2. MATERIAL ACCOUNTING POLICY INFORMATION

(i) Basis of Preparation and compliance with the
Indian Accounting Standards (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 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. Accounting policies have been consistently
applied except where newly issued accounting
standard is initially adopted or a revision to an
existing accounting standard requires a change in the
accounting policy.

(ii) Accounting Estimates

The preparation of the financial statements, in
conformity with the recognition and measurement
principles of Ind AS, requires the management to
make estimates and assumptions that affect the
reported amounts of assets & liabilities and disclosure
of contingent liabilities as at the date of financial
statements and the results of operation during the
reported period. Although these estimates are based
upon management's best knowledge of current events
and actions, actual results could differ from these
estimates which are recognised in the period in which
they are determined.

(iii) Current and Non-current classifications

Operating cycle for the business activities of the
Company covers the duration of the specific project or
contract or product line or 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.

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 amortized or intended to be sold
or consumed in normal operating cycle,

- Held primarily for the purpose of trading,

- Expected to be amortized within twelve months
after the reporting period, or

- Cash or cash equivalent treated as current
unless restricted from being exchanged or used
to settle a liability for at least twelve months after
the reporting period.

All other assets are classified as non-current.

A liability is current when:

- It is expected to be settled in normal operating
cycle,

- It is held primarily for the purpose of trading,

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

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

The Company classifies all other liabilities as non¬
current.

(iv) Basis of Measurement

These Ind AS Financial Statements have been prepared
on an accrual basis of accounting and going concern
basis using historical cost convention, except for
certain financial instruments measured at fair value
and defined benefit plans which have been measured
at actuarial valuation as required by relevant Ind AS

(refer Accounting Policies for Financial Instruments,
Property, Plant and Equipment and Employee Benefits).

Fair value measurements are amortized 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 assets or liabilities, either directly or
indirectly; and

• Level 3 inputs are unobservable inputs for the
valuation of assets or liabilities.

Above levels of fair value hierarchy are applied
consistently and generally, there are no transfers
between the levels of the fair value hierarchy unless
the circumstances change warranting such transfer.

(v) Functional and presentation currency

These Ind AS Financial Statements are prepared in
Indian Rupee which is the Company's functional and
presentation currency.

(vi) Property, Plant and Equipment

Property, Plant and Equipment are stated at cost of
acquisition including attributable interest and finance
cost, if any, till the date of acquisition/ installation
of the assets less accumulated depreciation and
impairment losses, if any.

Subsequent expenditure relating to Property, Plant
and Equipment amortization 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. All other repairs and
maintenance costs are charged to the Statement
of Profit and Loss as incurred. The cost and related
accumulated depreciation are eliminated from the
financial statements, either on disposal or when
retired from active use and the resultant gain or loss
are amortization in the Statement of Profit and Loss.

Capital work-in-progress, representing expenditure
incurred in respect of assets under development
and not ready for their intended use, are carried at

cost. Cost includes related acquisition expenses,
construction cost, related borrowing cost and other
direct expenditure.

(vii) Intangible Assets and Amortization

Intangible assets acquired separately are measured
on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost
less any accumulated amortization and accumulated
impairment losses, if any.

The Company's intangible assets constitutes software
which has finite useful economic lives and these are
amortized on a straight line basis, over their useful
life of 5 years. The amortization period and the
amortization method are reviewed at the end of each
reporting period.

(viii) Depreciation/Amortization

Depreciation on items of Property, Plant & Equipment
is calculated on a straight-line basis using the rates
arrived at based on the useful lives estimated by
the management.

The Company has used the following useful economic
lives to provide depreciation on its property, plant
& equipment:

The useful economic lives of buildings and plant
and equipment as estimated by the management
and supported by independent assessment by
professionals, are lower than those indicated in
Schedule II to the Companies Act, 2013. The residual
values, useful lives and methods of depreciation
of property, plant and equipment are reviewed
and adjusted, if appropriate, at the end of each
reporting period.

The Company's intangible assets constitutes software
which has finite useful economic lives and these are
amortised on a straight line basis, over their useful
life of 5 years. The amortisation period and the
amortisation method are reviewed at the end of each
reporting period.

(ix) Impairment of Property, Plant & Equipment and
Intangible Assets

The carrying amount of assets are reviewed at each
balance sheet date to determine if there is any
indication of impairment based on external or internal
factors. An impairment loss is recognised wherever the
carrying amount of an asset exceeds its recoverable
amount which represents the greater of the net selling
price of assets and their ‘value in use'. The estimated
future cash flows are discounted to their present
value using pre-tax discount rates and risks specific
to the asset.

(x) Borrowing Costs

Borrowing cost includes interest, amortisation
of ancillary costs incurred in connection with the
arrangement of borrowings measured at Effective
Interest rate (EIR).

