2. Material Accounting Policies:
(a) Basis of preparation, measurement and significant
accounting policies:
(i) Compliance with Indian Accounting Standard
(Ind AS)
The standalone financial statements of the Company
have been prepared and comply in all material aspects
with Companies (Indian Accounting Standards)
Rules, 2015 (Ind AS) as amended from time to time
and notified under Section 133 of the Companies
Act, 2013 (the Act) read with relevant rules and other
accounting principles. The policies set out below have
been consistently applied during the year presented.
(ii) Basis of Preparation
The standalone financial statements are presented
in ‘Indian Rupees’, which is also the Company’s
functional and presentation currency and all amounts,
are rounded to the nearest crore, with two decimals,
unless otherwise stated.
The standalone financial statements have been
prepared in accordance with the requirements of
the Schedule III to the Act applicable Ind AS, other
applicable pronouncements and regulations.
(iii) Basis of Measurement
The standalone financial statements have been
prepared on a historical cost convention on accrual
basis, except for the following:
• certain financial assets and liabilities that are
measured at fair value;
• defined benefit plans-planned assets measured
at fair value; and
• assets held for sale - measured at fair value less
cost to sell or carrying value whichever is lower
(b) Segment Reporting
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision maker (CODM).
The board of directors of Reliance Infra has appointed
the Chief Executive Officer (‘CEO’) to assess the financial
performance and position of the Company, and making
strategic decisions. The CEO has been identified as being
the Chief Operating Decision Maker for corporate planning.
(c) 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 realised or intended to be sold or
consumed in normal operating cycle
• Expected to be realised 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
• Held primarily for the purpose of trading
All other assets are classified as non-current.
A liability is current when:
• It is expected to be settled in normal operating cycle
• 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.
• Held primarily for the purpose of trading
All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of
assets for processing and their realisation 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.
(d) Revenue Recognition
Company applies Ind AS 115 “Revenue from Contracts
with Customers” using cumulative catch-up transition
method. The Company recognizes revenue from contracts
with customers when it satisfies a performance obligation
by transferring promised goods or service to a customer.
The revenue is recognised to the extent of transaction price
allocated to the performance obligation satisfied.
Further, specific criteria for revenue recognition followed
for different businesses are as under-
(i) Engineering and Construction Business (E&C)
In case of Engineering and Construction Business
performance obligations are satisfied over a period
of time and contracts revenue is recognised over
a period of time by measuring progress towards
complete satisfaction of the performance obligation at
the reporting date. The progress is measured based
on the proportion of contract costs incurred for work
performed to date, to the estimated total contract
costs attributable to the performance obligation, using
the input method.
Contract cost includes costs that relate directly to
the specific contract and allocated costs that are
attributable to the performance obligation. Cost
that are not allocated to the contract activity such
as general administration costs are expensed as
incurred and classified as other operating expenses.
The Company account for a contract modification
(change in the scope or price (or both) when that is
approved by the parties to the contract. In case of
modification of contracts a cumulative adjustment
is accounted for if changes of transaction price for
existing obligation.
Contract assets are recognised when there is excess
of revenue earned over billing on contracts. Contract
assets are classified as unbilled receivables (only act
of invoicing is pending) when there is unconditional
right to receive cash, and only passage of time is
required, as per contractual terms.
Unearned and deferred revenue (“contract liability”) is
recognised when there is billing in excess of revenues.
The billing schedules agreed with customer include
periodic performance based payments and/or
milestone based progress payments.
(ii) Power Business
Revenue from Sale of Power: Revenue from sale
of power is accounted for in accordance with
tariff provided in Power Purchase Agreement
(PPA) read with the regulations of Maharashtra
Electricity Regulatory Commission (MERC) and
no significant uncertainty as to the measurability or
collectability exist.
(iii) Others
• Insurance and other claims are recognized as
revenue on certainty of receipt on prudent basis.
• Income from rentals and others is recognized
in accordance with terms of the contracts with
customers based on the period for which the
facilities have been used. Rental income arising
from operating lease is accounted on a straight
line basis over the lease terms.
• Interest income is accrued on a time proportion
basis, by reference to the principal outstanding
and effective interest rate applicable.
• Dividend income is recognised in the Statement
of Profit and Loss only when the right to receive
payment is established.
(e) Foreign Currency Transactions
Functional and Presentation Currency
Items included in the standalone financial statements of the
Company are measured using the currency of the primary
economic environment in which the Company operates
(‘the functional currency’).
