3. Summary of Material Accounting Policies:
3.1 Property, Plant and Equipment
Property, Plant and Equipment are stated at cost, net of accumulated depreciation and accumulated impairment, if any.
The cost comprises the purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing
the asset to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase
price.
Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic
benefits associated with these will flow to the Company and the cost of the item can be measured reliably.
All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts,
are charged to the statement of profit and loss for the period during which such expenses are incurred.
Property, Plant and Equipment not ready for the intended use on the date of the Balance Sheet are disclosed as "Capital Wok
in Progress".
Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and
the carrying amount of the asset at the time of disposal and are recognized in the statement of profit and loss when the asset
is derecognized.
Depreciation
Depreciation on all Property, Plant and Equipment except vehicles is provided on straight-line method and depreciation on
vehicles is provided on written down value method as per the useful life prescribed in schedule II to the Companies Act, 2013
except in respect of plant and machineries used other than in mining activity, where useful life is considered lesser than those
prescribed in schedule II.
In respect of Property, Plant and Equipment purchased/sold during the year, depreciation is provided on a pro-rata basis from
the date on which such asset is ready to use or till the date when asset is sold, as the case may be. Assets costing less than rupees
five thousand each are fully depreciated in the year of purchase.
The residual value, useful live and method of depreciation of Property, Plant and Equipment are reviewed at each financial year
end and adjusted prospectively, if appropriate.
3.2 Revenue Recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be
reliably measured. Revenue is measured at the fair value of the consideration received or receivable.
a.) Revenue from contracts with customer
Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at
an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
The specific recognition criteria described below must also be met before revenue is recognized. The Company has concluded
that it is principal in its revenue arrangements because it typically controls goods or services before transferring them to the
customer.
i. Revenue from construction / project related activity:
Cost plus contracts: Revenue from cost plus contracts is recognized over time and is determined with reference to the extent
performance obligations have been satisfied. The amount of transaction price allocated to the performance obligations satisfied
represents the recoverable costs incurred during the period plus the margin as agreed with the customer.
Fixed price contracts: Contract revenue is recognised over time to the extent of performance obligation satisfied and control
is transferred to the customer. Contract revenue is recognised at allocable transaction price which represents the cost of work
performed on the contract plus proportionate margin, using the percentage of completion method.
Impairment loss (termed as provision for foreseeable losses in the standalone financial statements) is recognized in profit or
loss to the extent the carrying amount of the contract asset exceeds the remaining amount of consideration that the Company
expects to receive towards remaining performance obligations (after deducting the costs that relate directly to fulfill such
remaining performance obligations). In addition, the Company recognises impairment loss (termed as provision for expected
credit loss on contract assets in the standalone financial statements) on account of credit risk in respect of a contract asset using
expected credit loss model on similar basis as applicable to trade receivables.
ii. Contract Balances:
• Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to customer. If the Company performs
by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract
asset is recognized for the earned consideration that is conditional.
• Trade Receivable
A receivable is recognised if 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 instruments - initial recognition and subsequent
measurement.
• Contract liabilities
A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the
Company transfers the related goods or services. Contract liabilities are recognised as revenue when the Company performs
under the contract (i.e., transfers control of the related goods or services to the customer).
iii. Rendering of Services:
Revenue from contracts to provide services (other than those covered under construction contracts referred above) are
recognized by reference to the stage of completion of the contract.
b.) Other income
• Interest income
Interest income is recognized using effective interest method. The effective interest rate is the rate that exactly discounts
estimated future cash receipts through expected life of the financial asset to the gross carrying amount of the financial asset.
When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual
terms of the financial instrument but does not consider the expected credit losses.
• Dividend income
Dividend income is recognized when the right to receive dividend is established.
3.3 Inventories
Inventories are valued at lower of cost and net realizable value. Cost of materials is determined on first-in-first-out basis except
in case of items produced by the Company, where the cost are derived on weighted average basis. Net realizable value is the
estimated selling price less estimated cost necessary to make the sale.
3.4 Intangible Assets
An intangible asset is recognized, only where it is probable that future economic benefits attributable to the asset will accrue to
the enterprise and the cost can be measured reliably.
Intangible assets are stated at cost, less accumulated amortization and impairment losses, if any.
Intangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as intangible assets under
development.
Intangible assets are amortized over their estimated useful life on straight line method. The estimated useful life of the intangible
assets and the amortization period are reviewed at the end of each financial year and the amortization method is revised to
reflect the changed pattern. Software being Intangible Assets used at Head office and work-shop are amortized over a period of
three years and software used at Project sites are amortized over the project completion period.