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 capitalised as part of the cost
of the respective asset.

All other borrowing costs are expensed in the period
they are incurred.

(xi) 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

Financial Assets:

a) Classification

The company classifies 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 entity's
business model for managing the financial assets
and the contractual terms of the cash flows.

b) Initial Recognition

Financial assets are recognised initially at fair
value considering the concept of materiality.

Transaction costs that are directly attributable
to the acquisition of the financial asset (other
than financial assets at fair value through profit
or loss) are added to the fair value measured on
initial recognition of financial assets.

c) Subsequent Measurement of Financial Assets

Financial assets are subsequently measured at
amortised cost if they 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.

Financial assets at fair value through other
comprehensive income (FVTOCI): Financial
assets are subsequently measured at fair value
through other comprehensive income (FVTOCI),
if it is held within a business model whose
objective is achieved by both from collection of
contractual cash flows and selling the financial
assets, where the assets' cash flows represent
solely payments of principal and interest. Further
equity instruments where the company has made
an irrevocable election based on its business
model, to classify as instruments measured at
FVTOCI, are measured subsequently at fair value
through other comprehensive income.

d) Impairment of Financial Assets

For trade receivable, the Company applies
the simplified approach of Ind AS 109, which
requires measurement of loss allowance at an
amount equal to lifetime expected credit losses.
Impairment loss on trade receivables is recognised
using expected credit loss model, which involves
use of a provision matrix constructed on the
basis of historical credit loss experience as
permitted under Ind AS 109 and is adjusted for
forward looking information. Impairment loss
on investments is recognised when the carrying
amount exceeds its recoverable amount. For all
other financial assets, expected credit losses are
recognised based on the difference between the
contractual cash flows and all the expected cash
flows, discounted at the original effective interest
rate. ECLs are measured at an amount equal to
12-month expected credit losses or at an amount
equal to lifetime expected credit losses if the
credit risk on the financial asset has increased
significantly since initial recognition.

The company recognises loss allowances
using the expected credit loss (ECL) model
for the financial assets which are not valued
through profit or loss. Loss allowance for all
financial assets is measured at an amount
equal to lifetime ECL. The Company provides
for expected credit loss allowance by taking into
consideration historical trend, industry practices
and the business environment in which the
company operates. The amount of expected
credit losses (or reversal) that is required to
adjust the loss allowance at the reporting date
to the amount that is required to be recognised
as an impairment gain or loss in the Standalone
Statement of Profit and Loss.

For financial assets, the Company applies the
simplified approach permitted by Ind AS 109
Financial Instruments, which requires expected
lifetime losses to be recognized from initial
recognition of the receivables.

e) De-recognition of financial assets

A financial asset is primarily de-recognised when:

- The rights to receive cash flows from the asset
have expired, or

- The company has transferred its 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
recognise the transferred asset to the extent of
the company's continuing involvement. In that
case, the company also recognises 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.

Financial Liabilities:

a) Classification

The company classifies its financial liabilities in
the following measurement categories:

- those to be measured subsequently at fair
value through profit or loss, and

- those measured at amortised cost using
the effective interest method.

The classification depends on the entity's
business model for managing the financial
liabilities and the contractual terms of the
cash flows.

b) Initial Recognition

Financial liabilities are recognised at fair value
on initial recognition considering the concept of
materiality. Transaction costs that are directly
attributable to the issue of financial liabilities,
that are not at fair value through profit or loss are
reduced from the fair value on initial recognition.

c) Subsequent Measurement of Financial Liabilities

The measurement of financial liabilities depends
on their classification, as described below:

Amortised cost: After initial recognition, interest¬
bearing loans and borrowings are subsequently
measured at amortised cost using the Effective
interest rate (EIR) method. Gains and losses are
recognised in profit or loss when the liabilities
are derecognised as well as through the EIR
amortisation process.

Amortised 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 amortisation is included as finance
costs in the statement of profit and loss.

d) De-recognition of financial liabilities

A financial liability is derecognised 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 de-recognition of the original
liability and the recognition of a new liability. The
difference in the respective carrying amounts is
recognised in the statement of profit or loss.

Offsetting of Financial Instruments
The Company offsets a financial asset and a financial
liability when it currently has a legally enforceable right
to set off the recognised amounts and the Company
intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.

(xii) Inventories

Materials, components and stores & spares to be
used in contracts are valued at lower of cost, or net
realisable value. Cost is determined on weighted
average basis.

Net Realisable Value is the estimated selling price in
the ordinary course of business, less estimated costs
of completion and estimated cost necessary to make
the sale.

