Depreciation:
Depreciation is provided on assets to get the initial cost down to
the residual value. Land is not depreciated. Depreciation is provided
on a straight-line basis over the estimated useful life of the asset or
as prescribed in Schedule II to the Companies Act, 2013 or based on
a technical evaluation of the asset. Cost incurred on assets under
development are disclosed under capital work in progress and not
depreciated till asset is ready to use i.e. when it is in the location
and condition necessary for it to be capable of operating in the
manner intended by management. Estimated useful life of items of
Property, Plant and Equipment are as follows:
3. Summary of material accounting policies:A. Property, plant and equipment
Property, plant and equipment (PPE) are stated at cost less
accumulated depreciation and impairment losses, if any. Historical
cost includes expenditure that is directly attributable to the
acquisition of the item.
The cost of an item of PPE comprises its purchase price net of any
trade discounts and rebates, any import duties and other taxes (other
than those subsequently recoverable from the tax authorities), any
directly attributable expenditure including brokerage and start-up
costs on making the asset ready for its intended use, other incidental
expenses and interest on borrowings attributable to acquisition of
qualifying assets up to the date the asset is ready for its intended
use.
Subsequent expenditure is capitalized only if it is probable that the
future economic benefits associated with the expenditure will flow
to the Company.
An item of PPE 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.
Major inspections and overhauls are identified and accounted for
as an asset if that component is used over more than one reporting
period.
Capital Work in Progress:
Capital work in progress comprise of those costs that relate directly
to specific assets and those that are attributable to the construction
or project activity in general and can be allocated to specific assets
up to the date the assets are put to their intended use. At the point
when an asset is operating at management's intended use, the
capital work in progress is transferred to the appropriate category
of property, plant and equipment and depreciation commences.
The residual values and useful lives for depreciation of property,
plant and equipment are reviewed at each financial year end and
adjusted prospectively, if appropriate.
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount. Recoverable amount is higher of
the value in use or exchange.
Gains and losses on disposals are determined by comparing the sale
proceeds with the carrying amount and are recognised in the
Statement of Profit and Loss.
B. Intangible assets
Intangible assets are recognised when it is probable that the future
economic benefits that are attributable to the assets will flow to
the Company and the cost of the assets can be measured reliably.
Intangible assets are stated at cost less accumulated amortisation
and impairment loss, if any.
Intangible assets are amortised uniformly over the best estimate of
their useful lives.
The estimated useful lives for main categories of intangible assets
are as below:
C. Leases
A contract is, or contains, a lease if the contract conveys the right to
control the use of an identified asset for a period of time in exchange
for consideration.
As a lessee
(A) Lease Liability
At the commencement date, the Company measures the lease
liability at the present value of the lease payments that are not
paid at that date. The lease payments shall be discounted using
incremental borrowing rate.
(B) Right-of-use assets
Initially recognised at cost, which comprises the initial amount
of the lease liability adjusted for any lease payments made at
or prior to the commencement date of the lease plus any initial
direct costs less any lease incentives.
Subsequent measurement
(A) Lease Liability
Company measure the lease liability by (a) increasing the
carrying amount to reflect interest on the lease liability; (b)
reducing the carrying amount to reflect the lease payments
made; and (c) remeasuring the carrying amount to reflect any
reassessment or lease modifications.
(B) Right-of-use assets
Subsequently measured at cost less accumulated depreciation
and impairment losses. Right-of-use assets are depreciated from
the commencement date on a straight line basis over the
shorter of the lease term and useful life of the under lying asset.
Short term lease:
Short term lease is that, at the commencement date, has a lease
term of 12 months or less. A lease that contains a purchase option
is not a short-term lease. If the company elected to apply short term
lease, the lessee shall recognise the lease payments associated with
those leases as an expense on either a straight-line basis over the
lease term or another systematic basis. The lessee shall apply
another systematic basis if that basis is more representative of the
pattern of the lessee's benefit.
The Company as lessor
Leases for which the company is a lessor is classified as a finance or
operating lease. Whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee,
the contract is classified as a finance lease. All other leases are
classified as operating leases. Lease income is recognised in the
statement of profit and loss on straight line basis over the lease
term.
D. Revenue
Sale and operating income includes sale of products, services, etc.
