1. SIGNIFICANT ACCOUNTING POLICIES
i) Basis of Preparation
The financial statements of the Company have been prepared to comply with the Indian Accounting
standards ('Ind AS'), including the rules notified under the relevant provisions of the Companies Act,
2013.
The financial statements have been prepared on a historical cost convention on the accrual basis,
except for the following assets and liabilities which have been measured at fair value.
a. Certain financial assets at fair value (refer accounting policy regarding financial instruments).
The financial statements are presented in Indian Rupees (^ Lakhs).
ii) Summary of Significant Accounting Policies
a) Property, Plant and Equipment
On transition to Ind AS, the Company has adopted optional exception under Ind AS 101 to
measure property, plant and equipment at Indian GAAP carrying value as deemed cost.
Consequently, the Indian GAAP carrying values has been assumed to be deemed cost of property,
plant and equipment on the date of transition. Subsequently, property, plant and equipment are
carried at cost less accumulated depreciation and accumulated impairment losses, if any. Cost
includes expenditure that is directly attributable to the acquisition of the items.
Depreciation on the property, plant and equipment is provided over the useful life of assets as
specified in schedule II to the Companies Act, 2013. Property, plant and equipment which are
added / disposed off during the year, depreciation is provided on pro-rata basis with reference to
the date of addition / deletion. Freehold land is not depreciated.
Capital work-in-progress includes cost of property, plant and equipment under installation /
under development as at the balance sheet date.
Property, plant and equipment's are eliminated from financial statement, either on disposal or
when retired from active use. Profits / losses arising in the case of retirement of property, plant
and equipment and gains or losses arising from disposal of property, plant and equipment are
recognised in the statement of profit and loss in the year of occurrence.
Intangible assets have been amortized over the period of four financial years.
The estimated useful lives of Property, Plant & Equipments of the Company as follows:
Office Premises : 30 years
Garage : 30 years
Furniture & Fixtures : 10 years
Plant & Equipments : 5 years, 10 years and 15 years
Trucks /Tankers : 8 years
Motor Vehicles : 8 years and 10 years
Computers & Printers : 3 years
The assets residual values, useful lives and method of depreciation are reviewed at each financial
year end and are adjusted prospectively, if appropriate.
b) Impairment of non-current assets
An asset is considered as impaired when at the date of Balance Sheet there are indications of
impairment and the carrying amount of the asset or where applicable the cash generating unit to
which the asset belongs exceeds its recoverable amount (i.e. the higher of the net asset selling
price less cost to sell and value in use). The carrying amount is reduced to the recoverable amount
and the reduction is recognised as an impairment loss in the statement of Profit and Loss. The
impairment loss recognised in the prior accounting period is reversed if there has been a change
in the estimate of recoverable amount. Post impairment, depreciation is provided on the revised
carrying value of the impaired asset over its remaining useful life.
c) Cash and Cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks, cash in 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.
d) Employee Benefits
Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under which the Company pays
specified contributions to a separate entity. The Company makes specified monthly contributions
towards Provident Fund. The Company's contribution recognised as an expense in the Statement
of Profit & Loss during the period in which the employees renders the related service.
Defined Benefit Plans
In respect of liability towards Gratuity, Company has entered into a Group Gratuity Scheme with
Life Insurance Corporation of India.
The other retirement benefits are accounted for as and when the liability for payment arises.
e) Tax Expenses
The tax expense for the period comprises of current and deferred tax. Tax is recognised in
Statement of Profit & Loss, except to the extent that it relates to items recognised in the
comprehensive income or directly in equity respectively. In which case, the tax is also recognised
in other comprehensive income or equity.
Current Tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or
paid to the taxation authorities, based on tax rates and laws that are enacted or substantively
enacted at the balance sheet date.
Deferred Tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of
taxable profit.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the
period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that
have been enacted or substantively enacted by the end of the reporting period. The carrying
amount of deferred tax liabilities and assets are reviewed at the end of each reporting period.
f) Financial Instruments - Initial recognition, subsequent measurement and impairment
A financial instrument is any contract that gives rise to a financial asset of one entity and a
financial liability or equally instrument of another enfity.
Financial Assets Initial Recognition and Measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not
recorded at fair value through profit or loss, transaction costs that are attributable to the
acquisition of the financial asset. Financial assets are classified, at initial recognition, as financial
assets measured at fair value or as financial assets measured at amortised cost.