(xiii) Cash & Cash Equivalents

Cash and cash equivalents in the balance sheet
comprise cash at banks and on hand and short-term
deposits with an original maturity of three months
or less, which are subject to an insignificant risk of
changes in value. For the purpose of the statement of
cash flows, cash and cash equivalents consist of cash
and short-term deposits, as defined above.

(xiv) Revenue Recognition

The Company has adopted Ind AS 115 “Revenue from
Contracts with Customers” effective April 1, 2018.

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.

Revenue includes adjustments made towards
liquidated damages and variation wherever
applicable. Escalation and other claims, which are
not ascertainable/acknowledged by customers are
not taken into account

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.

3. Determining the method to be applied to arrive at the
variable consideration requiring an adjustment to the
transaction price.

(I) Revenue from operations

a) Revenue from contracts for supply/
commissioning of complex plant and equipment
and other project related activity is recognised
as follows:

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. Percentage of completion is the
proportion of cost of work performed to-date, to
the total estimated contract costs. Impairment
loss (termed as provision for foreseeable losses
in the financial statements) is recognised 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 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.

For contracts where the aggregate of contract
cost incurred to date plus recognised profits
(or minus recognised losses as the case may
be) exceeds the progress billing, the surplus
is shown as contract asset and termed as
“Unbilled Revenue”. Contract liabilities represent
amounts billed to customers in excess of revenue
recognised till date. A liability is recognised for
advance payments, and it is not considered as
a significant financing component since it is
used to meet working capital requirements at
the time of project mobilization stage. The same
is presented as contract liability in the balance
sheet. Amounts received before the related work
is performed are disclosed in the Balance Sheet
as contract liability and termed as “Advances
from customer”. The amounts billed on customer
for work performed and are unconditionally
due for payment i.e only passage of time is
required before payment falls due, are disclosed
in the Balance Sheet as trade receivables.
The amount of retention money held by the
customers pending completion of performance
milestone is disclosed as part of contract asset
and is reclassified as trade receivables when it
becomes due for payment.

b) Revenue from rendering of services is recognised
over time as the customer receives the benefit of
the Company's performance and the Company
has an enforceable right to payment for
services transferred.

c) Revenue from contracts for rendering of
engineering design services and other services
which are directly related to the construction of
an asset is recognised on the same basis as
stated in (a) above.

d) Commission income is recognised as the terms
of the contract are fulfilled.

e) Other operational revenue represents income
earned from the activities incidental to
the business and is recognised when the
performance obligation is satisfied and right to
receive the income is established as per the
terms of the contract.

(II) Other income

Interest income on investments, term deposits
and loans is accrued on a time basis by reference
to the principal outstanding and the effective
interest rate including interest on investments
classified as fair value through profit or loss
or fair value through Other Comprehensive
Income. Interest receivable on customer dues is
recognised as income in the Statement of Profit
and Loss on accrual basis provided there is no
uncertainty towards its realisation.

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.

Contract Assets

A contract asset is the right to consideration
in exchange for goods or services transferred
to the 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. The
same is disclosed under Other Current Assets.

Trade Receivable

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

Contract Liability

A contract liability is the obligation to transfer
goods or services to a customer for which
the Company has received consideration (or
an amount of consideration is due) from the
customer. Contract liabilities are recognized as
revenue when the Company performs under the
contract. The same is disclosed under Other
Current Liabilities.

(xv) Liquidated Damages

No provision is made for liquidated damages deducted
by the customers, wherever these have been refuted
by the Company and it expects to settle them without
any loss. Pending settlement of these claims, the
relative trade receivables are shown in the accounts

as fully recoverable and the corresponding amounts
are reflected as contingent liability.

(xvi) Leases

A lease is classified at the inception date as a finance
lease or an operating lease. A lease that transfers
substantially all the risks and rewards incidental to
ownership to the Company is classified as a finance
lease. All other leases are operating lease.

The Company as lessee:

The Company's lease asset classes primarily consist
of leases for buildings or part thereof. The Company
assesses whether a contract contains a lease, at
inception of a contract. A contract is, or contains,
a lease if the contract conveys the right to control
the use of an identified asset for a period of time
in exchange for consideration. To assess whether a
contract conveys the right to control the use of an
identified asset, the Company assesses whether: (i)
the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic
benefits from use of the asset through the period of
the lease and (iii) the Company has the right to direct
the use of the asset.

At the date of commencement of the lease, the
Company recognises a right-of-use asset and a
corresponding lease liability for all lease arrangements
in which it is a lessee, except for leases with low-value
assets and short-term leases (i.e., leases with a lease
term of 12 months or less). For these short term and
low value leases, the Company recognises the lease
payments as an operating expense over the term of
the lease.

