2. Significant Accounting Policies

2.1 Basis of Preparation of and compliance with Ind AS

The 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
Financial Statement.

These Financial Statements include Balance Sheet, Statement of Profit and Loss, Statement of
Changes in Equity and Statement of Cash Flows and Notes, comprising a summary of significant
accounting policies and other explanatory information and comparative information in respect of
the preceding period.

The financial statements have been prepared on a historical cost basis, except for the following
assets and liabilities which have been measured at fair value or revalued amount:

• Derivative financial instruments,

• Certain other financial assets and liabilities which have been measured at fair value (refer
accounting policy regarding financial instruments).

The Financial Statements are presented in Indian Rupees (?) and all values are rounded to the
nearest Lakhs (?1,00,000)except wherever otherwise stated.

2.2 Summary of Significant Accounting Policies

(A) Current versus Non-Current Classification

The Company presents assets and liabilities in the balance sheet based on current/non-
current classification.

An asset is treated as current when it is:

• Expected to be realized or intended to be sold or consumed in normal operating cycle;

• Held primarily for the purpose of trading;

• Expected to be realized within twelve months after the reporting period, or

• Cash or Cash Equivalent unless restricted from being exchanged or used to settle liability
for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is treated as current when:

• It is expected to be settled in normal operating cycle;

• It is held primarily for the purpose of trading;

• It is due to be settled within twelve months after the reporting period, or

• There is no unconditional right to defer the settlement of the liability for at least twelve
months after the reporting period.

• All other liabilities are classified as non-current.

Deferred Tax Assets and Liabilities are classified as non-current assets and liabilities.

The operating cycle is the time between the acquisition of assets for processing and their
realization in cash and cash equivalents. The Company has identified twelve months as its
operating cycle.

(B) 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. The fair value
measurement is based on the presumption that the transaction to sell the asset or transfer the
liability takes place either:

• In the principal market for the asset or liability, or

• In the absence of a principal market, in the most advantageous market for the asset or
liability

The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market
participants would use when pricing the asset or liability, assuming that market participants
act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's
ability to generate economic benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for
which sufficient data is available to measure fair value, maximizing the use of relevant
observable inputs and minimizing the use of unobservable inputs.

Fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which
the inputs to the fair value measurements are observable and the significance of the inputs to
the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices in active markets for identical assets or liabilities that
entity can access at measurement date;

• Level 2 inputs are inputs, other than quoted prices included in Level 1, that are
observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

For assets and liabilities that are recognized in the financial statements on a recurring basis,
the Company determines whether transfers have occurred between levels in the hierarchy by
re-assessing categorization (based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.

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.

(C) Foreign Currency

(i) Functional and Presentation Currency

The financial statements of the Company are presented using Indian Rupee (Rs.), which is
also our functional currency i.e. currency of the primary economic environment in which the
company operates.

(ii) Transactions and Balances

Foreign currency transactions are translated into the respective functional currency using the
exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation of monetary assets and
liabilities denominated in foreign currencies at year end exchange rates are recognized in
profit or loss.

(D) Property, Plant and Equipment

PPE is recognized 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. PPE is stated at
original cost net of tax/duty credits availed, if any, less accumulated depreciation and
cumulative impairment, if any. Property, Plant and Equipment acquired on hire purchase
basis are recognized at their cash values. Cost includes professional fees related to the
acquisition of PPE and for qualifying assets, borrowing costs capitalized in accordance with
the company's accounting policy.

PPE not ready for the intended use as on the date of the Balance Sheet are disclosed as
"Capital Work In Progress". (Also refer to policies on leases, borrowing costs, impairment of
assets and foreign currency transactions).

Depreciation is recognized using Straight Line Method so as to write off the cost of the
assets (other than freehold land & immovable properties) less their residual values over their
useful lives specified in Schedule II to the Companies Act, 2013, or in the case of assets
where the useful life was determined by technical evaluation, over the useful life so
determined. Depreciation method is reviewed at each financial year end to reflect the
expected pattern of consumption of the future economic-benefits embodied in the asset. The
estimated useful life and residual values are also reviewed at each financial year end and the
effect of any change in the estimates of useful life/residual value is accounted on prospective
basis.

