l.C.l STATEMENT OF COMPLIANCE AND BASIS OF
PREPARATION
The financial statements have been prepared under the
historical cost convention with the exception of certain
assets and liabilities that are required to be measured at
fair value at the end of each reporting period by Ind ASs. The
financial statements of the Company have been prepared
to comply with the Indian Accounting Standards ('Ind ASs'),
including the rules notified under the relevant provisions of
the Companies Act 2013.
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,
regardless of whether that price is directly observable
or estimated using another valuation technique. In
estimating the fair value of an asset or a liability, the
Company takes into account the characteristics of the
asset or liability if market participants would take those
characteristics into account when pricing the asset or
liability at the measurement date.
Functional Currency and Presentation Currency
The financial statements are prepared in Indian Rupees
(?) which is the Company's functional currency for all its
operations. All financial information presented in Indian
Rupees (?) has been rounded to the nearest Lakh, unless
otherwise stated.
Current and 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 Companies Act, 2013 and Ind AS 1 - 'Presentation of
Financial Statements'.
The operating cycle is the time between the acquisition
of assets for processing and their realization in cash and
cash equivalents. The Company has identified twelve
months as its operating cycle.
Deferred tax assets and liabilities are classified as non¬
current assets and liabilities.
Use of estimates and critical judgements
The preparation of accounts in accordance with Ind
ASs requires management to make estimates and
assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets
and liabilities at the date of the accounts and reported
amounts of income and expenses during the period.
Actual results could differ from those estimates. The
most significant techniques for estimation are described
in the accounting policies below. Critical accounting
judgements and the key sources of estimation or
uncertainty in applying the Company's accounting
policies arise in relation to property, plant and equipment,
current asset provisions, deferred tax, retirement
benefits. The detailed accounting policies, including
underlying judgements and methods of estimations for
each of these items are discussed below. All of these key
factors are reviewed on a continuous basis. Revisions
to accounting estimates are recognized in the period
in which estimates are revised and any future periods
affected.
1.C.2 FOREIGN CURRENCY TRANSLATION
In preparing the financial statements of the Company,
transactions in currencies other than the functional
currency are recorded at the rates of exchange
prevailing on the date of the transaction. At the end of
each reporting period, monetary items denominated in
foreign currencies are retranslated at the rates prevailing
at the end of the reporting period. Non-monetary items
carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing on the
date when the fair value was determined. Non-monetary
items that are measured in terms of historical cost in a
foreign currency are not translated.
Exchange differences arising on the settlement of
monetary items, and on retranslation of monetary items
are included in the Statement of Profit and Loss for the
period. Exchange differences arising on retranslation of
non-monetary items carried at fair value are included
in statements of profit and loss for the period except for
differences arising on the retranslation of non-monetary
items in respect of which gains and losses are recognized
directly in other comprehensive income.
Wherever foreign exchange fluctuations are to be borne
by the customers as per agreement with them, foreign
exchange gains/ losses are not recognized in the books
of the Company.
1.C.3 (a) PROPERTY, PLANT AND EQUIPMENT
An item of property, plant and equipment is recognized
as an asset if it is probable that future economic benefits
associated with the item will flow to the company and its
cost can be measured reliably. This recognition principle
is applied to the costs incurred initially to acquire an
item of property, plant and equipment and also to costs
incurred subsequently to add to, replace part of, or service
it. All other repair and maintenance costs, including
regular servicing, are recognized in the Statement of
Profit and Loss as incurred. When a replacement occurs,
the carrying amount of the replaced part is derecognized.
Property, plant and equipment are stated at cost, less
accumulated depreciation and impairment losses. Cost
includes all direct costs and expenditures incurred to
bring the asset to its working condition and location for
its intended use.
The gain or loss arising on disposal of an asset is
determined as the difference between the sale proceeds
and the carrying amount of the asset and is recognized
in the Statement of Profit and Loss.
Land has an indefinite economic life. The Company can
enjoy the part of the life restricted to years of lease. The
lease rent paid in advance is being amortized over the
period of lease.
1.C.3 (b) Depreciation of property, plant and equipment
Depreciation is provided so as to write off, on a straight¬
line basis, the cost of property, plant and equipment to
their residual value. These charges are commenced
from the date the assets are available for their intended
use and are spread over their estimated useful lives.
The estimated useful lives of assets and residual values
are reviewed regularly and, when necessary, revised. No
further charge is provided in respect of assets that are
fully written down but are still in use.
Depreciation on assets under construction commences
only when the assets are ready for their intended use.