Sale of goods are recognised net of returns and trade discounts, on
transfer of significant risks and rewards of ownership to the buyer.
Sale of services are recognised when services are rendered and
related costs are incurred.
The Company recognises revenue from contract with customers
based on a five-step model as set out in Ind AS 115:
• Identify Contracts with a customer: A contract is defined as an
agreement between two or more parties that creates
enforceable rights and obligations and sets out the criteria for
every contract that must be met;
• Identify performance obligations in the contract: A performance
obligation is a promise in a contract with a customer to transfer
a good or service to the customer;
• Determine the transaction price: The transaction price is the
amount of consideration to which the Company expects to be
entitled in exchange for transferring promised goods or services
to a customer, excluding amounts collected on behalf of third
parties;
• Allocate the transaction price to the performance obligations
in the contract: For a contract that has more than one
performance obligation, the Company allocates the transaction
price to each performance obligation in an amount that depicts
the amount of consideration the Company expects to be
entitled in exchange for satisfying each performance obligation;
• Recognise revenue when (or as) the entity satisfies a
performance obligation.
Revenue is recognised upon rendering of promised services to
customers in an amount that reflects the consideration which the
Company expects to receive in exchange for those products or
services. In case of charter hiring of fleet, revenue is recognized on
a time proportion basis.
Revenue is measured based on the transaction price, which is the
consideration, adjusted for volume discounts, service level credits,
performance bonuses, price concessions and incentives, if any, as
specified in the contract with the customer. Revenue also excludes
taxes collected from customers.
Unearned and deferred revenue ("contract liability") is recognised
when there is billings in excess of revenues. The billing schedules
agreed with customers include periodic performance based
payments and / or milestone based progress payments. Invoices are
payable within contractually agreed credit period.
Interest income
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable. For all debt
instruments measured either at amortised cost or at fair value
through other comprehensive income (FVTOCI), interest income is
recorded using the effective interest rate (EIR).
Dividend income
Dividend income is accounted for when the right to receive the same
is established, which is generally when shareholders approve the
dividend.
Other Income
Other income is accounted for on accrual basis except where the
receipt of income is uncertain in which case it is accounted for on
receipt basis.
E. Borrowing costs
General and specific borrowing costs that are directly attributable
to the acquisition, construction or production of a qualifying asset
are capitalised 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. Capitalisation of borrowing costs
is suspended and charged to the Standalone statement of profit and
loss during extended periods when active development activity on
the qualifying asset is interrupted.
All other borrowing costs are expensed in the period in which they
occur. Borrowing costs consist of interest and other costs that an
entity incurs in connection with the borrowing of funds. Borrowing
cost also includes exchange differences to the extent regarded as
an adjustment to the borrowing costs.
F. Impairment of non-financial assets
Non-financial assets other than inventories are reviewed at each
standalone balance sheet date to determine whether there is any
indication of impairment. If any such indication exists, or when
annual impairment testing is required for an asset or group of Assets,
called Cash Generating Units (CGU), the recoverable amount of an
asset or CGU is estimated to determine the extent of impairment, if
any. When it is not possible to estimate the recoverable amount of
an individual asset, the Company estimates the recoverable amount
of the CGU to which the asset belongs.
An impairment loss is recognised in the Statement of Profit and Loss
to the extent, asset's carrying amount exceeds its recoverable
amount. In case of non-financial assets company estimates asset's
recoverable amount, which is higher of an asset's or Cash Generating
Units (CGU's) fair value less costs of disposal and its value in use.
Recoverable amount is determined for an individual asset, unless
the asset does not generate cash flows that are largely independent
of those from other assets or group of assets. Value in use is based
on the estimated future cash flows, discounted to their present value
using pre-tax discount rate that reflects current market assessments
of the time value of money and risk specific to the assets.
The impairment loss recognised in prior accounting period is
reversed if there has been a change in the estimate of recoverable
amount.
G. Employee benefitsShort term employee benefits:
The undiscounted amount of short-term employee benefits expected
to be paid in exchange for the services rendered by employees is
recognised during the period when the employee renders the
services. These benefits include performance incentives.