Financial Assets - Subsequent Measurement
For the purpose of subsequent measurement financial assets are classified in two broad
categories:-
a) Financial Assets at fair value
b) Financial assets at amortised cost
Where assets are measured at fair value, gains and losses are either recognised entirely in the
statement of profit and loss (i.e. fair value through profit or loss) or recognised in other
comprehensive income (i.e. fair value through other comprehensive income).
A financial asset that meets the following two conditions in measured at amortised cost (net of
any write down for impairment) unless the asset is designated at fair value through profit or loss
under the fair value option.
a) Business Model Test: The objective of the Company's business model is to hold the financial
asset to collect the contractual cash flow (rather than to sell the instrument).
b) Cash Flow Characteristics Test: The contractual terms of the financial asset give rise on
specified dates to cash flow that are solely payments of principal and interest on the principal
amount outstanding.
A financial asset that meets the following two conditions is measured at fair value through other
comprehensive income unless the asset is designated at fair value through profit or loss under the
fair value option.
a) Business Model Test: The financial asset is held within a business model whose objective is
achieved by both collecting contractual cash flow and selling financial assets.
b) Cash Flow characteristics Test: The contractual terms of the financial asset give rise on
specified dates to cash flow that are solely payments of principal and interest on the principal
amount outstanding.
Even if an instrument meets the two requirements to be measured at amortised cost or fair value
through other comprehensive, a financial asset is measured at fair value through profit or loss if
doing so eliminates or significantly reduces a measurement or recognition inconsistency
(sometimes referred to as an accounting mismatch) that would otherwise arise from measuring
assets or liabilities or recognising the gains and losses on them on different bases. All other
financial assets are measured at fair value through profit or loss.
All equity instruments are measured at fair value in the balance sheet, with value changes
recognised in the statement of profit and loss, except for those equity instruments for which the
entity has elected to present value changes in other comprehensive income.
Financial Assets - De-recognition
A financial asset (or where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognised (i.e. removed from the Company's statement of
financial position) when:
a) The rights to receive cash flows from the asset have expired or
b) The Company has transferred its rights to receive cash flow from the asset or has assumed an
obligation to pay the received cash flow in full without material delay to a third party under a pass¬
through arrangement and either i) the company has transferred substantially all the risks and
rewards of the asset, or ii) the company has neither transferred nor retained substantially all the
risks and rewards of the assets, but has transferred control of the asset.
When the company has transferred its rights to receive cash flow from an asset or has entered into
a pass-through arrangement, it evaluates if and to what extent it has retained the risks and
rewards of ownership. When it has neither transferred nor retained substantially all of the risks
and rewards of the asset, nor transferred control of the asset, the Company continues to
recognise the transferred asset to the extent of the Company's continuing involvement. In that
case, the company also recognises an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects the rights and obligations that the
Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured
at the lower of the original carrying of the asset and the maximum amount of consideration that
the company could be required to repay.
Financial Liabilities - Initial Recognition and Measurement
The financial liabilities are recognised initially at fair value and in the case of loans and borrowings
and payables, net of directly attributable transaction costs. The Company's financial liabilities
include trade and other payable, loans and borrowings including bank overdrafts.
Financial Liabilities - Subsequent Measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial Liabilities at fair value through profit or loss include financial liabilities held for trading
and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
Financial liabilities designated upon initial recognised at fair value through profit or loss are
designated at the initial date of recognition and only if the criteria in Ind AS 109 as satisfied.
Financial Liabilities - Loans and Borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured at
amortised cost using Effective Interest Rate (EIR) Method. Gains and losses are recognised in
profit and loss when the liabilities are de-recognition as well as through the EIR amortisation
process. Amortised 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 amortisation in includes
as finance costs in the statement of profit and loss.
Financial Liabilities - 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 the de-recognition of the original
liability and the recognition of a new liability. The difference in the respective carrying amounts is
recognised in the statement of profit and loss.
g) Revenue Recognition and Other Income
Sale of Services
Revenue from rendering of services is recognised when the performance of agreed contractual
task has been completed.
Interest income
For all financial instruments measured at amortised cost, 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 instrument or a shorter period, where
appropriate to the net carrying amount of the financial asset. Interest income is included in the
other income in the statement of profit and loss.
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