Depreciation is provided to allocate the costs of property,
plant and equipment, net of their residual values,
over their useful life as specified in Schedule II of the
Companies Act, 2013. The estimated useful lives for the
main categories of property, plant and equipment are:
Assets in the course of construction are included under
capital work in progress and are carried at cost, less
any recognized impairment loss. Such capital work-in¬
progress, on completion, is transferred to the appropriate
category of property, plant and equipment.
1.C.3 (c) Intangible Assets
Intangible assets with finite useful lives that are acquired
separately are carried at cost less accumulated
amortization and accumulated impairment losses.
Amortization is recognized on a straight-line basis over
their estimated useful lives. The estimated useful life
and amortization methods are reviewed at the end of
each reporting period, with the effect of any changes in
estimate being accounted for on a prospective basis.
An intangible asset is de-recognized on disposal, or
when no future economic benefits are expected from
use or disposal. Further, the management estimates that
the intangible assets are having zero carrying costs at
the end of their useful life i.e. zero residual value.
Software acquired separately is capitalized as software.
These are amortized over a period of their license. In case
of perpetual licenses, the cost is amortized over a period
of five years.
1.C.4 Impairment of Non-Financial Assets
At the end of each reporting period, the Company
reviews the carrying amounts of its property, plant and
equipment and intangible assets to determine whether
there is any indication that the carrying amount of those
assets may not be recoverable through continuing use.
If any such indication exists, the recoverable amount of
the asset is reviewed in order to determine the extent
of impairment loss (if any). Where the asset does not
generate cash flows that are independent from other
assets, the Company estimates the recoverable amount
of the cash generating unit to which the asset belongs.
Intangible assets with an indefinite useful life are tested
for impairment annually and whenever there is an
indication, the asset may be impaired.
Recoverable amount is the higher of fair value less
costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that
reflects current market assessments of the time value of
money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.
An impairment loss is recognized in the Statement of
Profit and Loss as and when the carrying amount of an
asset exceeds its recoverable amount.
Where 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 recognized
for the asset (or cash generating unit) in prior years. A
reversal of an impairment loss is recognized in profit and
loss immediately.
1.C.5 Investment in Subsidiaries and Joint venture
Investment in subsidiaries and Joint venture are carried
at cost in terms of Ind AS 28. Where an indication
of impairment exists, the carrying amount of the
investment is assessed and written down immediately
to its recoverable amount. On disposal of investments in
subsidiaries and joint ventures, the difference between
net disposal proceeds and carrying amounts are
recognized in Statement of Profit and Loss.
1.C.6 Financial Instruments
Financial assets and financial liabilities are recognized
when the Company becomes a party to the contractual
provisions of the instrument. Financial assets and
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 and loss) are added to or deducted from
the fair value measured on initial recognition of financial
assets or financial liabilities. The transaction costs
directly attributable to the acquisition of financial assets
and financial liabilities at fair value through profit or loss
are immediately recognized in the Statement of Profit
and Loss. However, trade receivables that do not contain
a significant financing component are measured at
transaction cost.
a) Financial assets
I. Financial assets at amortized cost
Financial assets are subsequently measured at amortized
cost if these financial assets are held within a business
model whose objective is to hold these 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.
After initial measurement, such financial assets are
subsequently measured at amortized cost using the
Effective Interest Rate (EIR) method.
The Effective Interest Rate method is a method of
calculating the amortized cost of a financial instrument
and of allocating interest income or expense over the
relevant period. The Effective Interest Rate is the rate
that exactly discounts future cash receipts or payments
through the expected life of the financial instrument, or
where appropriate, a shorter period.
II. Financial assets measured at fair value through
Other comprehensive income
Financial assets are measured at fair value through other
comprehensive income if these financial assets are held
within a business model whose objective is to hold these
assets in order to collect contractual cash flows or to sell
these 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.
Financial assets meeting these criteria are measured
initially at fair value plus transaction costs. They are
subsequently measured at fair value with any gains or
losses arising on remeasurement recognized in other
comprehensive income. However, the interest income,
losses and reversals, and foreign exchange gains and
losses are recognized in the Statement of Profit and Loss.
III. Financial assets measured at fair value through
profit and loss
Financial assets not measured at amortized cost or at fair
value through other comprehensive income is carried at
fair value through profit and loss.
Impairment of financial assets
Loss allowance for expected credit losses is recognized
for financial assets measured at amortized cost and fair
value through other comprehensive income.
