Note 2 : Material Accounting Policy Informa¬
tion
This note provides a list of the Material Accounting Policy information
adopted in the preparation of these standalone financial statements.
2.01 Statement of compliance
The Company's financial statements have been prepared in
accordance with the provisions of the Companies Act, 2013 and the
Indian Accounting Standards ("Ind AS") notified under the Companies
(Indian Accounting Standards) Rules, 2015 and amendments
thereto issued by Ministry of Corporate Affairs under section 133
of the Companies Act, 2013. In addition, the guidance notes/
announcements issued by the Institute of Chartered Accountants
of India (ICAI) are also applied except where compliance with
other statutory promulgations require a different treatment. These
financials statements have been approved for issue by the Board of
Directors at its meeting held on May 28, 2025.
2.02 Basis of Preparation
The Financial Statements comprising Balance Sheet, Statement of
Profit and Loss, Statement of Changes in Equity, Statement of Cash
Flow together with notes for the year ended March 31, 2025, have
been prepared in accordance with applicable Indian Accounting
Standards (Ind AS) prescribed under section 133 of Companies Act,
2013 read with Companies (Indian Accounting Standard) Rules as
amended from time to time.
The Financial Statements have been prepared on the historical cost
convention on accrual basis except for certain financial instruments
that 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.
As the operating cycle cannot be identified in normal course due
to the special nature of industry, the same has been assumed to
have duration of 12 months. Accordingly, all assets and liabilities
have been classified as current or non-current as per the Company's
operating cycle and other criteria set out in Division II of Schedule III
to the Companies Act, 2013.
Operating Cycle
Operating cycle for the business activities of the company covers
the duration of the specific project/contract/product line/service
including the defect liability period wherever applicable and
extends up to the realisation of receivables (including retention
monies) within the agreed credit period normally applicable to the
respective lines of business.
Current and Non Current Classification
An asset is treated as current when it is:
(i) Expected to be realised or intended to be sold or consumed in
normal operating cycle
(ii) Held primarily for the purpose of trading
(iii) Expected to be realised within twelve months after the
reporting period, or
(iv) 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 treated as current when:
(i) It is expected to be settled in normal operating cycle
(ii) It is held primarily for the purpose of trading
(iii) It is due to be settled within twelve months after the reporting
period, or
(iv) 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.
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 under current market
conditions
The Company categorizes assets and liabilities measured at fair value
into one of three levels depending on the ability to observe inputs
employed in their measurement which are described as follows:
(i) Level 1- Quoted prices (unadjusted) in active markets for
identical assets or liabilities.
(ii) Level 2- Inputs that are observable, either directly or indirectly,
other than quoted prices included within level 1 for the asset or
liability.
(iii) Level 3- Unobservable inputs for the asset or liability reflecting
significant modifications to observable related market data or
Company's assumptions about pricing by market participants.
Functional and Presentation Currency
Items included in financial statements of the Company are measured
using the currency of the primary economic environment in which
the Company operates ("the functional currency"). Indian rupee is
the functional currency of the Company.
The Financial Statements are presented in Indian Rupees which
is company's presentation currency. All financial information
presented in Crores has been rounded to two decimals except
where otherwise indicated.
2.03 Critical Accounting Judgments, Assumptions and
Key Sources of Estimation Uncertainty
The preparation of financial statements in conformity with Ind
AS requires management to make judgments, estimates and
assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, the disclosures of contingent
assets and contingent liabilities at the date of financial statements,
income and expenses during the period. Actual results may differ
from these estimates. Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimates are revised and
in future periods which are affected.
Assumptions and Key Sources of Estimation Uncertainty
(i) Revenue
Revenue is recognised based on the extent of progress towards
completion of the performance obligation. This requires the
Company to estimate total contract revenue, and remaining
cost to complete the contract at the end of each reporting
date. The financial reporting of these contracts depends on
estimates that are assessed continually during the term of these
contracts, therefore recognized revenue and profit are subject
to change as the contract progresses to completion.
(ii) Useful life of Property, Plant & Equipment (PPE)
Depreciation on fixed assets is calculated on a straight-line basis
using the rates arrived at based on the useful lives estimated
by the management which is reviewed at the end of each
reporting period. The rate of depreciation adopted by the
company has been tabulated in note 2.03
(iii) Expected Credit Loss (ECL)
Expected Credit Loss is prepared based on the historical data
for the past five years with annual intervals and the probability
of default is computed accordingly. The mechanism tries
to identify the receivables which would probably result in
becoming unrecoverable for the company and additional
provision is created by company based on the ECL model.
