2 Material accounting policies
Material accounting policies adopted by the company
are as under:
2.1 Basis of Preparation of Financial Statements
The financial statements have been prepared using
material accounting policies and measurement
basis summarised below. These were used
throughout all periods presented in the financial
statements
(a) Statement of Compliance with Ind AS
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
thereof issued by Ministry of Corporate Affairs
in exercise of the powers conferred by 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 financial statements have been
approved for issue by the Board of Directors at
its meeting held on May 29, 2025.
(b) Basis of measurement
The financial statements have been prepared
on a historical cost convention on accrual basis,
except certain financial assets and liabilities
measured at fair value (Refer Accounting
Policy No. 2.9 on financial instruments).
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
the Schedule III to the Companies Act, 2013.
The normal operating cycle of the entity for
Construction contracts is the duration of 2 to 3
years depending on each contract.
(c) Presentation of financial statements
The Balance Sheet and the Statement of Profit
and Loss are prepared and presented in the
format prescribed in the Schedule III to the
Companies Act, 2013 ("the Act"). The statement
of cash flows has been prepared and presented
as per the requirements of Ind AS 7 "Statement
of Cash flows". The disclosure requirements
with respect to items in the Balance Sheet and
Statement of Profit and Loss, as prescribed
in the Schedule III to the Act, are presented
by way of notes forming part of the financial
statements along with the other notes required
to be disclosed under the notified Accounting
Standards and the SEBI (Listing Obligations
and Disclosure Requirements) Regulations,
2015.
Amounts in the financial statements are
presented in Indian Rupees in Lakhs rounded
off to two decimal places as permitted by
Schedule III to the Companies Act, 2013. Per
share data are presented in Indian Rupees to
two decimal places.
(d) Use of estimates
The preparation of financial statements
in conformity with Ind AS requires the
Management to make estimate and
assumptions that affect the reported amount
of assets and liabilities as at the Balance
Sheet date, reported amount of revenue and
expenses for the year and disclosures of
contingent liabilities as at the Balance Sheet
date. The estimates and assumptions used
in the accompanying financial statements are
based upon the Management's evaluation of
the relevant facts and circumstances as at the
date of the financial statements. Actual results
could differ from these estimates. Estimates
and underlying assumptions are reviewed
on a periodic basis. Revisions to accounting
estimates include useful lives of property, plant
and equipment & intangible assets, allowance
for expected credit loss, future obligations in
respect of retirement benefit plans, expected
cost of completion of contracts, fair value
measurement, etc. Difference, if any, between
the actual results and estimates is recognised
in the period in which the results are known.
Refer Note 3 for detailed discussion on
estimates and judgments.
(e) Interests in Joint Operations
When the Company has joint control of
the arrangement based on contractually
determined right to the assets and obligations
for liabilities, it recognises such interests as
joint operations. Joint control exists when the
decisions about the relevant activities require
unanimous consent of the parties sharing
the control. In respect of its interests in joint
operations, the Company recognises its share
in assets, liabilities, income and expenses line-
by-line in the standalone financial statements
of the entity which is party to such joint
arrangement which then becomes part of the
consolidated financial statements of the Group
when the financial statements of the Holding
Company and its subsidiaries are combined
for consolidation.
2.2 Fair value measurement
The Company maintains accounts on accrual basis
following the historical cost convention, except for
certain financial instruments that are measured at
fair value in accordance with Ind AS. The carrying
value of all the items of property, plant and
equipment as on date of transition is considered as
the deemed cost.
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
• I n the absence of a principal market, in the
most advantageous market for the asset or
liability accessible to the Company.
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. The
Company's management determines the policies
and procedures for fair value measurement.
Fair value measurements under Ind AS are
categorised as below based on the degree to which
the inputs to the fair value measurements are
observable and the significance of the inputs to the
fair value measurement in its entirety:
• Level 1 inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities
that the company can access at measurement
date;
• Level 2 inputs are inputs, other than quoted
prices included in level 1, that are observable
for the asset or liability, either directly or
indirectly; and
• Level 3 inputs are unobservable inputs for the
valuation of assets/liabilities"
2.3 Revenue Recognition
A. The Company recognises revenue from
contracts with customers when it satisfies
a performance obligation by transferring
promised good or service to a customer.
The revenue is recognised to the extent of
transaction price allocated to the performance
obligation satisfied. Performance obligation is
satisfied over time when the transfer of control
of asset (good or service) to a customer is done
over time and in other cases, performance
obligation is satisfied at a point in time. For
performance obligation satisfied over time,
the revenue recognition is done by measuring
the progress towards complete satisfaction
of performance obligation. The progress is
measured in terms of a proportion of actual
cost incurred to-date, to the total estimated
cost attributable to the performance obligation.
Transaction price is the amount of consideration
to which the Company expects to be entitled
in exchange for transferring good or service to
a customer excluding amounts collected on
behalf of a third party. Variable consideration
is estimated using the expected value method
or most likely amount as appropriate in a given
circumstance. Payment terms agreed with
a customer are as per business practice and
there is no financing component involved in the
transaction price. Costs to obtain a contract
which are incurred regardless of whether
the contract was obtained are charged-off in
Statement of Profit and Loss immediately in
the period in which such costs are incurred.
Incremental costs of obtaining a contract,
if any, and costs incurred to fulfil a contract
are amortised over the period of execution
of the contract in proportion to the progress
measured in terms of a proportion of actual
cost incurred to-date, to the total estimated
cost attributable to the performance obligation.