Other long term employee benefit obligations
The liabilities for earned leave are not expected to be settled wholly
within period of operating cycle after the end of the period in which
the employees render the related service. They are therefore
measured as the present value of expected future payments to be
made in respect of services provided by employees up to the end of
the reporting period using the projected unit credit method. The
benefits are discounted using the market yields at the end of the
reporting period that have terms approximating to the terms of the
related obligation. Remeasurements as a result of experience
adjustments and changes in actuarial assumptions are recognised
in profit or loss. The obligations are presented as current liabilities
in the balance sheet if the Company does not have an unconditional
right to defer settlement for at least twelve months after the
reporting period, regardless of when the actual settlement is
expected to occur.
Post-employment obligations
The Company operates the following post-employment schemes:
• defined benefit plan i.e. gratuity
• defined contribution plans such as provident fund and
employees state insurance(ESI)
H. Foreign currencies
Functional and presentation currency
The Company's financial statements are presented in Indian Rupee
(INR), which is also the Company's functional and presentation
currency.
Transaction and balances
Transactions in foreign currencies are translated into functional
currency using the exchange rate 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 the year-end
exchange rates are generally recognised in Statement of Profit and
loss. They are deferred in Equity if they relate to qualifying cash
flow hedges. A monetary item for which settlement is neither
planned nor likely to occur in the foreseeable future is considered
as a part of the Company's net investment in that foreign operations.
I. 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 which can be accessed by the Company for the asset or
liability.
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.
The Company uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure
fair value, maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed
in the financial statements are categorised within the fair value
hierarchy, described as follows, based on the lowest level input that
is significant to the fair value measurement as a whole:
• Level 1 Quoted (unadjusted) market prices in active markets
for identical assets or liabilities.
• Level 2 Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable.
• Level 3 Valuation techniques for which the lowest level input
that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy by re¬
assessing categorisation (based on the lowest level input that is
significant to the fair value measurement as a whole) at the end of
each reporting period.
J. Financial Instruments
Financial instruments comprise of financial assets and financial
liabilities. Financial asset primarily comprise of investments, loans
and advances, trade receivables and cash and cash equivalents.
Financial liabilities primarily comprise of borrowings, trade and other
payables.
Financial assets and financial liabilities are recognised when an entity
becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair
value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities (other
than financial assets and financial liabilities at fair value through
Statement of Profit and Loss) are added to or deducted from the
fair value of the financial assets or financial liabilities, as appropriate,
on initial recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair value
through profit and loss are recognised immediately in Statement of
Profit and Loss.
I. Financial assets
a) 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.
Purchases or sales of financial assets that require delivery
of assets within a time frame established by regulation or
convention in the market place (regular way trades) are
recognised on the trade date, i.e., the date that the
Company commits to purchase or sell the asset.
b) Subsequent measurement
Subsequent measurement is determined with reference
to the classification of the respective financial assets.
Based on the business model for managing the financial
assets and the contractual cash flow characteristics of the
financial asset, the Company classifies financial assets as
subsequently measured at amortised cost, Fair Value
through Other Comprehensive Income (FVTOCI) or Fair
Value through Profit and Loss (FVTPL).
c) Investments in subsidiaries and associates
Investment in subsidiaries and associates are accounted
at cost. Where the carrying amount of an investment is
greater than its estimated recoverable amount, it is written
down immediately to its recoverable amount and the
difference is transferred to the Statement of Profit and
Loss. On disposal of investment, the difference between
the net disposal proceeds and the carrying amount is
charged or credited to Statement of Profit and Loss.
d) Classification of financial assets
For purposes of subsequent measurement, financial assets
are classified in two broad categories:
1. Financial assets at amortised cost
2. Financial assets at fair value
Where assets are measured at fair value, gains and losses
are either recognized in the statement of profit and loss
(i.e. fair value through profit and loss) (FVTPL), or
recognized in other comprehensive income (i.e. fair value
through other comprehensive income) (FVTOCI).
Financial asset at amortised cost
Financial Assets such as trade and other receivables,
security deposits and loans given are measured at the
amortised cost if both the following conditions are met:
• The asset is held within a business model whose
objective is to hold assets for collecting contractual
cash flows, and
• Contractual terms of the asset give rise on specified
dates to cash flows that are solely payments of
principal and interest (SPPI) on the principal amount
outstanding.
After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method. 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 is included in finance
income in the profit or loss. The losses arising from
impairment are recognised in the Statement of profit and
loss.