(iv) Employee Benefits - Defined benefit obligation (DBO)
Management's estimate of the DBO is based on a number
of critical underlying assumptions such as standard rates of
inflation, medical cost trends, mortality, discount rate and
anticipation of future salary increases. Variation in these
assumptions may significantly impact the DBO amount and the
annual defined benefit expenses.
(v) Taxation
Determining of income tax liabilities using tax rates and tax laws
that have been enacted or substantially enacted requires the
Management to estimate the level of tax that will be payable
based upon the Group's/ expert's interpretation of applicable
tax laws, relevant judicial pronouncements and an estimation
of the likely outcome of any open tax assessments including
litigations or closures thereof.
Deferred income tax assets are recognized to the extent that it
is probable that future taxable income will be available against
which the deductible temporary differences, unused tax losses,
unabsorbed depreciation and unused tax credits could be
utilized.
(vi) Fair value measurement
Some of the Company's assets and liabilities are measured at
fair value for financial reporting purposes. The Management
determines the appropriate valuation techniques and inputs for
the fair value measurements. In estimating the fair value of an
asset or a liability, the Company used market-observable data to
the extent it is available. Where Level 1 inputs are not available,
the Company engaged third party qualified valuers to perform
the valuations in order to determine the fair values based on
the appropriate valuation techniques and inputs to fair value
measurements. Information about the valuation techniques
and inputs used in determining the fair value of various assets
and liabilities are disclosed in Note 45.
(vii) Provision for contractual obligation
Assessments undertaken in recognising provisions for
contractual obligation have been made as per the best
judgement of the management based on the current available
information.
2.04 Property, Plant and Equipment
Land and buildings, Property, Plant and Equipments held for use in
the production or supply of goods or services, or for administrative
purposes, are stated in the Balance Sheet at cost less accumulated
depreciation and impairment losses, if any. Property, Plant and
Equipment (PPE) in the course of construction for production, supply
or administrative purposes are carried at cost, less any recognised
impairment loss.
The cost of an asset comprises its purchase price or its construction
cost (net of applicable tax credits), any cost directly attributable to
bring the asset into the location and condition necessary for it to be
capable of operating in the manner intended by the Management
and initial estimate of decommissioning, restoring and similar
liabilities. Such cost includes the cost of replacing part of the
plant and equipment and professional fees. Any trade discounts
and rebates are deducted in arriving at the purchase price. Such
properties are classified to the appropriate categories of PPE when
completed and ready for intended use. Parts of an item of PPE
having different useful lives and significant value and subsequent
expenditure on Property, Plant and Equipment arising on account of
capital improvement or other factors are accounted for as separate
components. All other repair and maintenance costs are recognised
in profit or loss as incurred. Own fabricated assets are capitalized at
cost including an appropriate share of overheads.
Items of stores and spares that meet the definition of property, plant
and equipment are capitalized at cost and depreciated over their
useful life. Otherwise, such items are classified as inventories.
Depreciation on Property, Plant & Equipment
Depreciation of these PPE commences when the assets are ready
for their intended use. It is provided on the cost of PPE (other than
leasehold land) less their residual values, using the straight line
method over the useful life of PPE as stated in the Schedule II to
the Companies Act, 2013 or based on technical assessment by the
Company. The Company has used the following rates to provide
depreciation on its property, plant and equipment.
The estimated useful lives, residual values and depreciation method
are reviewed on an annual basis and if necessary, changes in
estimates are accounted for prospectively.
Depreciation on additions/deletions to PPE during the year
is provided for on a pro-rata basis with reference to the date
of additions/deletions except low value items not exceeding
Rs.15,000/- which are fully depreciated at the time of addition.
On subsequent expenditure on PPE arising on account of capital
improvement or other factors, depreciation is provided for
prospectively over the remaining useful life.
Depreciation on refurbished/revamped PPE which are capitalized
separately is provided for over the reassessed useful life.
De-Recognition:
An item of PPE is de-recognised upon disposal or when no future
economic benefits are expected to arise from the continued use of
the asset. Any gain or loss arising on the disposal or retirement of an
item of PPE is determined as the difference between the net sales
proceeds and the carrying amount of the asset and is recognised as
in the Statement of Profit and Loss.
Assets not ready for the intended use on the date of the Balance
Sheet are disclosed as Capital Work-in-Progress.