Significant judgments are used in:
1. Determining the revenue to be recognised
in case of performance obligation satisfied
over a period of time; revenue recognition
is done by measuring the progress towards
complete satisfaction of performance
obligation. The progress is measured
in terms of a proportion of actual cost
incurred to-date, to the total estimated cost
attributable to the performance obligation.
2. Determining the expected losses, which are
recognised in the period in which such losses
become probable based on the expected total
contract cost as at the reporting date."
B. Revenue from construction contracts/
project related activity and contracts for
supply/commissioning of complex plant and
equipment is recognised as follows:
Fixed price contracts: Contract revenue is
recognised only to the extent of cost incurred
till such time the outcome of the job cannot
be ascertained reliably subject to condition
that it is probable the such cost will be
recoverable. When the outcome of the contract
is ascertained reliably,contract revenue is
recognised at cost of work performed on the
contract plus proportionate margin, using the
percentage of completion method. Percentage
of completion is the proportion of cost of
work performed to date, to the total estimated
contracts cost.
The estimated outcome of a contract is
considered reliable when all the following
conditions are satisfied:
(i) The amount of revenue can be measured
reliably;
(ii) It is probable that the economic benefits
associated with the contract will flow to
the company;
(iii) The stage of completion of the contract
at the end of the reporting period can be
measured reliably; and
(iv) The costs incurred or to be incurred in
respect of the contract can be measured
reliably.
Expected loss, if any, on a contract is recognised
as expense in the period in which it is foreseen,
irrespective of the stage of completion of the
contract.
For contracts where progress billing exceeds
the aggregate of contract costs incurred to-date
and recognised profits (or recognised losses,
as the case may be), the surplus is shown
as the amount due to customers. Amounts
received before the related work is performed
are disclosed in the Balance sheet as a liability
towards advance received. Amounts billed
for work performed but yet to be paid by the
customer are disclosed in the Balance sheet
as trade receivables. The amount of retention
money due form customers within the next
twelve months are classified under other
current assets as Trade Receivable.
Revenue from contracts from rendering
engineering design services and other services
which are directly related to construction of
an asset is recognised on the same basis as
stated in (B) above.
Other Income
I nterest Income is recognised on a basis of
effective interest method as set out in Ind
AS 109, Financial Instruments, and where no
significant uncertainty as to measurability or
collectability exists.
Dividend income is accounted in the period
in which the right to receive the same is
established.
Other items of income are accounted as and
when the right to receive such income arises
and it is probable that the economic benefits
will flow to the company and the amount of
income can be measured reliably.
2.4 Taxes
Tax expense for the year, comprising current tax and
deferred tax, are included in the determination of the
net profit or loss for the year.
(a) Current income tax
Current tax assets and liabilities are measured
at the amount expected to be recovered 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 year end date. Current tax assets and tax
liabilities are offset where the entity has a
legally enforceable right to offset and intends
either to settle on a net basis, or to realize the
asset and settle the liability simultaneously.
The company has not opted to exercise the
option under section 115BAA of the income
tax 1961, as introduced by the taxation laws
(Amendment) ordinance, 2019 and decided
to continue with the existing rate of tax for the
purpose of deferred tax computation.
(b) Deferred tax
Deferred income tax is provided in full, using
the balance sheet approach, on temporary
differences arising between the tax bases of
assets and liabilities and their carrying amounts
in financial statements. Deferred income
tax is also not accounted for if it arises from
initial recognition of an asset or liability in a
transaction other than a business combination
that at the time of the transaction affects
neither accounting profit nor taxable profit (tax
loss). Deferred income tax is determined using
tax rates (and laws) that have been enacted or
substantially enacted by the end of the year
and are expected to apply when the related
deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred tax assets are recognised for all
deductible temporary differences and unused
tax losses only if it is probable that future
taxable amounts will be available to utilize
those temporary differences and losses.
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 tax assets and liabilities are offset
when there is a legally enforceable right to
offset current tax assets and liabilities and
when the deferred tax balances relate to the
same taxation authority."
Current and deferred tax is recognized in
Statement of Profit and Loss, except to the
extent that it relates to items recognised in
other comprehensive income or directly in
equity. In this case, the tax is also recognised
in other comprehensive income or directly in
equity, respectively.
2.5 Exceptional items
An item of income or expense which by its size,
type or incidence requires disclosure in order to
improve an understanding of the performance of
the company is treated as an exceptional item and
the same is disclosed in the notes to accounts.
2.6 Impairment of non-financial assets
The Company assesses at each year end whether
there is any objective evidence that a non financial
asset or a group of non financial assets is impaired.
If any such indication exists, the Company estimates
the asset's recoverable amount and the amount of
impairment loss.
An impairment loss is calculated as the difference
between an asset's carrying amount and recoverable
amount. Losses are recognized in Statement of
Profit and Loss and reflected in an allowance
account. When the Company considers that there
are no realistic prospects of recovery of the asset,
the relevant amounts are written off. If the amount
of impairment loss subsequently decreases and
the decrease can be related objectively to an event
occurring after the impairment was recognised,
then the previously recognised impairment loss is
reversed through Statement of Profit and Loss.
The recoverable amount of an asset or cash¬
generating unit (as defined below) is the greater
of its value in use and its fair value less costs to
sell. 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 the purpose
of impairment testing, assets are grouped together
into the smallest group of assets that generates
cash in flows from continuing use that are largely
independent of the cash inflows of other assets or
groups of assets (the "cash-generating unit")."
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