Transactions and Balances
Foreign currency transactions are translated into the
functional currency using exchange rates at the date of
the transaction. Foreign exchange gains and losses from
settlement of these transactions and from translation of
monetary assets and liabilities at exchange rates at the
reporting date are recognised in the Statement of Profit and
Loss except in case of certain long term foreign currency
monetary items where the treatment is as under:
• Non-monetary items which are carried at historical cost
denominated in foreign currency are reported using
the exchange rates at the dates of the transaction.
• Foreign exchange gains and losses are presented in
other expense/income in the standalone Statement of
Profit and Loss on a net basis.
(f) Financial Instruments
All financial assets and liabilities are recognised at fair values
on initial recognition, except for trade receivables which
are initially measured at transaction price. The Company
recognise financial assets and liabilities when it become a
party to the contractual provision of the instrument.
(I) Financial Assets
(i) Classification
The Company classified its financial assets in
the following measurement categories:
• Those to be measured subsequently at fair
value (either through other comprehensive
income, or through profit or loss), and
• Those measured at amortised cost.
The classification depends on the Company’s
business model for managing the financial assets
and the contractual terms of the cash flows.
For assets measured at fair value, gains and
losses will either be recorded in the Statement
of Profit and Loss or other comprehensive
income. For investments in debt instruments,
this will depend on the business model in which
the investment is held. For investments in equity
instruments, this will depend on whether the
Company has made an irrevocable election at
the time of initial recognition to account for the
equity investment at fair value through other
comprehensive income.
The Company reclassifies debt investments
when and only when its business model for
managing those assets changes.
(ii) Measurement
(a) Initial
Financial assets are measured at fair
value through profit or loss unless they
are measured at amortised cost or at
fair value through other comprehensive
income (FVOCI) on initial recognition. The
transaction cost directly attributable to the
acquisition of financial assets and liabilities
at fair value through profit or loss (FVTPL)
are immediately recognised in statement of
profit and loss.
Financial assets with embedded derivatives
are considered in their entirety when
determining whether their cash flows are
solely payment of principal and interest.
(b) Subsequent
A. Debt instruments
Subsequent measurement of
debt instruments depend on the
Company’s business model for
managing the asset and the cash flow
characteristics of the asset. There
are three measurement categories
into which the Company classifies its
debt instruments:
• Amortised cost
Assets that are held for collection of
contractual cash flows where those
cash flows represent solely payments
of principal and interest are measured
at amortised cost. A gain or loss on a
debt investment that is subsequently
measured at amortised cost and is
not part of a hedging relationship is
recognised in Statement of Profit and
Loss when the asset is derecognised
or impaired. Interest income from
these financial assets is included in
finance income using the effective
interest rate method.
• Fair Value through Other
Comprehensive Income (FVOCI)
Assets that are held for collection
of contractual cash flows and for
selling the financial assets, where the
assets’ cash flows represent solely
payments of principal and interest, are
measured at fair value through other
comprehensive income (FVOCI).
Movements in the carrying amount
are taken through OCI, except for the
recognition of impairment gains or
losses, interest revenue and foreign
exchange gains and losses which
are recognised in the Statement of
Profit and Loss. When the financial
asset is derecognised, the cumulative
gain or loss previously recognised
in OCI is reclassified from equity to
profit or loss and recognised in the
Statement of Profit and Loss. Interest
income from these financial assets
is included in other income using the
effective interest rate method.
• Fair Value through Profit
or Loss (FVTPL)
Assets that do not meet the criteria for
amortised cost or FVOCI are measured
at fair value through profit or loss. A
gain or loss on a debt investment that
is subsequently measured at fair value
through profit or loss and is not part of
a hedging relationship is recognised
in the Statement of Profit and Loss
and presented net in the Statement
of Profit and Loss in the period in
which it arises. Interest income from
these financial assets is included
in other income.
B. Equity instruments
The Company subsequently
measures all equity investments at
fair value. Where the Company’s
management has elected to present
fair value gains and losses on equity
investments in other comprehensive
income, there is no subsequent
reclassification of fair value gains
and losses to the Statement of
Profit and Loss.
Changes in the fair value of financial
assets at fair value through profit or
loss are recognised in other expenses/
income in the Standalone Statement
of Profit and Loss. Impairment losses
(and reversal of impairment losses)
on equity investments measured at
FVOCI are not reported separately
from other changes in fair value.