2.05 Investment Property
Properties, including those under construction, held to earn rentals
and/or capital appreciation are classified as investment property
and are measured and reported at cost, including transaction costs
and borrowing cost capitalised for qualifying assets, in accordance
with the Company's accounting policy. Policies with respect to
depreciation, useful life and derecognition are followed on the same
basis as stated for Property, Plant and Equipment
2.06 Intangible Assets
Intangible assets with finite useful lives that are acquired separately,
are carried at cost less accumulated amortisation and accumulated
impairment losses. The costs comprises of all cost, including financing
costs till commencement of commercial production, net charges on
foreign exchange contracts and adjustments arising from exchange
rate variations attributable to the intangible asset. Amortisation is
recognised on a straight line basis over their estimated useful lives
from the date of capitalisation. The estimated useful life is reviewed
at the end of each reporting period and the effect of any changes in
estimate being accounted for prospectively.
Computer software are amortized on a straight line basis over a
period of 3 years.
De-recognition
Intangible assets are derecognised on disposal, or when no future
economic benefits are expected from use or disposal. Gains or losses
arising from derecognition of an intangible asset are determined as
the difference between the net disposal proceeds and the carrying
amount of the asset, and recognised in the Statement of Profit and
Loss when the asset is derecognised.
2.07 Impairment of tangible and intangible assets
The Company reviews the carrying amount of its tangible and
intangible assets and Property, Plant and Equipment (including
Capital Works-in -Progress) of a "Cash Generating Unit" (CGU) at the
end of each reporting period to determine whether there is any
indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if
any). When it is not possible to estimate the recoverable amount of
an individual asset, the Company estimates the recoverable amount
of the cash-generating unit to which the asset belongs.
In determining net selling price, recent market transactions are taken
into account, if available. If no such transactions can be identified, an
appropriate valuation model is used.
Recoverable amount is the higher of fair value less costs of disposal
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.
If the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount
of the asset (or cash-generating unit) is reduced to its recoverable
amount and impairment loss is recognised in the Statement of Profit
and Loss.
The Company bases its impairment calculation on detailed budgets
and forecast calculations which are prepared separately for each of
the Company's cash-generating units to which the individual assets
are allocated. These budgets and forecast calculations are generally
covering a period of five years. For longer periods, a long term
growth rate is calculated and applied to project future cash flows
after the fifth year.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
An assessment is made at the end of each reporting period to see if
there are any indications that impairment losses recognized earlier
may no longer exist or may have come down. The impairment
loss is reversed, if there has been a change in the estimates used
to determine the asset's recoverable amount since the previous
impairment loss was recognized. If it is so, the carrying amount of
the asset is increased to the lower of its recoverable amount and the
carrying amount that have been determined, net of depreciation,
had no impairment loss been recognized for the asset in prior years.
After a reversal, the depreciation charge is adjusted in future periods
to allocate the asset's revised carrying amount, less any residual
value, on a systematic basis over its remaining useful life. Reversals of
Impairment loss are recognized in the Statement of Profit and Loss.
2.08 Leases
Assets taken on lease are accounted as right-of-use assets
and the corresponding lease liability is recognised at the lease
commencement date.
Initially the right-of-use asset is measured at cost which comprises
the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any
initial direct costs incurred and an estimate of costs to dismantle
and remove the underlying asset or to restore the underlying asset
or the site on which it is located, as reduced by any lease incentives
received.
The lease liability is initially measured at the present value of the
lease payments, discounted using the Company's incremental
borrowing rate. It is remeasured when there is a change in future
lease payments arising from a change in an index or a rate, or a
change in the estimate of the guaranteed residual value, or a change
in the assessment of purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the right-of-use asset
or is recorded in profit or loss if the carrying amount of the right-of-
use asset has been reduced to zero.
The right-of-use asset is measured by applying cost model i.e. right-
of-use asset at cost less accumulated depreciation and cumulative
impairment, if any. The right-of-use asset is depreciated using the
straight-line method from the commencement date to the end of
the lease term or useful life of the underlying asset whichever is
earlier. Carrying amount of lease liability is increased by interest on
lease liability and reduced by lease payments made.
Lease payments associated with following leases are recognised as
expense on straight-line basis:
(i) Low value leases; and
(ii) Leases which are short-term.
