| NOTE 2 | SUMMARY OF MATERIAL ACCOUNTING
POLICIES

2.1. Basis of Preparation

The Standalone financial statements of the Company
have been prepared in accordance with Indian
Accounting Standards (Ind AS) notified under the
Companies (Indian Accounting Standards) Rules, 2015.

In accordance with the notification issued by the
Ministry of Corporate Affairs, the Company, with effect
from April 01, 2016, has adopted Indian Accounting
Standards (the 'Ind AS') notified under the Rule 3 of the
Companies (Indian Accounting Standards) Rules, 2015
and amendments thereto.

Accounting policies have been consistently applied
except where a newly issued accounting standard is
initially adopted or a revision to an existing accounting
standard requires a change in the accounting policy
hitherto in use.

The Standalone financial statements are presented
in Indian rupees ('INR') and all values are rounded to
the nearest Lakhs and two decimals thereof, except if
otherwise stated.

These Standalone financial statements have been
prepared under the historical cost convention on the
accrual basis, except for certain financial instruments &
provisions which are measured at fair values at the end
of each reporting period, as explained in the accounting
policies below.

Historical cost is generally based on the fair value of
the consideration given in exchange for goods and
services.

2.2 Interest in Joint Operations

A joint operation is a joint arrangement whereby the
parties that have joint control of the arrangement
have rights to the assets and obligations for the
liabilities, relating to the arrangement. Joint control
is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about
the relevant activities require unanimous consent of the
parties sharing control. When a company undertakes
its activities under joint operations, the Company as a
joint operator recognizes in relation to its interest in a
joint operation:

1. its assets, including its share of any assets held
jointly,

2. its liabilities, including its share of any liabilities
incurred jointly,

3. its revenue from the sale of its share arising from
the joint operation,

4. its share of the revenue from the joint operations,
and

5. its expenses, including its share of any expenses
incurred jointly.

The Company accounts for the assets, liabilities,
revenues, and expenses relating to its interest in a joint
operation in accordance with the Ind AS applicable to
the particular assets, liabilities, revenues, and expenses.

2.3 Current versus non-current classification

The Company presents assets and liabilities in
the balance sheet based on current/ non-current
classification.

An asset is treated as current when it is:

• Expected to be realized or intended to be sold or
consumed in normal operating cycle

• Held primarily for the purpose of trading

• Expected to be realized within twelve months after
the reporting period, or

• Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting period

All other assets are classified as non-current.

A liability is current when it is:

• It is expected to be settled in normal operating
cycle

• It is held primarily for the purpose of trading

• It is due to be settled within twelve months after the
reporting period, or

• There is no unconditional right to defer the settlement
of the liability for at least twelve months after the
reporting period

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non¬
current assets and liabilities.

The operating cycle for the business activities of
the Company covers the duration of the project/
contract/ service including the defect liability period,
wherever applicable and extends up to the realization
of receivables (including retention monies) within the
credit period normally applicable to the respective
project.

2.4 Property Plant & Equipment

The Company has elected to continue with the
carrying value of all its property, plant and equipment
as recognized in the financial statement at the date of
transition i.e. at April 01, 2015, measured as per the
previous GAAP and used that as its deemed cost as at
the transition date.

Property, plant and equipment are stated at cost,
net of accumulated depreciation and accumulated
impairment losses, if any.

Cost includes cost of acquisitions or construction
including incidental expenses thereto and other
attributable cost of bringing the assets to its working
condition for the intended use and is net of recoverable
duty /tax credits.

2.5 Intangible Asset

The Company recognizes the intangible asset according
to Ind AS-38 which are stated at cost of acquisition net
of accumulated amortization and impairment losses, if
any.

In accordance with Ind AS 38, Intangible assets with
finite lives are amortized over the useful economic life
and assessed for impairment whenever there is an
indication that the intangible asset may be impaired.
Other intangible assets are amortized on straight line
basis over the period in which it is expected to be
available for use by the Company.

2.6 Intangible Asset under development

Expenditure related to and incurred during development
of Assets are included under "Intangible assets under
development". The same will be transferred to the
respective assets on its completion.