In respect of intangible assets acquired / purchased during the year, amortization is provided on a pro-rata basis from the date
on which such asset is ready to use.
3.5 Investment in subsidiaries
Investments in subsidiaries are recognized at cost as per Ind AS 27. If there is objective evidence of impairment as a result of one
or more events that occurred after the initial recognition of the net investment in a subsidiary (a 'loss event') and that loss event
(or events) has an impact on the estimated future cash flows from the net investment that can be reliably estimated, then it is
necessary to recognize impairment loss with respect the Company's investment in a subsidiary.
3.6 Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument
of another entity.
a.) Financial Assets
i. Initial recognition and measurement of financial assets
All financial assets are recognized initially at fair value. Transaction costs that are directly attributable to the acquisition of
financial assets that are not at fair value through profit or loss are added to the fair value on initial recognition.
ii. Subsequent measurement of financial assets
For purposes of subsequent measurement, financial assets are classified in below categories:
- Financial assets at amortized cost
- Financial assets at fair value through profit or loss
• Financial assets at amortized cost
A financial asset is measured at amortized cost if it is held within a business model whose objective is to hold financial 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 (SPPI) on the principal amount outstanding.
• Debt instruments at amortized cost
A 'debt instrument' is measured at the amortized cost if both the above conditions mentioned in "Financial assets at amortized
cost" are met. After initial measurement, such financial assets 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 income in the profit or loss. The losses
arising from impairment are recognized in the profit or loss.
• Perpetual securities
The Company invests in perpetual securities (sub ordinated debt), without coupon and redeemable at the issuer's option. The
Company classifies this instrument as equity under Ind AS 32.
• Financial assets at fair value through profit or loss:
Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value
recognised in the statement of profit and loss.
In addition, the Company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as
at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency
(referred to as 'accounting mismatch'). The Company has not designated any debt instrument as at FVTPL.
iii. De-recognition of financial assets
A financial asset is de-recognized when the contractual rights to the cash flows from the financial asset expire or the Company
has transferred its contractual rights to receive cash flows from the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Company
has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement,
it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor
retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues
to recognize the transferred asset to the extent of the Company's continuing involvement. In that case, the Company also
recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the
rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original
carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
b.) Financial Liabilities
i. Initial recognition and measurement of financial liabilities
The Company's financial liabilities include trade and other payables, loans and borrowings including bank overdrafts.
All financial liabilities are recognized initially at fair value in case of loan and borrowings and payable, fair value is reduced by
directly attributable transaction costs.
ii. Subsequent measurement of financial liabilities
For purposes of subsequent measurement, financial liabilities are classified in two categories:
- Financial liabilities at fair value through profit or loss
- Financial liabilities at amortized cost (loans and borrowings)
• Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated
upon initial recognition as at fair value through profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of
recognition, and only if the criteria in Ind-AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses on
changes in fair value of such liability are recognized in the Standalone Statement of Profit and Loss.
• Financial liabilities at amortized cost (Loans and Borrowings)
After initial recognition, interest-bearing borrowings are subsequently measured at amortized cost using the EIR method. Gains
and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.
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 as finance costs in the Standalone Statement of Profit and Loss. This category
generally applies to borrowings.
• Compound financial instruments
Compound financial instruments are separated into liability and equity components based on the terms of the contract. At
inception, the fair value of the liability component is determined using a market rate. This amount is classified as a financial
liability measured at amortised cost (net of transaction costs) until it is extinguished on redemption.
• Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the
holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt
instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that
are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of
loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less, when appropriate,
the cumulative amount of income recognized in accordance with the principles of Ind AS 115.
iii. Derecognition of financial liabilities
A financial liability (or a part of a financial liability) is derecognized from its balance sheet when the obligation specified in the
contract is discharged or cancelled or expired.
When an existing financial liability is replaced by another liability 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 de-recognition of
the original liability and the recognition of a new liability. The difference in the respective carrying amount is recognized in the
Standalone Statement of Profit and Loss.
c.) Offsetting of Financial Instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if the Company currently
has enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets
and settle the liabilities simultaneously.
3.7 Impairment
• Financial assets other than investments in subsidiaries
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 impairment loss allowance (or reversal) recognized during the period is recognized as income / expense in the statement
of profit and loss.
• Financial assets - investments in subsidiaries
The Company assesses at each reporting date whether there is an indication that an asset may be impaired.
If any indication exists, the Company estimates the asset's recoverable amount based on value in use.
To arrive at the value in use of the investment, the Company has used expected future cash flows of projects in subsidiaries
which generally covering period of the concession agreement using long term growth rate applied to future cash flows.
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.