Where cost of a part of the asset ("asset component") is significant to total cost of the asset
and useful life of that part is different from the useful life of the remaining asset, useful life of
that significant part is determined separately and such asset component is depreciated over
its separate useful life.

Depreciation on additions to/deductions from, owned assets is calculated pro rata to the
period of use.

Depreciation charge for impaired assets is adjusted in future periods in such a manner that
the revised carrying amount of the asset is allocated over its remaining useful life.

Assets acquired under finance leases are depreciated on a straight-line basis over the lease
term. Where there is reasonable certainty that the company shall obtain ownership of the
assets at the end of the lease term, such assets are depreciated based on the useful life
prescribed under Schedule II to the Companies Act, 2013 or based on the useful life adopted
by the company for similar assets.

Freehold land is not depreciated.

(E) Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. Following
initial recognition, intangible assets are carried at cost less accumulated amortization.
Internally generated intangible assets, excluding capitalized development costs, are not
capitalized and expenditure is reflected in the statement of profit and loss in the year in which
the expenditure is incurred.

Intangible assets not ready for the intended use on the date of the Balance Sheet are
disclosed as "Intangible Assets Under Development".

Intangible assets are amortized on Straight-Line Basis over the estimated useful life. The
method of amortization and useful life is reviewed at the end of each accounting year with the
effect of any changes in the estimate being accounted for on a prospective basis.

Amortization on impaired assets is provided by adjusting the amortization charge in the
remaining periods so as to allocate the asset's revised carrying amount over its remaining
useful life.

(F) 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 asset or cash-generating units' (CGU) net selling price 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. Where 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 net selling price, recent market
transactions are taken into account, if available. 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 losses on non-financial asset, including impairment on inventories, are recognized
in the statement of profit and loss, except for properties previously revalued with the
revaluation surplus taken to OCI. For such properties, the impairment is recognized in OCI
upto the amount of any previous revaluation surplus.

After impairment, depreciation is provided on the revised carrying amount of the asset over its
remaining useful life.

An assessment is made at each reporting date to determine whether there is an indication
that previously recognized impairment losses no longer exist or have decreased. If such
indication exists, the Group estimates the asset's or CGU's recoverable amount. A previously
recognized impairment loss is reversed only if there has been a change in the assumptions
used to determine the asset's recoverable amount since the last impairment loss was
recognized. The reversal is limited so that the carrying amount of the asset does not exceed
its recoverable amount, nor exceed the carrying amount that would have been determined,
net of depreciation, had no impairment loss been recognized for the asset in prior years. Such
reversal is recognized in the statement of profit or loss unless the asset is carried at a
revalued amount, in which case, the reversal is treated as a revaluation increase.

Intangible assets with indefinite useful lives are tested for impairment annually at the CGU
level, as appropriate; and when circumstances indicate that the carrying value may be
impaired.

(G) Non-Current Assets Held for Sale

The Company classifies non-current assets and disposal groups as 'Held for Sale' if their
carrying amounts will be recovered principally through a sale rather than through continuing
use and sale is highly probable i.e. actions required to complete the sale indicate that it is
unlikely that significant changes to the sale will be made or that the decision to sell will be
withdrawn.

Non-current assets held for sale and disposal groups are measured at the lower of their
carrying amount and the fair value less costs to sell. Assets and liabilities classified as held
for sale are presented separately in the balance sheet.

Property, Plant and Equipment and intangible assets once classified as held for sale are not
depreciated or amortized.

(H) Earnings per Share

Basic EPS amounts are calculated by dividing the profit for the year attributable to the
shareholders of the Company by the weighted average number of the equity shares
outstanding as at the end of reporting period.

Diluted EPS amounts are calculated by dividing the profit attributable to the shareholders of
the Company by the weighted average number of the equity shares outstanding during the
year plus the weighted average number of Equity shares that would be issued on conversion
of all the dilutive potential equity shares into equity shares.

(I) Cash and Cash Equivalents

Cash and Cash Equivalent in the balance sheet comprise 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 changes in value.

For the purpose of the statement of cash flows, cash and cash equivalents consist 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.