2.7 Depreciation and Amortization

Depreciation and amortization on fixed assets and
intangible assets is provided on straight line method
(other than specified Plant & Machinery which are
depreciated on written down value basis) based on
useful life which is estimated by the management as
equivalent to the useful life stated in schedule II to
the Companies Act 2013 and is on pro-rata basis for
addition and deletions. The useful life is reviewed at
least at the end of each financial year. In case of Plant
& Machinery as per technical estimate (excluding
Earth Moving equipments), the useful life is more than
as stated in schedule II. The estimated useful life of
Property, Plant & Equipment and Intangible assets as
mentioned below:

2.8 Cash & Cash Equivalent

Cash & cash equivalents comprise of cash at bank
and cash-in-hand. The Company consider all highly
liquid investments which must be readily convertible

to a known amount of cash and are subject to an
insignificant risk of change in value with an original
maturity of three months or less from date of purchase
to be cash equivalent.

2.9 Revenue recognition
Construction Contracts

The Company recognized revenue when the Company
satisfies a performance obligation by transferring a
promised good or service (i.e., assets) to a customer
at an amount that reflects the consideration entitled
in exchange for those goods or services. Revenue is
measured at the amount of consideration which the
Company expects to be entitled to in exchange for
transferring distinct goods or services to a customer as
specified in the contract, excluding amounts collected
on behalf of third parties (for example taxes and duties
collected on behalf of the government). Consideration
is generally due upon satisfaction of performance
obligations and a receivable is recognized when it
becomes unconditional.

Construction Contract: Performance obligation under
the construction contracts satisfied over a period
of time, since the Company creates an asset that
the customer controls as the asset is created and
the Company has an enforceable right to payment
for performance completed to date if it meets the
agreed specifications. With respect to the method
for recognizing revenue over time (i.e. the method for
measuring progress towards complete satisfaction
of a performance obligation), the Company has
established certain criteria that are applied consistently
for similar performance obligations. In this regard, the
method chosen by the Company to measure the value
of goods or services for which control is transferred to
the customer over time is the output method based
on surveys of performance completed to date as
acknowledged by the client according to which revenue
is recognized corresponding to the work performed
and on the basis of the price allocated thereto. In cases
where the work performed till the reporting date has
not reached the milestone specified in the contract, the
Company recognizes revenue only to the extent that it
is highly probable that the customer will acknowledge
the same. This method is applied as the progress
of the work performed can be measured during its
performance on the basis of the contract. Under this
method, on a regular basis, the work completed under
each contract is measured and the corresponding
output is recognized as revenue.

Contract modifications are accounted for when
additions, deletions or changes are approved either
to the scope or price or both. Goods/services added

that are not distinct are accounted for on a cumulative
catch up basis. Goods / services those that are distinct
are accounted for prospectively as a separate contract,
if the additional goods/services are priced at the
standalone selling price else as a termination of the
existing contract and creation of a new contract. In
cases where the additional work has been approved
but the corresponding change in price has not been
determined, the recognition of revenue is made for an
amount with respect to which it is highly probable that
a significant reversal will not occur.

If the consideration promised in a contract includes
a variable amount, this amount is recognized only to
the extent that it is highly probable that a significant
reversal in the amount recognized will not occur.

Revenue related Claims/Bonus are accounted in the
year in which awarded/settled or accepted by customer
or there is a tangible evidence of acceptance received.

Other sales are accounted on dispatch of material and
exclude applicable tax including Goods and Service tax
and are net of discount.

Sale of Services (Operation and Maintenance
contracts)

Revenue from providing operating and maintenance
services is recognized in the accounting period in
which the services are rendered. Invoices are issued
according to contractual terms and are usually payable
as per the credit period agreed with the customer.

Provision for future losses

Provision for future losses are recognized as soon as
it becomes evident that the total costs expected to be
incurred in a contract exceed the total expected revenue
from that contract.

Contract balances

(i) Contract assets

A contract asset is recognized for amount of work
done but pending billing/acknowledgement by
customer or amounts billed but payment is due
on completion of future performance obligation,
since it is conditionally receivable. The provision
for Expected Credit Loss on contract assets is
made on the same basis as financial assets.

(ii) Trade receivables

A receivable represents the Company’s right to
an amount of consideration that is unconditional
(i.e., only the passage of time is required before
payment of the consideration is due). Refer to

accounting policies of financial assets in section
financial instruments.

(iii) Contract liabilities

A contract liability is the obligation to transfer
goods or services to a customer for which the
Company has received advance payments from
the customer. If a customer pays consideration
before the Company transfers goods or services
to the customer, a contract liability is recognized
when the consideration received.