C. Economic Rights in Shares and
Securities
The Company subsequently
measures all economic rights in share
and securities at fair value through
profit or loss (FVTPL). Changes in
the fair value of financial assets at
fair value through profit or loss are
recognised in other expenses/income
in the Standalone Statement of
Profit and Loss
Investments in Subsidiaries,
Associates and Joint-Ventures
The Company has accounted for its
equity instruments in Subsidiaries,
Associates and Joint-Ventures at
cost except where Investments
classified as assets held for sale
shall be accounted in accordance
with Ind AS 105.
When, the investee entity ceases to
be a subsidiary, associate or Joint-
Venture of the Company, the said
investment is carried at fair value
in accordance with Ind AS 109
“Financial Instruments”.
Ind AS 101 “First-time Adoption of
Indian Accounting Standards” permits
a first time adopter to measure its
each investment in subsidiaries, joint
ventures or associates, at the date
of transition, at cost determined in
accordance with Ind AS 27 “Separate
Financial Statements” or deemed
cost. The deemed cost of such
investment can be it’s fair value at
date of transition to Ind AS of the
Company, or Previous GAAP carrying
amount at that date. The Company
had elected to measure its investment
in Reliance Power Limited, associate
of the Company, which will be
regarded at deemed cost at its fair
value on transition date. The rest of
the investments in subsidiaries, joint
ventures and associates were carried
at their Previous GAAP carrying
values as its deemed cost on the
transition date.
(iii) Impairment of Financial Assets
The Company assesses on a forward looking
basis the expected credit losses associated with
its assets carried at amortised cost and FVOCI
debt instruments. The impairment methodology
applied depends on whether there has been
a significant increase in credit risk. Note
No. 50 details how the Company determines
whether there has been a significant increase
in credit risk.
For trade receivables, the Company measures
the expected credit loss associated with its trade
receivables applying simplified approach based
on historical trend, industry practices and the
business environment in which the entity operates
or any other appropriate basis. The impairment
methodology applied depends on whether there
has been a significant increase in credit risk.
(iv) Derecognition of Financial Assets
A financial asset is derecognised only when:
• Right to receive cash flow from assets
have expired or
• The Company has transferred the
rights to receive cash flows from the
financial asset or
• It retains the contractual rights to receive
the cash flows of the financial asset, but
assumes a contractual obligation to pay
the received cash flows in full without
material delay to a third party under a
“pass through” arrangement.
Where the Company has transferred an
asset, it evaluates whether it has transferred
substantially all risks and rewards of ownership
of the financial asset. In such cases, the financial
asset is derecognised.
Where the Company has neither transferred
a financial asset nor retains substantially all
risks and rewards of ownership of the financial
asset, the financial asset is derecognised if the
Company has not retained control of the financial
asset. Where the Company retains control
of the financial asset, the asset is continued
to be recognised to the extent of continuing
involvement in the financial asset.
(II) Financial Liabilities
Initial Recognition and Measurement
All financial liabilities are recognised initially at fair
value and in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
The Company’s financial liabilities include trade and
other payables, loans and borrowings including bank
overdrafts and derivative financial instruments.
Subsequent measurement
Financial liabilities at amortized cost: After
initial measurement, such financial liabilities are
subsequently measured at amortized cost using the
effective interest rate (EIR) method. Amortized 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 amortization
is included in finance costs in the Statement of
Profit and Loss.
(a) Borrowings
Borrowings are initially recognised at fair
value, net of transaction costs incurred and
subsequently measured at amortised cost.
Any difference between the proceeds (net of
transaction costs) and the redemption amount
is recognised in the Statement of Profit and
Loss over the period of the borrowings using
the EIR method.
(b) Trade and Other Payables
These amounts represent liabilities for goods
and services provided to the Company prior
to the end of financial year which are unpaid.
Trade and other payables are presented as
current liabilities unless payment is not due
within 12 months after the reporting period.
They are recognised initially at their fair value
and subsequently measured at amortised cost
using the effective interest method.
(c) Financial Guarantee Obligations
The fair value of financial guarantees is
determined as the present value of the difference
in net cash flows between the contractual
payments under the debt instrument and
the payments that would be required without
the guarantee, or the estimated amount that
would be payable to a third party for assuming
the obligations.