(J) Contingent Liabilities and Contingent Assets

A contingent liability is a possible obligation that arises from past events whose existence will
be confirmed by the occurrence or non-occurrence of one or more uncertain future events
beyond the control of the company or a present obligation that is not recognized because it is
not probable that an outflow of resources will be required to settle the obligation. A contingent
liability also arises in extremely rare cases where there is a liability that cannot be recognized
because it cannot be measured reliably. The company does not recognize a contingent
liability but discloses its existence in the financial statements.

Contingent assets are only disclosed when it is probable that the economic benefits will flow
to the entity.

(K) Investment Property

Properties, including those under construction, held to earn rentals and/or capital appreciation
are classified as investment property and measured and reported at cost, including
transaction costs.

Depreciation is recognized using Straight-Line method so as to write off the cost of the
investment property less their residual values over their useful lives specified in Schedule II to
the Companies Act, 2013 or in case of assets where the useful life was determined by
technical evaluation, over the useful life so determined. Depreciation method is reviewed at
each financial year end to reflect the expected pattern of consumption of the future benefits
embodied in the investment property. The estimated useful life and residual values are also
reviewed at each financial year end and the effect of any change in the estimates of useful
life/ residual value is accounted on prospective basis. Freehold land and properties under
construction are not depreciated.

An investment property is derecognized upon disposal or when the investment property is
permanently withdrawn from use and no future economic benefits are expected from the
disposal. Any gain or loss arising on derecognizing of property is recognized in the Statement
of Profit and Loss in the same period.

(L) Inventories

Inventories which comprise raw material, work in progress, finished goods, traded goods and
stores and spares are valued at the lower of cost and net realizable value.

The basis of determining costs for various categories of inventories is as follows -

(i) Raw Materials

Raw Material is valued at lower of cost or net realizable value. Cost ascertained on FIFO
Basis includes all the purchase price, duties and taxes which are not recoverable from
government authorities, freight inwards and other expenditure directly attributable to the
acquisition.

Net realizable value is the estimated selling price, in the ordinary course of business, less
estimated costs of completion and estimated costs necessary to make the sale.

(ii) Stores & Spares and Consumables

It includes cost of purchase and other costs incurred in bringing the inventories to their
present location and condition.

(iii) Work-In-Progress

Lower of cost and net realizable value. Cost includes direct materials and labour and a
proportion of manufacturing overheads based on normal operating capacity.

(iv) Traded Goods

Lower of cost and net realizable value. Cost ascertained on FIFO Basis includes all the
purchase price, duties and taxes which are not recoverable from government authorities,
freight inwards and other costs incurred in bringing to their present location and condition.

Net realizable value is the estimated selling price, in the ordinary course of business, less
estimated costs of completion and estimated costs necessary to make the sale.

(M) Leases

(i) Company as a Lessee

The Company applies a single recognition and measurement approach for all leases, except
for short-term leases and leases of low-value assets. The Company recognizes lease
liabilities to make lease payments and right-of-use assets representing the right to use the
underlying assets.

1) Right-of-Use Assets

The Company recognizes right-of-use assets at the commencement date of the lease. Right-
of-use assets are measured at cost, less any accumulated depreciation and impairment
losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognized, initial direct costs incurred, lease
payments made at or before the commencement date less any lease incentives received.
Right-of-use assets are depreciated on a Straight-Line basis from the commencement date to
the end of lease term.

If ownership of the leased asset transfers to the Company at the end of the lease term or the
cost reflects the exercise of a purchase option, depreciation is calculated using the estimated
useful life of the asset.

The right-of-use assets are also subject to impairment as mentioned in the Impairment of non¬
financial assets section of the accounting policies of the company.

2) Lease Liabilities

At the commencement date of the lease, the Company recognizes lease liabilities measured
at the present value of lease payments to be made over the lease term. The lease payments
include fixed payments less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual value
guarantees. The lease payments also include the exercise price of a purchase option
reasonably certain to be exercised by the Company and payments of penalties for terminating
the lease, if the lease term reflects the Company exercising the option to terminate. Variable
lease payments that do not depend on an index or a rate are recognized as expenses in the
period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Company uses its incremental
borrowing rate at the lease commencement date because the interest rate implicit in the lease
is not readily determinable.

After the commencement date, the amount of lease liabilities is increased to reflect the
accretion of interest and reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is re-measured if there is a modification, a change in the lease term,
a change in the lease payments or a change in the assessment of an option to purchase the
underlying asset.