2.10 Other Income
Interest Income

Interest income is generally recognized on a time
proportion basis by considering the outstanding
amount and effective interest rate.

In the absence of ascertainment with reasonable
certainty the quantum of accruals in respect of claims
recoverable, the same is accounted for on receipt basis.
Income from investments is accounted for on accrual
basis when the right to receive income is established.

For all financial instruments measured at amortized
cost, interest income is recorded using the effective
interest rate (EIR). EIR is the rate that exactly discounts
the estimated future cash payments or receipts over
the expected life of the financial instrument or a shorter
period, where appropriate, to the gross carrying amount
of the financial asset or to the amortized cost of a
financial liability. When calculating the effective interest
rate, the Company estimates the expected cash flows
by considering all the contractual terms of the financial
instrument. Income from dividend is recognized when
the right to received is established.

Dividend

Dividends are recognized in profit or loss only when:

(i) The Company’s right to receive payment of the
dividend is established;

(ii) It is probable that the economic benefits
associated with the dividend will flow to the entity;
and

(iii) The amount of dividend can be measured reliably.
Other Income

Other items of income are accounted as and when the
right to receive such income arises and it is probable
that the economic benefit will flow to the Company and
the amount of income can be measured reliably.

2.11 Inventories

The stock of raw material, stores, spares and embedded
goods and fuel is valued at lower of cost or net realizable
value. Cost is computed on weighted average basis.

Work-In-Progress is calculated taking into accounts for
the work done not qualify to be billed to the customer.

2.12 Leases

Where the Company is the lessee

The Company’s lease asset classes primarily consist
of leases buildings. The Company assesses whether a
contract contains a lease, at inception of a contract. 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. To assess
whether a contract conveys the right to control the use
of an identified asset, the Company assesses whether:

(i) the contract involves the use of an identified asset

(ii) the Company has substantially all of the economic
benefits from use of the asset through the period of the
lease and (iii) the Company has the right to direct the
use of the asset.

At the date of commencement of the lease, the
Company recognizes a right-of-use asset ("ROU") and a
corresponding lease liability for all lease arrangements
in which it is a lessee, except for leases with a term
of twelve months or less (short-term leases) and
low value leases. For these short-term and low value
leases, the Company recognizes the lease payments as
an operating expense on a straight-line basis over the
term of the lease.

Certain lease arrangements includes the options to
extend or terminate the lease before the end of the
lease term. ROU assets and lease liabilities includes
these options when it is reasonably certain that they
will be exercised.

The right-of-use assets are initially recognized 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. They are 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
underlying asset. Right of use assets are evaluated
for recoverability whenever events or changes in

at and for the year ended March 31,2019 have not been
retrospectively adjusted and therefore will continue to
be reported under the accounting policies included as
part of our Annual Report for year ended March 31,
2019.

2.13 Employee benefits
Short Term

All employee benefits payable wholly within twelve
months rendering services are classified as short term
employee benefits. Benefits such as salaries, wages,
short-term compensated absences, performance
incentives etc., and the expected cost of bonus, ex-
gratia are recognized during the period in which the
employee renders related service.

Payments to defined contribution retirement benefit
plans are recognized as an expense when employees
have rendered the service entitling them to the
contribution.

Long Term

Provident Fund: The contribution to provident fund is in
the nature of defined contribution plan. The Company
makes contribution to statutory provident fund in
accordance with the Employees Provident Fund and
Miscellaneous Provisions Act, 1952.The contribution
paid or payable is recognized as an expense in the
period in which services are rendered.

Gratuity: The cost is determined using the projected
unit credit method with actuarial valuation being carried
at cash at each Balance Sheet date by an independent
actuary. The retirement benefits obligation recognized
in the Balance Sheet represent the present value of
defined benefit obligation as adjusted for recognized
past service cost.

Actuarial gains and losses are recognized in full in the
other comprehensive income for the period in which
they occur.

Other long term employee benefits

The cost of long term employee benefits is determined
using project unit credit method and is present value
of related obligation, determined by actuarial valuation
done on Balance Sheet date by an independent actuary.
The past service cost and actuarial gain & losses are
recognized immediately in the Statement of Profit &
Loss in which they occur.

2.14 Borrowing Costs

Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily

takes a substantial period of time to get ready for its
intended use are capitalised as part of the cost of the
asset. 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.

2.15 Segment reporting

The Company’s operations consist of infrastructure
development and construction/project activities, Water
supply projects in India, which in the context of Ind AS
108 "Operating Segments" is considered as identifiable
segments. All the activities of the Company revolve
around these business.