Where guarantees in relation to loans or other
payables of subsidiaries, joint ventures or
associates are provided for no compensation,
the fair values as on the date of transition are
accounted for as contributions and recognised
as part of the cost of the equity investment.
Derecognition
A financial liability is derecognized 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
recognized in the Statement of Profit and Loss.
(g) Fair Value Measurement
Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability
takes place either:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most
advantageous market for the asset or liability
The principal or the most advantageous market must be
accessible by the Company.
The fair value of an asset or a liability is measured using
the assumptions that market participants would use
when pricing the asset or liability, assuming that market
participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into
account a market participant’s ability to generate economic
benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the
asset in its highest and best use.
The Company uses valuation techniques that are
appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximizing the
use of relevant observable inputs and minimizing the use
of unobservable inputs.
All assets and liabilities for which fair value is measured
or disclosed in the standalone financial statements are
categorized within the fair value hierarchy, described as
follows, based on the lowest level input that is significant to
the fair value measurement as a whole:
Level 1 -Quoted (unadjusted) market prices in active
markets for identical assets or liabilities.
Level 2- Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
directly or indirectly observable.
Level 3 -Valuation techniques for which the lowest level
input that is significant to the fair value measurement
is un-observable.
For assets and liabilities that are recognised in the
standalone financial statements on a recurring basis,
the Company determines whether transfers have
occurred between levels in the hierarchy by re-assessing
categorisation (based on the lowest level input that is
significant to the fair value measurement as a whole) at the
end of each reporting period.
The Company’s Management determines the policies
and procedures for both recurring and non-recurring fair
value measurement, such as derivative instruments and
unquoted financial assets measured at fair value.
At each reporting date, the Management analyses the
movements in the values of assets and liabilities which
are required to be re-measured or re-assessed as per
the Company’s accounting policies. For this analysis,
the Management verifies the major inputs applied in the
latest valuation by agreeing the information in the valuation
computation to contracts and other relevant documents.
The management also compares the change in the fair
value of each asset and liability with relevant external
sources to determine whether the change is reasonable.
For the purpose of fair value disclosures, the Company
has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset
or liability and the level of the fair value hierarchy as
explained above.
Disclosures for valuation methods, significant estimates
and assumptions of Financial Instruments (including those
carried at amortised cost) and Quantitative disclosures of
fair value measurement hierarchy (Refer Note 50).
(h) (i) Derivatives
Derivatives including forward contracts are initially
recognised at fair value on the date a derivative
contract is entered into and are subsequently re¬
measured to their fair value at the end of each
reporting period. The Company does not designate
their derivatives as hedge and such contracts are
accounted for at fair value through profit or loss and
are included in the Statement of Profit and Loss.
In respect of derivative transactions, gains / losses
are recognised in the Statement of Profit and
Loss on settlement.
On a reporting date, open derivative contracts are
revalued at fair values and resulting gains / losses are
recognised in the Statement of Profit and Loss
(ii) Embedded Derivatives
An embedded derivative is a component of a hybrid
(combined) instrument that also includes a non¬
derivative host contract - with the effect that some of
the cash flows of the combined instrument vary in a
way similar to a standalone derivative. An embedded
derivative cause some or all of the cash flows that
otherwise would be required by the contract to be
modified according to a specified interest rate, financial
instrument price, commodity price, foreign exchange
rate, index of prices or rates, credit rating or credit
index, or other variable, provided in the case of a non
financial variable that the variable is not specific to a
party to the contract. Reassessment only occurs if
there is either a change in the terms of the contract
that significantly modifies the cash flows that would
otherwise be required or a reclassification of a financial
asset out of the fair value through profit or loss.
Derivatives embedded in a host contract that is
a financial asset within the scope of Ind AS 109
“Financial Instruments” are not separated. Financial
assets with embedded derivatives are considered in
their entirety when determining whether their cash
flows are solely payment of principal and interest.
Derivatives embedded in all other host contract are
separated only if the economic characteristics and
risks of the embedded derivative are not closely
related to the economic characteristics and risks of
the host and are measured at fair value through profit
or loss. Embedded derivatives closely related to the
host contracts are not separated.
(i) Offsetting Financial Instruments
Financial assets and liabilities are offset and the net
amount is reported in the balance sheet where there is a
legally enforceable right to offset the recognised amounts
and there is an intention to settle on a net basis or realise
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
Company or the counterparty.
(j) Property, Plant and Equipment
Property, Plant and Equipment assets are carried at
cost net of tax / duty credit availed less accumulated
depreciation and accumulated impairment losses, if any.
