3. Summary of Material Accounting Policies3.1 Property, plant and equipment
All items of property, plant and equipment are stated at historical cost less depreciation. Historical cost
includes expenditure that is directly attributable to the acquisition of the items. The 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 recognized in the Statement of Profit and Loss on
the date of disposal or retirement.
Subsequent costs are capitalised on the carrying amount or recognised as a separate asset, as appropriate,
only when future economic benefits associated with the item are probable to flow to the Company and cost of
the item can be measured reliably. All other repair and maintenance are charged to the statement of profit and
loss during the reporting period in which they are incurred.
Property Plant and Equipment not ready for the intended use on the date of the Balance Sheet are disclosed
as capital work-in-progress and is stated at cost, net of accumulated impairment loss, if any.
Depreciation on property, plant and equipment is provided on written down value method over the useful lives
of assets as prescribed under Schedule II to the Companies Act, 2013. Based on past experience and internal
technical evaluation, the management believes that these useful lives represent the appropriate period of
usage and therefore, considered to be appropriate for charging depreciation.
Depreciation on addition (disposal) is provided on a pro-rata basis i.e. from (upto) the date on which assets is
ready for use (disposed of).
Leasehold improvements are amortised over the lower of estimated useful life as per Schedule II or intended
lease period.
Assets residual values, depreciation method and useful lives are reviewed at the end of financial year
considering the physical condition of the assets or whenever there are indicators for review and adjusts
residual life prospectively.
Derecognition
An item of property, plant and equipment and any significant component 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 derecognition of the asset / significant component (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset / significant component) is recognised in statement of
profit and loss, when the asset is derecognised.
3.2 Investment Property
Investment property is property held either to earn rental income or for capital appreciation or for both, but not
for sale in the ordinary course of business, use in the production or supply of goods or services or for
administrative purposes. Upon initial recognition, an investment property is measured at cost. Subsequent to
initial recognition, investment property is measured at cost less accumulated depreciation and accumulated
impairment losses, if any.
Subsequent costs are capitalised on the carrying amount or recognised as a separate asset, as appropriate,
only when future economic benefits associated with the item are probable to flow to the Company and cost of
the item can be measured reliably. All other repair and maintenance are charged to the statement of profit and
loss during the reporting period in which they are incurred.
Depreciation on investment property is provided on the written down value method over their estimated useful
lives. However, where the management's estimate of the remaining useful life of the assets on a review
subsequent to the time of acquisition is different, then depreciation is provided over the remaining useful life
based on the revised useful life
3.3 Intangible assets
Identifiable intangible assets are recognised when the Company controls the asset, it is probable that future
economic benefits attributed to the asset will flow to the Company and the cost of the asset can be reliably
measured. At initial recognition, the separately acquired intangible assets are recognised at cost. Following
initial recognition, the intangible assets are carried at cost less any accumulated amortisation and
accumulated impairment losses, if any.
Useful lives are determined based on expected period of economic benefits, technology obsolescence
studies and management assessment. The estimated useful lives of the intangible assets considered by the
Company are as follows:
License and customer acquisition are amortised on a straight-line basis over a period of five years.
Radar system development (internally generated) is amortised on a straight-line basis over a period of ten
years based on internal technical evaluation and estimates by the management.
Right to charge users - EV charging stations is amortised on a straight-line basis over a period of eight years
which represents operation and maintenance period from the date of handover.
Intangible assets, other than above, are amortised on a written down value method in accordance with the
useful life prescribed in Schedule II to the Act.
The amortisation period and the amortisation method are reviewed at least at each financial year end. If the
expected useful life of the asset is significantly different from previous estimates, the amortisation period is
changed accordingly. Gains or losses arising from the retirement or disposal of an intangible asset are
determined as the difference between the net disposal proceeds and the carrying amount of the asset and
recognised as income or expense in the statement of profit and loss.
Intangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as “intangible
assets under development”.
Intangible assets under development are carried at cost less accumulated impairment losses in accordance
with Ind AS 36, if any. Cost comprises expenditure directly attributable to the development of the asset and
other expenditure that is necessary to create the asset and bring it to the condition necessary for it to be
capable of operating in the manner intended by management.