3) Short Term Leases and Leases of Low Value of Assets

The Company applies the short-term lease recognition exemption to its short-term leases of
machinery and equipment. It also applies the lease of low-value assets recognition exemption
to leases that are considered to be low value. Lease payments on short-term leases and
leases of low-value assets are recognized as expense on a straight-line basis over the lease
term.

(ii) Company as a Lesser

Leases in which the Company does not transfer substantially all the risks and rewards
incidental to ownership of an asset are classified as operating leases. Rental income arising
is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in
negotiating and arranging an operating lease are added to the carrying amount of the leased
asset and recognized over the lease term on the same basis as rental income. Contingent
rents are recognized as revenue in the period in which they are earned.

(N) Financial Instruments

(i) Initial Recognition

Financial instruments i.e. Financial Assets and Financial Liabilities are recognized when the
Company becomes a party to the contractual provisions of the instruments. Financial
instruments are initially measured at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial instruments (other than financial instruments at fair
value through profit or loss) are added to or deducted from the fair value of the financial
instruments, as appropriate, on initial recognition. Transaction costs directly attributable to the
acquisition of financial instruments assets or financial liabilities at fair value through profit or
loss are recognized in profit or loss.

(ii) Financial Assets
Subsequent Measurement

All recognized financial assets are subsequently measured at amortized cost using effective
interest method except for financial assets carried at fair value through Profit and Loss
(FVTPL) or fair value through Other Comprehensive Income (FVTOCI).

1) Equity Investments in Subsidiaries, Associates and Joint Venture

The Company accounts for its investment in subsidiaries, joint ventures and associates and
other equity investments in subsidiary companies at cost in accordance with Ind AS 27 -
'Separate Financial Statements'.

2) Equity Investments (other than investments in subsidiaries, associates and joint
venture)

All equity investments falling within the scope of Ind-AS 109 are mandatorily measured at
Fair Value through Profit and Loss (FVTPL) with all fair value changes recognized in the
Statement of Profit and Loss.

The Company has an irrevocable option of designating certain equity instruments as FVTOCI.
Option of designating instruments as FVTOCI is done on an instrument-by-instrument basis.
The classification made on initial recognition is irrevocable.

If the Company decides to classify an equity instrument as FVTOCI, then all fair value
changes on the instrument are recognized in Statement of Other Comprehensive Income
(SOCI). Amounts from SOCI are not subsequently transferred to profit and loss, even on sale
of investment.

3) Investment in Preference Shares

Investment in preference shares are classified as debt instruments and carried at amortized
cost if they are not convertible into equity instruments and are not held to collect contractual
cash flows. Other Investment in preference shares which are classified as debt instruments
are carried at FVTPL.

Investment in convertible preference shares of subsidiary, associate and joint venture
companies are treated as equity instruments and carried at cost. Other Investment in
convertible preference shares which are classified as equity instruments are mandatorily
carried at FVTPL.

4) De-recognition

A financial asset is primarily derecognized when the rights to receive cash flows from the
asset have expired, or the Company has transferred its rights to receive cash flows from the
asset or has assumed an obligation to pay the received cash flows in full without material
delay to a third party under a pass through the arrangement; and with that -

a) the Company has transferred substantially all the risks and rewards of the asset, or

b) the Company has neither transferred nor retained substantially all the risks and rewards
of the asset, but has transferred control of the asset.

5) Impairment of Financial Assets

The Company assesses at each date of balance sheet whether a financial asset or a group of
financial assets is impaired. Ind AS 109 requires expected credit losses to be measured
through a loss allowance. The Company recognizes lifetime expected losses for all trade
receivables and/or contract assets that do not constitute a financing transaction. For all other
financial assets, expected credit losses are measured at an amount equal to the 12 month
expected credit losses or at an amount equal to the life time expected credit losses if the
credit risk on the financial asset has increased significantly since initial recognition.

(iii) Financial Liabilities

Classification

Financial liabilities and equity instruments issued by the Company are classified according to
the substance of the contractual arrangements entered into and the definitions of a financial
liability and an equity instrument.

