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

I ntangible 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

The company assesses on a forward looking
basis the expected credit losses associated
with its assets carried at amortised cost and
FVTOCI debt instruments. The impairment
methodology applied depends on whether
there has been a significant increase in
credit risk.

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”. For contracts where progress
billing exceeds the aggregate of contract
costs incurred to-date plus recognised
profits (or minus recognised losses, as
the case may be), the surplus is shown as
contract liability and termed as “Due to
customers”. 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 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 Financial 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

Emplo yee 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 is administered through an
approved benefit fund. 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.