Financial assets at fair value
Debt instruments
A debt instrument is classified as FVTOCI only if it meets
both of the following conditions and is not recognised at
FVTPL;
• The asset is held within a business model whose
objective is achieved by both collecting contractual
cash flows and selling financial assets; and
• The asset's contractual cash flows represent SPPI
Financial Assets included within the FVTOCI category are
measured initially as well as at each reporting date at fair
value. Fair value movements are recognized in the Other
Comprehensive Income (OCI).
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt
instrument, which does not meet the criteria for
categorization as at amortized cost or as FVTOCI, is
classified as at FVTPL. In addition, the Company may elect
to designate a debt instrument, which otherwise meets
amortized cost or FVTOCI criteria, as at FVTPL. However,
such election is allowed only if doing so reduces or
eliminates a measurement or recognition inconsistency
(referred to as 'accounting mismatch'). The Company has
not designated any debt instrument as at FVTPL.
Debt instruments included within the FVTPL category are
measured at fair value with all changes recognized in the
P&L.
Equity investments
All equity investments in scope of Ind AS 109 are measured
at fair value. Equity instruments which are held for trading
and contingent consideration recognised by an acquirer
in a business combination to which Ind AS 103 applies are
classified as at FVTPL. For all other equity instruments,
the Company may make an irrevocable election to present
in other comprehensive income subsequent changes in
the fair value. The Company makes such election on an
instrument-by-instrument basis. The classification is made
on initial recognition and is irrevocable.
Equity instruments included within the FVTPL category are
measured at fair value with all changes recognized in the
Statement of Profit and Loss.
e) Effective interest method
The effective interest method is a method of calculating
the amortised cost of a debt instrument and of allocating
interest income over the relevant period. The effective
interest rate is the rate that exactly discounts estimated
future cash receipts (including all fees and points paid or
received that form an integral part of the effective interest
rate, transaction costs and other premiums or discounts)
through the expected life of the debt instrument, or, where
appropriate, a shorter period, to the net carrying amount
on initial recognition.
Income is recognised on an effective interest basis for debt
instruments other than those financial assets classified as
at FVTPL. Interest income is recognized in the Statement
of Profit and Loss and is included in the 'Other income'
line item.
f) Derecognition of financial assets
A financial Asset is primarily derecognised 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'
arrangement; and either
o The Company has transferred substantially all
the risks and rewards of the asset, or
o The Company has neither transferred nor
retained substantially all the risks and rewards
of the asset, but has transferred control of the
asset.
On de-recognition, any gains or losses on all Financial
Assets (other than Financial Assets measured at FVTOCI)
and equity investments (measured at FVTPL) are
recognized in the Statement of Profit and Loss. Gains and
losses in respect of Financial Assets measured at FVTOCI
and that are accumulated in OCI are reclassified to
Statement of Profit And Loss on de-recognition. Gains or
losses on equity investments measured at FVTOCI that are
recognized and accumulated in OCI are not reclassified to
Statements of Profit and Loss on de-recognition.
g) Impairment of financial assets
In accordance with Ind AS 109, the Company applies
expected credit loss (ECL) model for measurement and
recognition of impairment loss on the following financial
assets and credit risk exposure:
• Financial assets that are debt instruments, and are
measured at amortised cost e.g., loans, debt
securities, deposits, trade receivables and bank
balance.
• Financial assets measured at FVTOCI.
In case of other assets (listed as above), the Company
determines if there has been a significant increase in credit
risk of the financial asset since initial recognition. If the
credit risk of such assets has not increased significantly,
an amount equal to 12-month ECL is measured and
recognized as loss allowance. However, if credit risk has
increased significantly, an amount equal to lifetime ECL is
measured and recognized as loss allowance.
II. Financial liabilities and equity instruments
a) Classification as debt or equity
Debt and equity instruments issued by a company are
classified as either financial liabilities or as equity in
accordance with the substance of the contractual
arrangements and the definitions of a financial liability and
an equity instrument.
b) Equity instruments
An equity instrument is any contract that evidences a
residual interest in the assets of an entity after deducting
all of its liabilities. Equity instruments issued by the
Company are recognised at the proceeds received, net of
direct issue costs.
