1 Material accounting policies
This note provides a list of the material accounting
policies adopted in the presentation of these standalone
financial statements.
1.01 Basis of preparation
Compliance with Ind AS
The standalone financial statements comply in all
material aspects with Indian Accounting Standards ("Ind
AS") notified under Section 133 of the Companies Act,
2013 ("the Act") and relevant rules issued there under.
In accordance with proviso to rule 4A of the Companies
(Account) Rules,2014, the terms used in these Financial
Statements are in accordance with the definitions
and other requirements specified in the applicable
Accounting Standards.
Historical cost convention
The financial statements have been prepared on a
historical cost basis, except for the following:
• certain financial assets and liabilities (including
investments in mutual funds, private equity fund,
loans and advances, preference shares) that are
measured at fair value;
• assets held for sale - measured at lower of
carrying amount or fair value less cost to sell; and
• defined benefit plans - plan assets measured at
fair value.
1.02 Rounding of amounts
All amounts disclosed in the standalone financial
statements and notes have been rounded off to the
nearest lakhs, except where otherwise indicated.
Transactions and balances with values below the
rounding off norm adopted by the Company have been
reflected as "0.00" in the relevant notes in these financial
statements.
1.03 Current versus non-current classification
The Company presents assets and liabilities in the balance
sheet based on current/ non-current classification.
All assets and liabilities have been classified as current
or non-current as per the Company's normal operating
cycle and other criteria set out in the Schedule III to the
Act. Based on the nature of operations, and the time
between the acquisition of assets for processing and their
realisation in cash and cash equivalents, the Company
has ascertained its operating cycle as 12 months for the
purpose of current - non-current classification of assets
and liabilities.
Deferred tax assets and liabilities are classified as non¬
current on net basis.
1.04 Use of judgements, estimates and assumptions
The estimates and judgments used in the preparation
of the financial statements are continuously evaluated
by the Company and are based on historical experience
and various other assumptions and factors (including
expectations of future events) that the Company believes
to be reasonable under the existing circumstances.
Differences between actual results and estimates are
recognised in the period in which the results are known
/ materialised.
The said estimates are based on the facts and events,
that existed as at the reporting date, or that occurred
after that date but provide additional evidence about
conditions existing as at the reporting date.
Critical estimates and judgements
The areas involving critical estimates or judgements
are:
• Estimation of current tax expense and payable -
Note 3.10
• Estimation of defined benefit obligation - Note
4.07
• Recognition of deferred tax assets - Note 2.07
1.05 Property, Plant and Equipment
Property, Plant and Equipment is stated at cost, less
accumulated depreciation and accumulated impairment
losses (other than freehold land). The initial cost of an
asset comprises its purchase price or construction cost,
any costs directly attributable to bringing the asset into
the location and condition necessary for it to be capable
of operating in the manner intended by management,
the initial estimate of any decommissioning obligation,
if any, and, for assets that necessarily take a substantial
period of time to get ready for their intended use,
finance costs. The purchase price or construction cost
is the aggregate amount paid and the fair value of any
other consideration given to acquire the asset.
Subsequent costs are included in the asset's carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the item will flow to the company and
the cost of the item can be measured reliably. All other
repairs and maintenance are charged to statement of
profit and loss during the reporting period in which they
are incurred.
An item of Property, Plant and Equipment is derecognised
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
Any gain or loss arising on the disposal or retirement of
an item of property, plant and equipment is determined
as the difference between the sales proceeds and
the carrying amount of the asset and is recognised in
statement of profit and loss.
Depreciation on Property, Plant and Equipment
Depreciation on Property, Plant and Equipment is
computed on written down value method except with
respect to leasehold premises where depreciation is
provided on straight line method (SLM).
Depreciation for assets purchased / sold during a period
is proportionately charged.
Useful life and residual value prescribed in Schedule II
to the Act are considered for computing depreciation
except in the following cases:
For Moulds for Mineral Materials (included in Shuttering
Materials), the residual value is considered at 31% to
52% of original cost, which is higher than the limit
specified in Schedule II to the Act. For these classes
of assets, based on internal assessments and technical
evaluation, the Company believes that the useful lives
and residual values as given above best represent the
period over which the Company expects to use these
assets. Hence the useful lives and residual values for
these assets are different from the useful lives and
residual values as prescribed in Schedule II to the Act.
The estimated useful lives, residual values and
depreciation methods are reviewed at the end of each
reporting period, with the effect of any changes in
estimate accounted for on a prospective basis.
1.06 Investment properties
Property that is held for long-term rental yields or for
capital appreciation or both, and that is not occupied
by the Company, is classified as investment property.
Investment property is measured at its cost, including
related transaction costs and where applicable borrowing
costs less depreciation and impairment if any.
Depreciation on residential flats is provided over its
useful life using the written down value method.
Useful life and residual value prescribed in Schedule II
to the Act are considered for computing depreciation.
1.07 Intangible Assets
Intangible assets acquired separately are measured on
initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less any accumulated
amortisation and accumulated impairment losses.
