.
Derecognition
A financial liability is derecognized when the obligation under the
liability is discharged or cancelled or expires.
Offsetting of financial instruments
Financial assets and financial liabilities are offset, and the net amount
is reported in the Standalone Balance Sheet if there is a currently
enforceable legal right to offset the recognized amounts and there is
an intention to settle on a net basis to realize the assets and settle the
liabilities simultaneously.
Investment in Subsidiary Companies, associates and joint venture
The investment in subsidiary companies, associates and joint venture (if
any) is carried at cost (net of impairment) as per IND AS 27.
i) Dividends
Dividends are recognised when they become legally payable. In the
case of interim dividends to equity shareholders, this is when declared
by the directors. In the case of final dividends, this is when approved by
the shareholders at the Annual General Meeting.
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