Subsequent measurement

The company have all the borrowings at floating interest rate. Being variable interest rate, it is
not possible to estimate future cash flows. Borrowings are recognized initially at an amount
equal to the principal receivable or payable on maturity. So, re-estimating the future cash
flows has no significant impact on the carrying value of Borrowings. Transaction costs are not
material to be included in the EIR calculation. So the carrying value is being considered as
amortized cost for all the borrowings bearing a floating interest rate. For trade and other
payables maturing within one year from the balance sheet date, the carrying are Amortized
Cost.

Financial Liabilities recognized at FVTPL, including derivatives, are subsequently measured
at fair value.

1) Compound Financial Instruments

Compound financial instruments issued by the company is an instrument which creates a
financial liability on the issuer and which can be converted into fixed number of equity shares
at the option of the holders.

Such instruments are initially recognized by separately accounting the liability and the equity
components. The liability component is initially recognized at the fair value of a comparable
liability that does not have an equity conversion option. The equity component is initially
recognized as the difference between the fair value of the compound financial instrument as a
whole and the fair value of the liability component. The directly attributable transaction costs
are allocated to the liability and the equity components in proportion to their initial carrying
amounts.

Subsequent to initial recognition, the liability component of the compound financial instrument
is measured at amortized cost using the effective interest method. The equity component of a
compound financial instrument is not re-measured subsequently.

2) Financial Guarantee Contracts

Financial guarantee contracts are initially recognized as a liability at fair value. The liability is
subsequently measured at carrying amount less amortization or amount of loss allowance
determined as per impairment requirements of Ind AS 109, whichever is higher. Amortization
is recognized as finance income in the Statement of Profit and Loss.

3) De-Recognition

A financial liability is derecognized when the obligation under the liability is discharged or
cancelled or expires.

Offsetting Financial Instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet
where there is a legally enforceable right to offset the recognized amounts and there is an
intention to settle on a net basis or realize the asset and settle the liability simultaneously.

Re-classification of Financial Instruments

The Company determines classification of financial assets and liabilities on initial recognition.
After initial recognition, no re-classification is made for financial assets, such as equity
instruments designated at FVTPL or FVTOCI and financial liabilities or financial assets which
are debt instruments, a reclassification is made only if there is a change in the business
model for managing those assets.

0) Revenue Recognition
(i) Revenue

Revenue from contracts with customers is recognized when control of the goods is
transferred to the customer at an amount that reflects the consideration to which the
Company expects to be entitled in exchange for those goods or services. The Company has
generally concluded that it is the principal in its revenue arrangements because it typically
controls the goods before transferring them to the customer.

1) Revenue from Construction Contracts

Performance obligation in case of long - term construction contracts is satisfied over a period
of time, since the Company creates an asset that the customer controls as the asset is
created and the Company has an enforceable right to payment for performance completed to
date if it meets the agreed specifications.

The stage of completion is measured by input method i.e. the proportion that costs incurred to
date bear to the estimated total costs of a contract. The percentage of completion method (an
input method) is the most faithful depiction of the company’s performance because it directly
measures the value of the services transferred to the customer.

The total costs of contracts are estimated based on technical and other estimates. In the
event that a loss is anticipated on a particular contract, provision is made for the estimated
loss. Contract revenue earned in excess of billing is reflected under as “contract asset” and
billing in excess of contract revenue is reflected under “contract liabilities”.

Revenue billings are done based on milestone completion basis or Go-live of project basis.
Retention money receivable from project customers does not contain any significant financing
element, these are retained for satisfactory performance of contract. In case of long - term
construction contracts payment is generally due upon completion of milestone as per terms of
contract. In certain contracts, short-term advances are received before the performance
obligation is satisfied.

The major component of contract estimate is “budgeted cost to complete the contract” and on
assumption that contract price will not reduce vis-a-vis agreement values. While estimating
the various assumptions are considered by management such as:

• Work will be executed in the manner expected so that the project is completed timely;

• Consumption norms will remain same;

• Cost escalation comprising of increase in cost to compete the project are considered as a
part of budgeted cost to complete the project etc.

Due to technical complexities involved in the budgeting process, contract estimates are highly
sensitive to changes in these assumptions. All assumptions are reviewed at each reporting
date.

Service Contracts

For service contracts (including maintenance contracts) in which the company has the right to
consideration from the customer in an amount that corresponds directly with the value to the
customer of the company’s performance completed to date, revenue is recognized when
services are performed and contractually billable.