Where the carrying amount of an asset exceeds its value in use amount, the asset is considered impaired and is written down to
its recoverable amount. The impairment loss is recognized in statement of profit and loss.
• Non-financial assets - Tangible and intangible assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired.
If any indication exists, the Company estimates the asset's recoverable amount.
An asset's recoverable amount is the higher of an assets net selling price and its value in use.
The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets.
Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to
its recoverable amount. The impairment loss is recognized in the statement of profit and loss.
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.
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.
3.8 Fair Value Measurements
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 assumes 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
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefit
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. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair
value that are either observable or unobservable and consists of the following three levels:
Level 1 - inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 - inputs are other than quoted prices included within level 1 that are observable for the asset or liability either directly
(i.e. as prices) or indirectly (i.e. derived prices)
Level 3 - inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part
using a valuation model based on assumption that are neither supported by prices from observable current market transactions
in the same instrument nor are they based on available market data.
3.9 Income Tax
Income tax expense comprises current tax, deferred tax and MAT Credit.
Current Tax
Current tax is recognized in profit or loss.
Current tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities,
using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
Current tax assets and current tax liabilities are offset, where Company has a legally enforceable right to set off the recognized
amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred Tax
Deferred tax is recognized in profit or loss.
Deferred tax liabilities are recognized for all taxable temporary differences, except to the extent that the deferred tax liability
arises from initial recognition of goodwill; or initial recognition of an asset or liability in a transaction which is not a business
combination and at the time of transaction, affects neither accounting profit nor taxable profit or loss.
Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax losses and carry
forward of unused tax credits to the extent that it is probable that taxable profit will be available against which those temporary
differences, losses and tax credit can be utilized, except when deferred tax asset on deductible temporary differences arise from
the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction,
affects neither accounting profit nor taxable profit or loss.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is
realized or the liability is settled, based on the tax rules and tax laws that have been enacted or substantively enacted by the
end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset, where Company has a legally enforceable right to set off the recognized
amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the
related tax benefit will be realized.
MAT Credit
Minimum Alternate Tax (MAT) paid in a year is charged to statement of profit and loss as current Tax. The Company recognizes
MAT Credit available as an asset only when and to the extent that there is convincing evidence that the Company will pay normal
income tax during the specified period, i.e. the period for which MAT credit is allowed to be carried forward. In the year in which
the Company recognizes MAT credit as an asset in accordance with the Guidance Note on "Accounting for Credit Available in
respect of Minimum Alternative Tax under Income Tax Act, 1961", the said assets is created by way of credit to the statement of
profit and loss and shown as "Deferred Tax". The Company reviews the "MAT credit entitlement" asset at each reporting date
and writes down the assets to the extent the Company does not have convincing evidence that it will pay normal tax during the
specified period.
3.10 Borrowing Cost
Borrowing cost includes interest and other costs that Company has incurred in connection with the borrowing of funds.
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 or sale are capitalized as part of the cost of the respective asset.
All other borrowing costs are expensed in the year they occur.
3.11 Employee Benefits
a. ) Short Term Employee Benefits
All employee benefits payable are expected to be settled wholly within 12 months after the end of the reporting period are
classified as short-term benefits. Such benefits include salaries, wages, bonus, short term compensation etc. and the same are
recognized as an expense in the Standalone Statement of Profit and Loss in the period in which the employee renders the related
services.
b. ) Post-Employment Benefits
(i) Defined contribution plan
The Company's approved provident fund scheme is defined contribution plans. The Company has no obligation, other than the
contribution paid/payable under such schemes. The contribution paid/payable under the schemes is recognized and charged to
Standalone Statement of Profit and Loss during the period in which the employee renders the related service.
(ii) Defined benefit plan
The employee's gratuity scheme is a defined benefit plan. The present value of the obligation under such defined benefit plans
is determined based on the actuarial valuation using the Projected Unit Credit Method as at the date of the Balance sheet.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net
interest on the net defined benefit liability are recognized immediately in the Balance Sheet with a corresponding debit or credit
to retained earnings through Other Comprehensive Income (OCI) in the period in which they occur. Re-measurements are not
reclassified to Standalone Statement of Profit and Loss in subsequent periods.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognizes the
following changes in the net defined benefit obligation as an expense in the Standalone Statement of Profit and Loss:
• Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine
settlements; and
• Net interest expense or income
c.) Other Employment benefits
The employee's compensated absences, which is expected to be utilized or encased within the next 12 months, is treated as
short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it
expects to pay as result of the unused entitlement that has accumulated at the reporting date. As per Company's policy, no leave
are expected to be carried forward beyond 12 months from the reporting date.
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