Cost includes expenditure that is directly attributable to the
acquisition of the items.
Subsequent costs are included in the asset’s carrying
amount or recognized 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. The
carrying amount of any component accounted for as a
separate asset is de-recognized when replaced. All other
repairs and maintenance are charged to the Statement
of Profit and Loss during the reporting period in which
they are incurred.
Capital work in progress (CWIP) includes cost of
property, plant and equipment under installation / under
development, as at balance sheet date. All project related
expenditure viz. civil works, machinery under erection,
construction and erection materials, preoperative
expenditure incidental / attributable to the construction
of projects, borrowing cost incurred prior to the date of
commercial operations and trial run expenditure are
shown under CWIP. These expenses are net of recoveries
and income (net of tax) from surplus funds arising out of
project specific borrowings.
Property, Plant and Equipment are derecognised from
the standalone financial statements, either on disposal or
when retired from active use.
Gains and losses on disposal or retirement of Property,
Plant and Equipment are determined by comparing
proceeds with carrying amount.
These are recognized in the Statement of Profit and Loss.
Depreciation methods, estimated useful lives and
residual value
Power Business:
Property, Plant and Equipment relating to license business
and other power business are depreciated under the
straight-line method as per the rates and useful life
prescribed as per the Electricity Regulations, as referred to
in Part “B” of Schedule II to the Act. Depreciation on amount
of fair valuation for assets carried at fair value on date of
transition is charged over the balance residual life of the
assets considering the life prescribed as per the Electricity
Regulation. Once the individual asset is depreciated to
the extent of seventy (70) percent, remaining depreciable
value as on March 31 of the year closing shall be spread
over the balance useful life of the asset, as provided in the
Electricity Regulations. The residual values are not more
than 10% of the cost of the assets.
Engineering and Construction Business
Property, Plant and Equipment of E&C Business are
depreciated under the reducing balance method as per
the useful life and in the manner prescribed in Part “C”
Schedule II to the Act.
Other Activities
Property, Plant and Equipment of other activities have
been depreciated under the straight line method as per
the useful life and in the manner prescribed in Part “C”
Schedule II to the Act.
Leasehold improvements are depreciated over the lease
term, in accordance with the period of the underlying
lease agreement.
(k) Investment Property
Investment property comprise portion of office building that
are held for long term yield and / or capital appreciation.
Investment property is initially recognised at cost.
Subsequently investment property comprising of building
is carried at cost less accumulated depreciation and
accumulated impairment losses.
The cost includes the cost of replacing parts and borrowing
costs for long-term construction projects if the recognition
criteria are met. When significant parts of the investment
property are required to be replaced at intervals, the
Company depreciates them separately based on their
specific useful lives. All other repair and maintenance costs
are recognized in Statement of Profit and Loss as incurred.
Depreciation on Investment Property is depreciated under
the straight line method as per the rates and the useful life
prescribed as per Schedule II of the Companies Act.
Though the Company measures investment property
using cost based measurement, the fair value of
investment property is disclosed in the notes. Fair values
are determined based on periodical basis performed
by an accredited external independent valuer applying
a valuation model recommended by the International
Valuation Standards Committee.
Investment properties are derecognised when either they
have been disposed of or when the investment property is
permanently withdrawn from use and no economic benefit
is expected from its disposal.
The difference between the net disposal proceeds and the
carrying amount of the asset is recognized in the Statement
of Profit and Loss.
(l) Intangible Assets
Intangible assets are stated at cost of acquisition net of
tax/duty / input credits availed, if any, less accumulated
amortisation/ depletion/impairment. Cost includes
expenditure directly attributable to the acquisition of asset.
Amortisation Method:
Software are amortised over a period of 3 years. Intangible
Assets are derecognised from the standalone financial
statements, either on disposal or when retired from
active use. Gains and losses on disposal or retirement of
Intangible Assets are determined by comparing proceeds
with carrying amount. These are recognized in the
standalone Statement of Profit and Loss.
(m) Inventories
Inventories are stated at lower of cost and net realisable
value. In case of fuel, stores and spares “cost” means
weighted average cost. Unserviceable / damaged stores
and spares are identified and written down based on
technical evaluation.
Net realizable value is the estimated selling price in the
ordinary course of business, less estimated costs of
completion and estimated costs necessary to make the sale.