Sale of Goods

Revenue from sale of products is recognized at the point in time when control of the asset is
transferred to the customer.

Warranty Obligation

The Company provides for contractual obligations to periodically service, repair or rectify any
defective work during the defect liability period as well as towards contractual obligations to
restore the infrastructure at periodic intervals. Provisions are measured based on
management’s estimate required to settle the obligation at the balance sheet date and are
discounted using a rate that reflects the time value of money. When discounting is used, the
increase in the provision due to the passage of time is recognized as finance cost. The same
is reviewed at each balance sheet date and adjustments if any to the carrying amount is
provided for accordingly.

Variable Consideration

The nature of the Company’s contracts gives rise to several types of variable consideration,
including claims, unpriced change orders, award and incentive fees, change in law, liquidated
damages and penalties. The company recognizes revenue for variable consideration when it
is probable that a significant reversal in the amount of cumulative revenue recognized will not
occur. The company estimates the amount of revenue to be recognized on variable
consideration using the expected value (i.e., the sum of a probability-weighted amount) or the
most likely amount method, whichever is expected to better predict the amount.

The Company’s claim for extra work, incentives and escalation in rates relating to execution
of contracts are recognized as revenue in the year in which said claims are finally accepted
by the customers. Claims under arbitration / disputes are accounted as income based on final
award. Expenses on arbitration are accounted as incurred. Claims - are recognized on its
approval from customer / authority / court decision or its surety of receipt (not on
assessment).

2) Insurance & Other Claims

Revenue in respect of claims is recognized when no significant uncertainty exists with regard
to the amount to be realized and the ultimate collection thereof.

(ii) Contract Balances

1) Contract Assets

A contract asset is the right to consideration in exchange for goods or services transferred to
the customer. If the Company performs by transferring goods or services to a customer
before the customer pays consideration or before payment is due, a contract asset is
recognized for the earned consideration that is conditional.

Contract assets represent revenue recognized in excess of amounts billed and include
unbilled receivables. Unbilled receivables, which represent an unconditional right to payment
subject only to the passage of time, are reclassified to accounts receivable when they are
billed under the terms of the contract.

2) Trade Receivables

A receivable represents the Company's right to an amount of consideration that is
unconditional (i.e., only the passage of time is required before payment of the consideration is
due).

3) Contract Liabilities

A contract liability is the obligation to transfer goods or services to a customer for which the
Company has received consideration (or an amount of consideration is due) from the
customer. If a customer pays consideration before the Company transfers goods or services
to the customer, a contract liability is recognized when the payment is made, or the payment
is due (whichever is earlier). Contract liabilities are recognized as revenue when the
Company performs under the contract.

Contract liabilities include unearned revenue which represent amounts billed to clients in
excess of revenue recognized to date and advances received from customers. For contracts
where progress billing exceeds, the aggregate of contract costs incurred to date plus
recognized profits (or minus recognized losses, as the case may be), the surplus is shown as
contract liability and termed as unearned revenue. Amounts received before the related work
is performed are disclosed in the balance sheet as contract liability and termed as advances
received from customers.

P) Interest Income

For all debt instruments measured at amortized cost or at fair value through other
comprehensive income, interest income is recorded using the effective interest rate (EIR).
EIR is the rate that exactly discounts the estimated future cash payments or receipts over the
expected life of the financial instruments or a shorter period, where appropriate, to the gross
carrying amount of the financial asset or to the amortized cost of a financial liability. When
calculating the effective interest rate, the Company estimates the expected estimated cash
flows by considering all the contractual terms of the financial instrument but does not consider
the expected credit loss. Interest income is included under the head "Other Income" in the
statement of profit and loss.

Interest income on bank deposits and advances to vendors 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.

Q) Borrowing Costs

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.

(i) Borrowing Cost under Service Concession Arrangements

Borrowing costs attributable to the construction of qualifying assets under service concession
arrangement classified as intangible asset, are capitalized to the date of its intended use.

Borrowing costs attributable to concession arrangement classified as financial assets are
charged to Statement of Profit and Loss in the period in which such costs are incurred.

(ii) Other borrowing costs are charged to Statement of Profit and Loss in the period in which they
are incurred.