Loss allowance equal to the lifetime expected credit
losses is recognized if the credit risk on the financial
instruments has significantly increased since initial
recognition. For financial instruments whose credit risk
has not significantly increased since initial recognition,
loss allowance equal to twelve months expected credit
losses is recognized.
Derecognition of financial assets
The Company derecognizes a financial asset only when
the contractual rights to the cash flows from the asset
expire, or it transfers the financial asset and substantially
all risks and rewards of ownership of the asset to another
entity. If the Company neither transfers nor retains
substantially all the risks and rewards of ownership
and continues to control the transferred assets, the
Company recognizes its retained interest in the assets
and an associated liability for amounts it may have to
pay. If the Company retains substantially all the risks and
rewards of ownership of a transferred financial asset,
the Company continues to recognize the financial asset
and also recognizes a collateralized borrowing of the
proceeds received.
b) Financial liabilities and equity instruments
Classification
Financial liabilities and equity instruments issued by the
Company are classified according to the substance
of the contractual arrangements entered into and the
definitions of financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences
a residual interest in the assets of the Company after
deducting all of its liabilities. Transaction costs of an
equity transaction are being accounted as a deduction
from equity.
Financial Liabilities
The Company's financial liabilities include Trade and
other payables and borrowings including bank overdrafts
are initially measured at fair value, net of transaction
costs, and are subsequently measured at amortized
cost, using the effective interest rate method.
Derecognition of financial liabilities
The Company derecognizes financial liabilities when, and
only when, the Company's obligations are discharged,
cancelled or they expire.
Offsetting financial instruments
Financial assets and liabilities are offset and the net
amount reported in the Balance Sheet when there is
a legally enforceable right to offset the recognized
amounts and there is an intention to settle on a net basis
or realize the asset and settle the liability simultaneously.
The legally enforceable right must not be contingent on
future events and must be enforceable in the normal
course of business and in the event of default, insolvency
or bankruptcy of the counterparty.
1.C.7 CASH AND CASH EQUIVALENTS
For the purpose of presentation in the statement of cash
flows, cash and cash equivalent includes cash on hand,
highly liquid investments with original maturities of three
months or less that are readily convertible to known
amounts of cash, cash at bank, and bank overdraft and
which are subject to an insignificant risk of changes in
value. Bank overdrafts are shown within borrowings in
current liabilities in the Balance Sheet.
1.C.8 INVENTORIES
Stock in trade including material-in-transit is valued at
cost or estimated net realizable value whichever is less.
1.C.9 REVENUE RECOGNITION
Revenue is recognized when the performance obligation
towards transfer of goods and services to a customer is
satisfied.
SERVICE CHARGES
Remuneration for transaction in Marketing Department
through facilitator mode and for conducting sales/
procurement on behalf of Principals, by way of auctions,
tenders, or any other means, are accounted for as
service charges.
(a) Service charges are accounted for as income at
contracted rates on:
i. Tender/Auction sale on behalf of Public Sector
Undertakings, Defence and other Government
Departments/ other clients on issuance of sale
orders / delivery orders.
ii. On satisfactory completion of e-sales.
In respect of (i) & (ii), service charges are
accounted for on bid price of auction with
adjustments, if any, on the basis of actual delivery
by the Principals, in case service charges are
payable on percentage basis.
iii. On occurrence of event, in case of service
contract on event basis including development,
maintenance of e-portal and software.
iv. In case of E-Procurement Service charges are
booked, where service charges are collectable
from the Principal, on completion of event.
(b) Transaction fees collected from bidders are
accounted for the successful conduct of events.
(c) Service charges accrued in respect of purchase as
facilitator are accounted for at the contracted rate
on the basis of date of bill of lading / railway receipt
/lorry receipt as the case may be. For imported
materials, value is ascertained either at forward
cover rate or at FEDAI spot rate prevailing on the last
date of the Financial Year. Final adjustment is made
on actual payment. In case of indigenous materials,
value is ascertained on the basis of actual payment
at contracted rate.
E-AUCTION REGISTRATION
E-auction Registration fees collected from buyers is
considered as income of the current year if the validity
of registration is upto one year. In case of lifelong
registration, the amount so collected is distributed in five
years equally.
OTHER INCOME
Revenue is recognized on accrual basis except in
the following items which are accounted on actual
realization since realizability of such items is uncertain
in accordance with the provisions of the accounting
standards:
i) Decrees pending for execution/contested dues
and interest thereon, if any.
ii) Interest on overdue recoverable where realizability
is uncertain.
iii) Liquidated damages on suppliers or contractors.
iv) Refund of Income-Tax/Sales Tax/VAT and interest
thereon.
v) Dividend income is recognized when right to
receive payment is established.