Intangible assets with finite lives are amortised on
straight line basis over their useful economic life and
assessed for impairment whenever there is an indication
that the intangible asset may be impaired. The
amortisation expense on intangible assets with finite
lives and impairment loss is recognised in the Statement
of Profit and Loss.
Amortisation of intangible assets
Intangible assets are amortized on a straight line basis
over the estimated useful economic life as follows:
• Computer software - 2 years
The amortization period and the amortization method
are reviewed atleast at each financial year end. If the
expected useful life of the asset is significantly different
from previous estimates, the amortization period is
changed accordingly. If there has been a significant
change in the expected pattern of economic benefits
from the asset, the amortization method is changed to
reflect the changed pattern.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when
no future economic benefits are expected from use or
disposal. Gains or losses arising from derecognition of
an intangible asset, measured as the difference between
the net disposal proceeds and the carrying amount of
the asset, are recognised in statement of profit and loss
when the asset is derecognised.
1.08 Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which
are assets that necessarily take a substantial period of
time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the
assets are substantially ready for their intended use or
sale.
Interest income earned on the temporary investment
of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs
eligible for capitalisation.
All other borrowing costs are recognised in profit or loss
in the period in which they are incurred.
1.09 Impairment of non-financial assets
Carrying amount of Property, Plant and Equipment,
intangible assets and investments in subsidiaries, joint
ventures and associates (which are carried at cost) are
tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognised for the
amount by which the asset's carrying amount exceeds
its recoverable amount. The recoverable amount is the
higher of an asset's fair value less costs of disposal and
value in use.
For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are
separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or
group of assets (cash-generating units).
Non- financial assets other than goodwill that suffered
impairment are reviewed for possible reversal of
the impairment at the end of each reporting period.
When an impairment loss subsequently reverses, the
carrying amount of the asset (or cash-generating unit)
is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been
determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A
reversal of an impairment loss is recognised immediately
in profit and loss.
1.10 Investment in subsidiaries, joint ventures and
associates
The Company's investments in its subsidiaries, joint
ventures and associates are accounted at cost as per Ind
AS 27 and reviewed for impairment at each reporting
date.
1.11 Financial instruments
Financial assets and financial liabilities are recognised
when a Company becomes a party to the contractual
provisions of the instruments.
Initial Recognition and Measurement - Financial Assets
and Financial Liabilities
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 profit or loss and
ancillary costs related to borrowings) 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 or loss are recognised immediately in the
Statement of Profit and Loss. However, trade receivables
that do not contain a significant financing component
are measured at transaction price.
Classification and Subsequent Measurement : Financial
Assets
The Company classifies financial assets as subsequently
measured at amortised cost, fair value through other
comprehensive income ("FVTOCI") or fair value through
profit or loss ("FVTPL") on the basis of following :
- the entity's business model for managing the
financial assets and
- the contractual cash flow characteristics of the
financial asset
Amortised Cost
A financial asset is classified and measured at amortised
cost if both of the following conditions are met :
- the financial asset is held within a business model
whose objective is to hold financial assets in order
to collect contractual cash flows and
- 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.
FVTOCI
A financial asset is classified and measured at FVTOCI if
both of the following conditions are met :
- the financial asset is held within a business model
whose objective is achieved by both collecting
contractual cash flows and selling financial assets
and
- 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.
FVTPL
A financial asset is classified and measured at FVTPL
unless it is measured at amortised cost or at FVTOCI.
All recognised financial assets are subsequently
measured in their entirety at either amortised cost or
fair value, depending on the classification of the financial
assets.
Impairment of Financial Assets
The Company assesses on a forward looking basis
the expected credit losses associated with its assets
carried at amortised cost. The impairment methodology
applied depends on whether there has been a significant
increase in credit risk.
For trade receivables only, the Company applies the
simplified approach permitted by Ind AS 109 Financial
Instruments, which requires expected lifetime losses to
be recognised from initial recognition of the receivables.
Classification and Subsequent measurement : Financial
Liabilities
The Company's financial liabilities include trade and
other payables, loans and borrowings including bank
overdrafts, financial guarantee contracts.
Financial Liabilities at FVTPL
Financial liabilities are classified as FVTPL when the
financial liability is held for trading or are designated
upon initial recognition as FVTPL.
Gains or losses on financial liabilities held for trading are
recognised in the Statement of Profit and Loss.
Other Financial Liabilities
Other financial liabilities (including borrowings and
trade and other payables) are subsequently measured
at amortised cost using the effective interest method.
The effective interest method is a method of calculating
the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated
future cash payments (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 financial
liability, or (where appropriate) a shorter period, to the
net carrying amount on initial recognition.
Derecognition of Financial Assets and Financial Liabilities
The Company de-recognises 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 all of the risks and rewards of ownership of
the financial asset are transferred. If the Company enters
into transactions whereby it transfers assets recognised
on its balance sheet, but retains either all or substantially
all of the risks and rewards of the transferred assets, the
transferred assets are not derecognised.
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
1.12 Inventories
Inventory of construction materials is valued at lower of
cost (net of indirect taxes, wherever recoverable) and
net realizable value. Cost is determined on FIFO basis.