The right-of-use assets are initially recognised at
cost, which comprises the initial amount of the lease
liability i.e. the present value of future lease payment,
adjusted for any lease payment made at or prior to the
commencement date of lease plus any initial direct
costs less any lease incentive. They are subsequently
measured at cost less accumulated depreciation and
impairment losses.

Right-of-use assets are depreciated from the
commencement date on a straight-line basis over
the lease term. The lease liability is initially measured
at amortised cost at the present value of the future
lease payments. The lease payments are discounted
using interest rate implicit in the lease or if not readily
determinable using the incremental borrowing rate.
Lease liabilities are remeasured with a corresponding

adjustment to the related right of use asset if the
Company changes its assessment if whether it will
exercise an extension or a termination option. Lease
payments are apportioned between finance expenses
and reduction of the lease liability so as to achieve
a constant rate of interest on the remaining balance
of the liability. Contingent rentals are recognised as
expenses in the periods in which they are incurred. In
the event that lease incentives are received to enter
into lease, such incentives are adjusted towards right-
of-use-asset.

Lease liability and right-of-use assets have been
separately presented in the Balance Sheet.

(xvii)Foreign Currency Translations

Initial Recognition

In the financial statements of the Company,
transactions in foreign currencies are translated into
the functional currency at the exchange rates ruling at
the date of the transaction.

Conversion

Foreign currency monetary items are reported using
the closing rate. Non-monetary items which are carried
in terms of historical cost denominated in a foreign
currency are reported using the exchange rate at the
date of the transaction and non-monetary items which
are carried at fair value or other similar valuation
denominated in a foreign currency are reported using
the exchange rates that existed when the values
were determined.

Exchange Differences

Exchange differences arising on the settlement or
reporting of monetary items at rates different from
those at which they were initially recorded during the
period or reported in previous financial statements and
/ or on conversion of monetary items, are recognised
at income or expense in the year in which they arise.

Forward Exchange Contracts (not intended for trading
or speculation purpose)

The premium or discount arising at the inception of
forward exchange contracts is amortised at expense
or income over the life of the respective contracts.
Exchange differences on such contracts are
recognised in the Statement of Profit and Loss in the
period in which the exchange rates change. Any profit
or loss arising on cancelation or renewal of forward
exchange contract is recognised as income or expense
for the year.

(xviii) Retirement and Other Employee Benefits

Employee benefits

(A) Short-term employee benefits

Employee benefits payable wholly within twelve
months of receiving employee services are
classified as short-term employee benefits. These
benefits include salaries and wages, bonus and
ex-gratia.

Accumulated leave, which is expected to be
utilised within the next 12 months, is treated
as short-term employee benefit. The Company
measures expected cost of such absences as
the additional amount that it expects to pay
as a result of the unused entitlement that has
accumulated at the reporting date. Such short¬
term compensated absences are provided
for in the Statement of Profit and Loss based
on estimates.

(B) Post-employment benefits

The Company operates the following post¬
employment schemes:

i) Employee benefits in the form of Provident
Fund is made to a government administered
fund and charged as an expense to the
Statement of Profit and Loss, when an
employee renders the related service.
There are no obligations other than the
contributions payable to the fund.

ii) Gratuity liability is defined benefit
obligation and is provided for on the basis
of an actuarial valuation on projected unit
credit method done at the end of each
financial year.

iii) Re-measurements, comprising of actuarial
gains and losses excluding amounts
included in net interest on the net defined
benefit liability and the return on plan
assets (excluding amounts included in
net interest on the net defined benefit
liability), are recognised immediately in
the balance sheet with a corresponding
debit or credit to retained earnings through
Other Comprehensive Income in the period
in which they occur. Re-measurements
are not reclassified to profit or loss in
subsequent periods.

(xix) Income Taxes

Tax expense comprises of current (net of Minimum
Alternate Tax (MAT) credit entitlement) and deferred tax.

Current income tax

Current income tax is measured at the amount
expected to be paid to the tax authorities in accordance
with Indian Income Tax Act. Management periodically
evaluates positions taken in the tax returns Vis a
Vis position taken in books of account which are
subject to interpretation and creates provisions
where appropriate.

Deferred tax

Deferred tax is recognised on temporary differences
between the tax bases and accounting bases of assets
and liabilities at the tax rates and laws that have been
enacted or substantively enacted at the Balance
Sheet date.

Deferred tax assets are recognised to the extent that it
is probable that taxable profit will be available against
which the deductible temporary differences can be
utilised. The carrying amount of deferred tax assets is
reviewed at each Balance Sheet date and reduced to
the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of
the deferred tax asset to be utilised. Unrecognised
deferred tax assets are re-assessed at each reporting
date and are recognised to the extent that it has
become probable that future taxable profits will allow
the deferred tax asset to be recovered.

For items recognised in OCI or equity, deferred /
current tax is also recognised in OCI or equity.