2.16 Earnings per share

Basic earnings per equity share is computed by dividing
the net profit attributable to the equity holders of the
Company by the weighted average number of equity
shares outstanding during the period.

Diluted earnings per equity share is computed by
dividing the net profit attributable to the equity holders
of the Company by the weighted average number of
equity shares considered for deriving basic earnings
per equity share and also the weighted average
number of equity shares that could have been issued
upon conversion of all dilutive potential equity shares.
Dilutive potential equity shares are deemed converted
as of the beginning of the period, unless issued at a later
date. Dilutive potential equity shares are determined
independently for each period presented.

The Weighted average number of equity shares
outstanding during the period is adjusted for events
of bonus issue, buy back of shares, bonus element in
a rights issue to existing shareholders, share split and
reverse share split (consolidation of shares).

2.17 Taxation

Current income tax assets and liabilities are measured
at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax laws
used to compute the amount are those that are enacted
or substantively enacted, at the reporting date in the
countries where the Company operates and generates
taxable income. Current income tax is charged at the
end of reporting period to profit & loss.

Current income tax relating to items recognized
outside profit or loss is recognized outside profit or loss
(either in other comprehensive income or in equity).
Management periodically evaluates positions taken
in the tax returns with respect to situations in which

applicable tax regulations are subject to interpretation
and establishes provisions where appropriate.

Current tax assets and tax liabilities are offset where
the Company has a legal enforceable right to offset and
intends either to settle on a net basis, or to realize the
assets and settle the liabilities simultaneously.

Deferred Tax

Deferred tax is provided using the balance sheet
approach on temporary differences at the reporting
date between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purpose
at reporting date.

Deferred tax assets and liabilities are offset when there
is legal enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate
to the same taxation authorities.

Deferred income tax assets and liabilities are measured
using tax rates and tax laws that have been enacted
or substantively enacted by the balance sheet date and
are expected to apply to taxable income in the years
in which those temporary differences are expected to
be recovered or settled. Deferred tax relating to items
recognized outside profit or loss is recognized outside
profit or loss (either in other comprehensive income
or in equity). Deferred tax items are recognized in
correlation to the underlying transaction either in OCI or
directly in equity."

The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred tax asset
to be utilized.

Unrecognized Deferred Tax Assets are re-assessed at
each reporting date and are recognized to the extent
that it has become probable that future taxable profits
will allow the Deferred Tax Asset to be recovered.

2.18 Impairment of Financial Assets

The Company recognizes loss allowances using the
expected credit loss (ECL) model for the financial
assets which are not fair valued through profit or loss.
Loss allowance for trade receivables with no significant
financing component is measured at an amount equal
to lifetime ECL.

For all other financial assets, expected credit losses
are measured at an amount equal to the 12-month
ECL, unless there has been a significant increase in
credit risk from initial recognition in which case those
are measured at lifetime ECL. The amount of expected

credit losses (or reversal) that is required to adjust the
loss allowance at the reporting date to the amount
that is required to be recognized is recognized as an
impairment gain or loss in profit or loss.

2.19 Impairment of Non-Financial Assets

Intangible assets and property, plant and equipment
are evaluated for recoverability whenever events or
changes in circumstances indicate that their carrying
amounts may not be recoverable. For the purpose of
impairment testing, the recoverable amount (i.e. the
higher of the fair value less cost of disposal and the
value-in-use) is determined on an Individual asset
basis unless the asset does not generate cash flows
that are largely Independent of those from other assets.
In such cases, the recoverable amount is determined
for the Cash Generating Unit (CGU) to which the asset
belongs.

If such assets are considered to be impaired, the
impairment to be recognized in the statement of profit
and loss is measured by the amount by which the
carrying value of the assets exceeds the estimated
recoverable amount of the asset.

An impairment loss is reversed in the statement of profit
and loss if there has been a change in the estimates
used to determine the recoverable amount. The
carrying amount of the asset is increased to its revised
recoverable amount, provided that this amount does
not exceed the carrying amount that would have been
determined (net of any accumulated amortization or
depreciation) had no impairment loss been recognized
for the asset in prior years.

2.20 Claims & Counter Claims

Claims and counter claims including under arbitrations
are accounted for on their final settlement/ Award.
Contract related claims are recognized when there is a
reasonable certainty.