However, inventory is not written down below cost if
the estimated revenue of the concerned contract is in
excess of estimated cost.
Work-in-progress / other stock is valued at lower of cost
(net of indirect taxes, wherever recoverable) and net
realizable value.
1.13 Revenue recognition
The Company derives revenues primarily from
construction contracts relating to works and services.
Revenue towards satisfaction of a performance obligation
is measured at the amount of transaction price (net of
variable consideration) allocated to that performance
obligation. The transaction price of goods sold and
services rendered is net of variable consideration, if any
on account of various discounts and schemes offered by
the Company as part of the contract.
Performance obligation may be satisfied over time or at
a point in time. Performance obligations satisfied over
time if any one of the following criteria is met. In such
cases, revenue is recognized over time.
1. The customer simultaneously receives and
consumes the benefits provided by the Company's
performance; or
2. The Company's performance creates or enhances
an asset that the customer controls as the asset is
created or enhanced; or
3. The Company's performance does not create an
asset with an alternative use to the Company and
the Company has an enforceable right to payment
for performance completed to date.
For performance obligations where one of the above
conditions are not met, revenue is recognised at the
point in time at which the performance obligation is
satisfied.
Where Revenue is recognized over time, the amount of
Revenue is determined on the basis of project expenses
incurred in relation to estimated project expenses.
1.14 Recognition of Dividend Income and Interest
Income
Dividend income
Dividend income from investments is recognised
when the shareholder's right to receive payment has
been established (provided that it is probable that the
economic benefits will flow to the Company and the
amount of income can be measured reliably).
Interest income
Interest income from a financial asset is recognised
when it is probable that the economic benefits will flow
to the Company and the amount of income can be
measured reliably. Interest income is accrued on a time
basis, by reference to the principal outstanding and at
the effective interest rate applicable.
1.15 Employee benefits
a) Short-term obligations
Short term employee benefits are recognised as an
expense at an undiscounted amount in the Statement of
profit and loss of the year in which the related services
are rendered. Accumulated leave, which is expected
to be utilized within the next 12 months, is treated as
short-term employee benefit. The Company measures
the expected cost of such absences as the additional
amount that it expects to pay as a result of the unused
entitlement that has accumulated at the reporting date.
b) Post-employment obligations
The Company operates the following post-employment
schemes:
• defined benefit plans such as gratuity; and
• defined contribution plans such as provident fund.
Gratuity obligations
The liability or asset recognised in the balance sheet in
respect of defined benefit gratuity plans is the present
value of the defined benefit obligation at the end of
the reporting period. The defined benefit obligation is
calculated annually by actuaries using the projected unit
credit method.
The present value of the defined benefit obligation
denominated in INR is determined by discounting the
estimated future cash outflows by reference to market
yields at the end of the reporting period on government
bonds that have terms approximating to the terms of
the related obligation.
The net interest cost is calculated by applying the
discount rate to the net balance of the defined benefit
obligation. This cost is included in employee benefit
expense in the statement of profit and loss.
Remeasurement gains and losses arising from experience
adjustments and changes in actuarial assumptions are
recognised in the period in which they occur, directly
in other comprehensive income. They are included in
retained earnings in the statement of changes in equity
and in the balance sheet.
Defined contribution plans
Contributions to provident fund, a defined contribution
plan, are made in accordance with the rules of the
statute and are recognized as expenses when employees
render service entitling them to the contributions. The
Company has no obligation, other than the contribution
payable to the provident fund.
The obligations are presented as current liabilities
in the balance sheet if the entity 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.
1.16 Taxes on income
Income tax expense represents the sum of the tax
currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for
the year. Taxable profit differs from 'Profit before tax' as
reported in profit and loss because of items of income
or expense that are taxable or deductible in other years
and items that are never taxable or deductible. The
Company's current tax is calculated using tax rates that
have been enacted or substantively enacted by the end
of the reporting period.
Deferred tax
Deferred tax is recognized on temporary differences
between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax basis
used in the computation of taxable profits. Deferred
tax liabilities are generally recognized for all taxable
temporary differences. Deferred tax assets are generally
recognized for all deductible temporary differences to
the extent that it is probable that taxable profits will
be available against which those deductible temporary
differences can be utilized.
The carrying amount of deferred tax assets is reviewed
at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the
asset to be recovered.
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 measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from
the manner in which the company expects, at the end
of the reporting period, to recover the carrying amount
of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss,
except when they relate to items that are recognised
in other comprehensive income or directly in equity,
in which case, the current and deferred tax are also
recognised in other comprehensive income or directly in
equity respectively.
1.17 Earnings Per Share (EPS)Basic earnings per share
Basic earnings per share is calculated by dividing :
• the profit attributable to owners of the Company
• by the weighted average number of equity shares
outstanding during the financial year, adjusted for
bonus elements in equity shares
Diluted earnings per share
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account:
• the after income tax effect of interest and other
financing costs associated with dilutive potential
equity shares, and
• the weighted average number of additional
equity shares that would have been outstanding
assuming the conversion of all dilutive potential
equity shares
|