Assets given on lease are classified either as operating lease or as
finance lease. A lease is classified as a finance lease if it transfers
substantially all the risks and rewards incidental to ownership of an
underlying asset. Asset held under finance lease is initially recognised
in balance sheet and presented as a receivable at an amount equal
to the net investment in the lease. Finance income is recognised over
the lease term, based on a pattern reflecting a constant periodic rate
of return on Company's net investment in the lease. A lease which is
not classified as a finance lease is an operating lease.
The Company recognises lease payments in case of assets given on
operating leases as income on a straight-line basis. The Company
presents underlying assets subject to operating lease in its balance
sheet under the respective class of asset.
In case of sale and leaseback transactions, the Company first
considers whether the initial transfer of the underlying asset to the
buyer lessor is a sale by applying the requirements of Ind AS 115.
If the transfer qualifies as a sale and the transaction is at market
terms, the Company effectively derecognises the asset, recognises
a ROU asset (and lease liability) and recognises in Statement of Profit
and Loss, the gain or loss relating to the buyer-lessor's rights in the
underlying asset.
2.09 Financial instruments
Financial assets and financial liabilities are recognised when
Company becomes a party to the contractual provisions of the
instruments.
Financial assets and financial liabilities are initially measured at
fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities (other
than financial assets and financial liabilities at fair value through
profit or loss) are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to the acquisition
of financial assets or financial liabilities at fair value through profit or
loss are recognised immediately in the Statement of Profit and Loss.
2.09 Financial assets
Financial assets comprises of investments , trade receivables, cash
and cash equivalents, term loans and advances and other financial
assets.
(i) Cash and cash equivalents
Cash and cash equivalents comprise of cash at bank and cash
in hand. The Company considers all highly liquid investments
with an original maturity of three months or less from date of
purchase, to be cash equivalents.
(ii) Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost
using the effective interest method if these financial assets are
held within a business 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.
(iii) Financial assets 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 whose objective is achieved by both collecting
contractual cash flows and selling financial assets and the
contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
The Company has made an irrevocable election to present in
other comprehensive income subsequent changes in the fair
value of equity investments not held for trading.
(iv) Financial assets at fair value through profit or loss
Financial assets are measured at fair value through profit or loss
unless it is measured at amortised cost or at fair value through
other comprehensive income on initial recognition.
(v) Impairment of financial assets
The Company assesses at each balance sheet date whether a
financial asset or a group of financial assets is impaired. Ind AS
109 requires expected credit losses to be measured through
a loss allowance. The Company recognises lifetime expected
losses for trade receivables that do not constitute a financing
transaction. For all other financial assets, expected credit losses
are measured at an amount equal to 12 month expected credit
losses or at an amount equal to lifetime expected losses, if the
credit risk on the financial asset has increased significantly since
initial recognition.
(vi) Derecognition of financial assets
The Company derecognises a financial asset when the
contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another party.
On derecognition of a financial asset in its entirety (except
for equity instruments designated as FVTOCI), the difference
between the asset's carrying amount and the sum of the
consideration received and receivable is recognised in the
Statement of Profit and Loss.
2.10 Financial liabilities
(i) Financial guarantee contracts
A financial guarantee contract is a contract that requires the
issuer to make specified payments to reimburse the holder for a
loss it incurs because a specified debtor fails to make payments
when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by the Company are
initially measured at their fair values and, if not designated as at
FVTPL, are subsequently measured at the higher of:
(a) the amount of loss allowance determined in accordance
with impairment requirements of Ind AS 109; and
(b) the amount initially recognised less, when appropriate, the
cumulative amount of income recognised in accordance
with the principles of Ind AS 18.
(ii) Financial liabilities
Financial liabilities are measured at amortised cost using the
effective interest method
(iii) Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only
when, the Company's obligations are discharged, cancelled or
have expired. The difference between the carrying amount of
the financial liability derecognised and the consideration paid
and payable is recognised in the Statement of Profit and Loss.
2.11 Inventories
Inventories are stated at lower of cost and net realisable value. Cost
of construction / raw materials comprises cost of purchases and
includes taxes and duties and is net of eligible credits under CENVAT/
VAT schemes/ Input Tax Credit (ITC). It also includes all other related
costs incurred in bringing the inventories to their present location
and condition.
Stores and spares which do not meet the definition of property,
plant and equipment are accounted as inventories. Cost is
determined on first in first out basis. Cost of surplus/ obsolete/
slow moving inventories are adequately provided for. Net realisable
value represents the estimated selling price for inventories less all
estimated costs of completion and costs necessary to make the sale.
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