(n) Allocation of Expense
Common overheads are absorbed by various jobs in
proportion to the prime cost of each job.
(o) Employee Benefits
(i) Short-term Obligations
Liabilities for wages and salaries, including non¬
monetary benefits that are expected to be settled
wholly within 12 months after the end of the period in
which the employees render the related service are
recognised in respect of employees’ services up to
the end of the reporting period and are measured at
the amounts expected to be paid when the liabilities
are settled. The liabilities are presented as short term
employee benefit obligations in the balance sheet.
(ii) Post-employment Obligations
The Company operates the following post¬
employment schemes:
(a) Defined benefit plans such as gratuity and
(b) Defined contribution plans such as provident
fund, superannuation fund etc.
(a) 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 less
the fair value of plan assets. The defined benefit
obligation is calculated annually by actuaries
using the projected unit credit method. The
present value of the defined benefit obligation 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 and
the fair value of plan assets. This cost is included
in employee benefit expense in the Statement
of Profit and Loss. remeasurement of 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. Changes in the
present value of the defined benefit obligation
resulting from plan amendments or curtailments
are recognised immediately in profit or loss as
past service cost. The Company contributes to
a trust set up by the Company which further
contributes to policies taken from Insurance
Regulatory and Development Authority (IRDA)
approved insurance companies.
(b) Provident Fund
The benefit involving employee established
provident funds, which require interest shortfall
to be recompensated are to be considered
as defined benefit plans. As per the Audited
Accounts of Provident Fund Trust maintained
by the Company, the shortfall arising in meeting
the stipulated interest liability, if any, gets
duly provided for.
The Company pays provident fund contributions
to publicly administered provident funds as per
local regulations. The Company has no further
payment obligations once the contributions have
been paid. The contributions are accounted for as
defined contribution plans and the contributions
are recognized as employee benefit expense
when they are due. Prepaid contributions are
recognized as an asset to the extent that a cash
refund or a reduction in the future payments
is available. Superannuation plan, a defined
contribution scheme is administered by IRDA
approved Insurance Companies.
(iii) Other long-term employee benefit obligations
The liabilities for earned leave and sick leave are not
expected to be settled wholly within 12 months after
the end of the reporting period in which the employees
render the related service. They are therefore
measured as the present value of expected future
payments to be made in respect of services provided
by employees up to the end of the reporting period
using the projected unit credit method. The benefits
are discounted using the market yields at the end of
the reporting period that have terms approximating to
the terms of the related obligation. Remeasurement
as a result of experience adjustments and changes
in actuarial assumptions are recognised in the
Statement of Profit and Loss.
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.
(p) Treasury Shares
The Company has created a Reliance Infrastructure ESOS
Trust (ESOS Trust) for providing share-based payment to
its employees. The Company uses ESOS Trust as a vehicle
for distributing shares to employees under the employee
remuneration schemes. The ESOS Trust buys shares of the
Company from the market, for giving shares to employees.
The Company treats ESOS Trust as its extension and
shares held by ESOS Trust are treated as treasury shares.
Reliance Infrastructure ESOS Trust has in substance
acted as an agent and the Company as a sponsor retains
the majority of the risks rewards relating to funding
arrangement. Accordingly, the Company has recognised
issue of shares to the Trust as the issue of treasury shares
and deducted the total cost of such shares from a separate
category of equity (Treasury Shares) by consolidating Trust
into standalone financial statements of the Company.
(q) Borrowing Costs
Borrowing cost includes interest, amortisation of ancillary cost
incurred in connection with the arrangement of borrowings
and the exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment
to the interest cost. General and specific borrowing costs
that are directly attributable to the acquisition, construction
or production of a qualifying asset are capitalized during
the period of time that is required to complete and prepare
the asset for its intended use or sale. Qualifying assets are
assets that necessarily take a substantial period of time to
get ready for their intended use or sale.
Investment income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for
capitalization.
Other borrowing costs are expensed in the period in which
they are incurred.
(r) Income Taxes
Income tax expense for the year comprises of current tax
and deferred tax. Income tax is recognised in the Standalone
Statement of Profit and Loss except to the extent that
it relates to items recognised in ‘Other Comprehensive
Income’ or directly in equity, in which case the tax is
recognised in ‘Other Comprehensive Income’ or directly in
equity, respectively.
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 for each jurisdiction 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
reporting date. 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 Balance
Sheet approach, on temporary differences arising between
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