3.4 Research and development cost
Research costs are expensed as incurred. Development expenditures on an individual project are
recognised as an intangible asset when the Company can demonstrate:
a) The technical feasibility of completing the intangible asset so that the asset will be available for use or sale,
b) Its intention to complete and its ability and intention to use or sell the asset,
c) How the asset will generate future economic benefits,
d) The availability of resources to complete the asset
e) The ability to measure reliably the expenditure during development.
Development expenditure till date of capitalization are disclosed under Intangible Assets under development.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any
accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when
development is complete and the asset is available for use.
3.5 Foreign currency translation
Initial recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency
amount the exchange rate between the reporting currency and the foreign currency at the date of the
transaction.
Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried
in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date
of the transaction. Non-monetary items, which are measured at fair value or other similar valuation
denominated in a foreign currency, are translated using the exchange rate at the date when such value was
determined.
Exchange differences
Exchange differences arising on the settlement of monetary items or on reporting monetary items of
Company at rates different from those at which they were initially recorded during the year, or reported in
previous financial statements, are recognised as income or as expenses in the year in which they arise except
those arising from investments in non-integral operations.
3.6 Taxes
Tax expense comprises of current and deferred tax.
The income tax expense or credit for the period is the tax payable on the current period's taxable income
based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at
the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the standalone financial statements.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted
by the end of the reporting period and are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax
assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either
to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in the statement of profit and loss, except to the extent that it relates to
items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised
in other comprehensive income or directly in equity respectively.
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.
3.7 Inventories
Inventories are valued at the lower of cost and the net realisable value after providing for obsolescence and
other losses, where considered necessary. Cost includes all charges in bringing the goods, including freight,
octroi and other levies.
Cost is determined under the weighted average cost method and includes all costs incurred in bringing the
inventories to their present location and condition.
Cost of finished goods and work in progress further includes direct labour and an appropriate share of
production overheads as applicable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated cost of
completion and the estimated costs necessary to make the sale.
Due allowances are made for defective, obsolete and slow-moving inventory, wherever necessary, based on
management estimates and past experiences of the Company.
Project Work-in-Progress represents expenditure incurred on products under development that are intended
for sale. Costs directly attributable to the development of such products are accumulated as Project Work-in¬
Progress under Inventories until the product is completed, upon which the accumulated cost is transferred to
Finished Goods. The cost of such products is recognised as cost of sales when the related revenue is
recognised.
3.8 Revenue recognition
Revenue from contract with customers is recognized when the Company satisfies the performance obligation
by transfer of control of promised product or service to customers in an amount that reflects the consideration
which the Company expects to receive in exchange for those products or services. Control is defined as the
ability to direct the use of and obtain substantially all of the economic benefits from an asset. Revenue
excludes taxes collected from customers.
Revenue is measured based on the transaction price, which is the expected consideration to be received, to
the extent that it is highly probable that there will not be a significant reversal of revenue in future periods. If the
consideration in a contract includes a variable amount, at the inception of the contract, the Company
estimates the amount of consideration to which it will be entitled in exchange for transferring the goods or
services to the customer.
At the inception of the contract, the Company identifies the goods or services promised in the contract and
assess which of the promised goods or services shall be identified as separate performance obligations.
Promised goods or services give rise to separate performance obligations if they are capable of being distinct.
Revenue from the delivery of products is recognised at the point in time when control over the products is
passed to the customers, which is determined based on the individual terms agreed in the customer contract.
Revenue from support services is recognized on rendering of services in accordance with the contractual
agreement with the customers.
Contract balances:
The Company classifies the right to consideration in exchange for deliverables as either a receivable or as
unbilled revenue. A receivable is a right to consideration that is unconditional upon passage of time. Contract
asset, which is presented as unbilled revenue, is classified as non-financial asset as the contractual right to
consideration is dependent on completion of contractual milestones.
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
recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are
recognised as revenue when the Company performs under the contract. Contract liabilities include, and are
presented as ‘Revenue received in advance' and ‘Advances from customers'.
3.9 Other operating revenue and other income
Duty drawback
Duty drawback is recognized basis entitlement upon exports made. Export incentive under duty drawback
are accrued when no significant uncertainties as to the amount of consideration that would be derived and as
to its ultimate collection exist.
Interest income
Interest income is recognized as it accrues in the statement of profit and loss using effective interest rate
method.