Repurchase of the Company's own equity instruments is
recognised and deducted directly in equity. No gain or loss
is recognised in Statement of Profit and Loss on the
purchase, sale, issue or cancellation of the Company's own
equity instruments.
c) Financial liabilitiesInitial recognition and measurement
All 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
payables, loans and borrowings including bank overdrafts,
and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below:
Financial liabilities at FVTPL:
Financial liabilities at FVTPL include financial liabilities
designated upon initial recognition as at FVTPL. For
liabilities designated as FVTPL, fair value gains/ losses
attributable to changes in own credit risk are recognized
in OCI. These gains/ loss are not subsequently transferred
to Statement of Profit and Loss. However, the company
may transfer the cumulative gain or loss within equity. All
other changes in fair value of such liability are recognised
in the Statement of Profit and Loss.
Financial liabilities at amortized cost
Financial liabilities classified and measured at amortised
cost such as loans and borrowings are initially recognized
at fair value, net of transaction cost incurred. After initial
recognition, financial liabilities are subsequently measured
at amortised cost using the Effective interest rate (EIR)
method. Gains and losses are recognised in Statement of
Profit and Loss when the liabilities are derecognised 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 is included
as finance costs in the Statement of Profit and Loss.
Derecognition of financial liabilities:
The Company derecognises financial liabilities when, and
only when, the Company's obligations are discharged,
cancelled or have expired. An exchange with a lender of
debt instruments with substantially different terms is
accounted for as an extinguishment of the original financial
liability and the recognition of a new financial liability.
Similarly, a substantial modification of the terms of an
existing financial liability (whether or not attributable to
the financial difficulty of the debtor) is accounted for as
an extinguishment of the original financial liability and the
recognition of a new financial liability. The difference
between the carrying amount of the financial liability
derecognised and the consideration paid and payable is
recognised in Statement of Profit or Loss.
d) Borrowings
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any differences between the
proceeds (net of transaction costs) and the redemption
amount is recognised in Statement of Profit and loss over
the period of the borrowing using the effective interest
method. Fees paid on the establishment of loan facilities
are recognised as transaction costs of the loan to the
extent that it is probable that some or all of the facilities
will be drawn down. In this case, the fee is deferred until
the drawdown occurs.
The borrowings are removed from the Standalone balance
sheet when the obligation specified in the contract is
discharged, cancelled or expired. The difference between
the carrying amount of the financial liability that has been
extinguished or transferred to another party and the
consideration paid including any noncash asset transferred
or liabilities assumed, is recognised in Statement of Profit
and Loss as other gains/(losses).
Borrowings are classified as current liabilities unless the
group has an unconditional right to defer settlement of
the liability of at least 12 months after the reporting
period. Where there is a breach of a material provision of
a long term loan arrangement on or before the end of the
reporting period with the effect that the liability becomes
payable on demand on the reporting date, the Company
does not classify the liability as current, if the lender
agreed, after the reporting period and before the approval
of the financial statement for issue, not to demand
payment as a consequence of the breach.
e) 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 recognised
amounts and there is an intention to settle on a net basis,
to realise the assets and settle the liabilities
simultaneously.
K. Taxation
Current Tax
Current tax is the amount of tax payable as per special provisions
relating to income of shipping companies under the Income Tax Act,
1961 on the basis of deemed tonnage income of the Company and
tax payable on other taxable income for the year determined in
accordance with the applicable tax rates and provisions of the
Income Tax Act, 1961 and other applicable tax laws.
Deferred tax
Deferred tax is recognised on differences between the carrying
amounts of assets and liabilities in the Standalone Balance sheet
and the corresponding tax bases used in the computation of taxable
profit and are accounted for using the liability method. Deferred
tax liabilities are generally recognised for all taxable temporary
differences, and deferred tax assets are generally recognized for all
deductible temporary differences, carry forward tax losses and
allowances to the extent that it is probable that future taxable profits
will be available against which those deductible temporary
differences, carry forward tax losses and allowances can be utilised.
Deferred tax assets and liabilities are measured at the applicable
tax rates. Deferred tax assets and deferred tax liabilities are off set,
and presented as net.
Current and deferred tax relating to items directly recognised in
reserves are recognised in reserves and not in the Statement of Profit
and Loss.
Further, the Company is paying taxes on the basis of deemed tonnage
income therefore there is no impact on deferred tax.
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