1.C.10 BORROWING COST
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.
Other 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 and
loss in the period in which they are incurred.
1.C.11 EMPLOYEE BENEFITS
(a) Short-term benefits
Short-term employee benefits are accounted for at
their undiscounted amount in the accounting period
in which the services are rendered by the employees
are recognized as an expense in the Statement
of Profit and Loss during the period in which the
employee renders the related service.
(b) Leave encashment
The liabilities for earned leave and commuted
leave are not expected to be settled wholly within
12 months after the end of the period in which the
employees render 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
based on actuarial valuation using the projected unit
credit method.
The benefits are discounted using the market yield
at the end of the reporting period that have terms
of approximating to the terms of related obligations.
Remeasurement as a result of experience
adjustments and changes in actuarial assumptions
are recognized in profit and loss. The facility is funded
through LIC of India.
(c) Post-employment obligation
Defined Contribution Plan -
i. Pension
The pension plan is administered through an independent
trust, and contributions to this fund are charged to
revenue. The fund is managed through the LIC of India /
NPS. The contribution amount is governed by directives
from the Ministry of Steel, in accordance with Department
of Public Enterprises (DPE) guidelines.
Defined Benefit Plan -
i. Provident Fund
Provident Fund is administered by a Trust recognized
by Income Tax Authorities and contribution to this
Fund is charged to revenue. Pensioner's Benefits are
secured through Employees' Pension Scheme 1995. The
Company pays fixed contribution to provident fund at
predetermined rates to a separate trust, which invests
the funds in permitted securities. The Company has
an obligation to ensure minimum rate of return to the
members as specified by GOI.
ii. Gratuity
The liabilities or assets recognized in the Balance Sheet
in respect of defined gratuity plan is the present value
of the defined benefits obligation at the end of the
reporting period, less the fair value of plan assets. The
defined benefits obligations are calculated annually
by actuaries using projected unit credit method.
The present value of defined benefits obligations 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 are terms
approximating to the terms of the related obligations.
The net interest cost is calculated by applying the
discounted rate to the net balance of defined benefit
obligation and the fair value of plan assets. 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
recognized 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.
Changes in the present value of defined benefit
obligation resulting from amendments and curtailments
are recognized immediately in profit or loss as past
service cost. The Gratuity obligation is funded through
Group Gratuity Life Assurance Scheme of Life Insurance
Corporation of India and is administered through a
separate irrevocable trust created by the Company for
this purpose.
iii. Post Retirement medical benefit
The Company provides post retirement healthcare
benefits to their retirees. The entitlement to these benefits
is usually conditional on the employee remaining in
service up to the retirement age and the completion
of minimum service period. The expected cost of these
benefits is accrued over the period of employment using
the same accounting methodology as used for defined
benefit plans. Re-measurement gains and losses
arising from experience adjustments and changes in
actuarial assumptions are charged or credited in other
comprehensive income in the period in which they
arise. The fund is administered through a separate trust
created for this purpose.
1.C.12 TAXATION
Tax expense for the year comprises current and deferred
tax.
(i) Current tax
The tax currently payable is based on taxable profit for
the year. Taxable profit differs from profit before tax for
the year as reported in the Statement of Profit and Loss
because it excludes items of income or expense that
are taxable or deductible in other years and it further
excludes items that are never taxable or deductible.
The Company's liability for current tax is calculated
using tax rates and tax laws that have been enacted or
substantively enacted in the country where the Company
operates by the end of the reporting period.
(ii) Deferred tax
Deferred tax liabilities are the amount of income taxes
payable in future periods in respect of taxable temporary
differences. Deferred tax assets are the amount of
income tax recoverable in future in respect of deductible
temporary differences, carry forward of unused tax
losses and carry forward of unused tax credits. Deferred
tax assets are recognized to the extent that it is probable
that future taxable profits will be available against which
the deferred tax assets 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 deferred
tax assets to be utilized.
Deferred tax assets and liabilities are offset to the
extent that they relate to taxes levied by the same tax
authority and there are legally enforceable rights to set
off current tax assets and current tax liabilities within that
jurisdiction.
Current and deferred tax are recognized as an expense or
income in the Statement of Profit and Loss, except when
they relate to items credited or debited either in other
comprehensive income or directly in equity, in which
case the tax is also recognized in other comprehensive
income or directly in equity.
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