Rental income
Rental income from property leased under operating lease is recognised in the income statement on a
straight-line basis over the term of the lease unless increase in rentals are in line with expected general
inflation. Contingent rents are recognised as revenue in the period in which they are earned.
Net gain loss on fair value change
The Company recognises gains on fair value change of financial assets measured at FVTPL and realised
gains on derecognition of financial asset measured at FVTPL on net basis. However, net gain / loss on
derecognition of financial instruments classified as amortised cost is presented separately under the
respective head in the statement of profit and loss.
Finance guarantee income
Finance guarantee income is recognised in the standalone statement of profit and loss on a straight-line basis
over the period of the guarantee. Any unamortised finance guarantee income is presented as a liability
(deferred finance guarantee income) and released to income over the guarantee tenure.
Other miscellaneous income
Other miscellaneous income is recognized when it is probable that the economic benefits will flow to the
Company and the amount can be measured reliably.
3.10 Financial instruments:
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.
i. 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 and loss, transaction costs that are attributable to the acquisition of the financial
asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified as:
• Debt instruments assets at amortised cost
• Equity instrument measured at fair value through profit or loss (FVTPL)
When 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 and loss), or recognised in other comprehensive income
(i.e. fair value through other comprehensive income).
Debt instruments at amortised cost
A debt instrument is measured at amortised cost (net of any write down for impairment) if both the following
conditions are met:
• the asset is held to collect the contractual cash flows (rather than to sell the instrument prior to its
contractual maturity to realise its fair value changes), and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest (“SPPI”) on the principal amount outstanding.
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 and loss. The losses arising from impairment are recognised statement of
profit and loss. This category generally applies to trade and other receivables.
Financial assets at fair value through OCI (FVTOCI)
A financial asset that meets the following two conditions is measured at fair value through OCI unless the
asset is designated at fair value through profit and loss under fair value option.
• The financial asset is held both to collect contractual cash flows and to sell.
• 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.
Instruments included within the FVTOCI category are measured initially as well as at each reporting date
at fair value. Fair value movements are recognized in OCI. However, the Company recognizes interest
income, impairment losses & reversals and foreign exchange gain or loss in the Profit and Loss. On
derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the
equity to Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest
income using the EIR method.
Financial assets at fair value through profit and loss (FVTPL)
FVTPL is a residual category for company's investment instruments. Any instruments which does not
meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
All investments included within the FVTPL category are measured at fair value with all changes
recognized in the Profit and Loss
In addition, the company may elect to designate an 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').
Equity investments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are
held for trading 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 has not made any such election. This classification is made on initial recognition and is
irrevocable.
If the Company decides to classify an equity instrument as at FVOCI, then all fair value changes on the
instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from
OCI to P&L, even on sale of investment, However, the Company may transfer the cumulative gain or loss
within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes
recognized in the P&L.
Equity investment in subsidiary are measured at cost.
Derecognition
When 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; it evaluates if and to what extent it has retained the risks and rewards of ownership.
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial
assets) is primarily derecognised when:
• The rights to receive cash flows from the asset have expired, or
• Based on above evaluation, either
(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.
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 bases that reflect 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 amount of the asset and the maximum amount of consideration that the
Company could be required to repay.
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 (‘Financial instruments') requires expected credit losses to be measured
through a loss allowance. The Company recognizes lifetime expected losses for all contract assets and /
or all trade receivables 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.
ii. Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit
and loss or at amortised cost, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings, net of
directly attributable transaction costs.
The Company's financial liabilities include trade payables and other payables.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings and other payables are subsequently
measured at amortised cost using the EIR method. Gains and losses are recognised in 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
A financial liability is derecognised 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 derecognition 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.
iii. 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.
iv. Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After initial
recognition, no reclassification is made for financial assets which are equity instruments and financial
liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a
change in the business model for managing those assets. Changes to the business model are expected
to be infrequent. The Company's senior management determines change in the business model as a
result of external or internal changes which are significant to the Company's operations. Such changes
are evident to external parties. A change in the business model occurs when the Company either begins
or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial
assets, it applies the reclassification prospectively from the reclassification date which is the first day of
the immediately next reporting period following the change in business model. The Company does not
restate any previously recognised gains, losses (including impairment gains or losses) or interest.
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