Note 2: Summary of significant accounting policies
This note provides a list of the significant accounting policies
adopted in the preparation of these financial statements.
The policies have been consistently applied to all the years
presented, unless otherwise stated.
a. Basis of preparation
i. Compliance with Ind AS
The financial statements of the Company have been
prepared in accordance with Indian Accounting
Standards (Ind AS) notified under section 133 of
Companies Act, 2013 (the Act) [Companies (Indian
Accounting Standards) Rules, 2015] as amended
from time to time and other relevant provision of the
Act.
The Financial Statements are presented in INR
and all values are rounded off to the nearest lakhs
(INR 00,000), unless otherwise stated. The financial
statements have been prepared on a historical cost
basis, except certain financial instruments which
have been measured at fair value.
ii. Current versus non-current classification
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 realised or intended to be sold or
consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months
after the reporting period, or
- Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for
at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is 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.
Deferred tax assets and liabilities are classified as
non-current assets and liabilities.
b. Operating Segment
The company is primarily engaged in the business
of providing cranes on rental basis. Further all the
commercial operations of the company are based in India.
Accordingly, there are no separate reportable segments.
c. Fair value measurement
The Company measures financial instruments at fair
value at each balance sheet date.
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.
All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows,
based on the lowest level input that is significant to the
fair value measurement as a whole:
- Level 1 - Quoted (unadjusted) market prices in active
markets for identical assets or liabilities
- Level 2 - Valuation techniques for which the lowest
level input that is significant to the fair value
measurement is directly or indirectly observable
- Level 3 - Valuation techniques for which the lowest
level input that is significant to the fair value
measurement is unobservable
d. Revenue recognition
Rendering of services
Revenue from hiring of equipment (cranes & trailers)
associated with the transaction is recognised when
the Company satisfies a performance obligation by
transferring a promised services. When a performance
obligation is satisfied, the Company recognise as revenue
the amount of the transaction price that is allocated to
that performance obligation.
Interest income
Interest income for debt instruments is recognised
using the effective interest rate method. The effective
interest rate is the rate that discounts estimated future
cash receipts through the expected life of the financial
asset to the gross carrying amount of a financial asset.
When calculating the effective interest rate, the company
estimates the expected cash flows by considering
contractual terms of the financial instrument but does not
consider the expected credit losses.
Dividends
Dividend is recognised when the Company's right to
receive the payment is established, which is generally
when shareholders approve the dividend.
Rental Income
Rental Income from Investment Property is recognised
as part of revenue from operations in profit or loss on a
straight-line basis over the term of the lease except where
the rentals are structured to increase in line with general
inflation.
e. Income Taxes
Income tax comprises current and deferred tax. It is
recognised in profit or loss except to the extent that it
relates to an items recognised directly in equity or in
other comprehensive income.
Current income tax
Current tax comprises the expected tax payable or
receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable in
respect of the previous years. It is measured using tax
rates (and tax laws) enacted or substantively enacted
by the reporting date. Current tax assets and current tax
liabilities are offset only if there is a legally enforceable
right to set off the recognized amounts, and it is intended
to realise the asset and settle the liability on a net basis or
simultaneously.
Deferred tax
Deferred tax is recognised in respect of temporary
differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
corresponding amounts used for taxation purposes.
Deferred tax is also recognised in respect of carried
forward tax loss and tax credits.
Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused tax
credits and any unused tax losses. Deferred tax assets are
recognised to the extent that it is probable that taxable
profit will be available against which the deductible
temporary differences, and the carry forward of unused
tax credits and unused tax losses can be utilized.
Deferred tax measured at the tax rates that are expected
to apply to the period when the asset is realised or the
liability is settled, based on the laws that have been
enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is
legally enforceable right to offset current tax liabilities
and assets, and they to income taxes levied by the same
tax authority.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss,
except when they relate to items that are recognised
in other comprehensive income or directly in equity,
in which case, the current and deferred tax are also
recognised in other comprehensive income or directly in
equity respectively.
The recognition of deferred tax assets has been deferred
due to the absence of virtual certainity regarding sufficient
future taxable profits against which these losses can
be utilizied. Further, the company has substantial carry
forward business losses and unabsorbed depreciation
hence, the company will continue to assess the
recoverablity of this deferred tax assets in future periods.
f. Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at
cost, which includes capitalised borrowing costs, less
accumulated depreciation and accumulated impairment
loss, if any. Cost of an item of property, plant and equipment
comprises its purchase price, including import duties and
non-refundable purchase taxes, after deducting trade
discounts and rebates, any directly attributable cost of
bringing the item to its working condition for its intended
use and estimated costs of dismantling and removing the
item and restoring the site on which it is located.
Any gain or loss on disposal of an item of property, plant
and equipment is recognised in profit or loss.
Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable
that the future economic benefits associated with the
expenditure will flow to the company.
Depreciation
Depreciation is calculated on the cost of items of property,
plant and equipment less their estimated residual values
over their estimated useful lives using the straight-line
method, and is generally recognised in the statement of
profit and loss. Freehold land is not depreciated.
Depreciation on property, plant and equipment is
provided over the useful life of assets as assessed by the
management as follows-
*Based on single shift. Cranes owned by the company
usually work for more than single shift and hence double
shift are considered (only wherever applicable).
The useful lives assessed by the management are in
line with the useful lives prescribed in schedule II to
the companies Act 2013. Depreciation on additions
(disposals) is provided on a pro-rata basis i.e. from (upto)
the date on which asset is ready for use (disposed off).
Reclassification to investment property
When the use of a property changes from owner-occupied
to investment property, the property is reclassified as
investment property at its carrying amount on the date of
reclassification.
g. Investment properties
Investment properties are properties held to earn rentals
and/or for capital appreciation (including property
under construction for such purposes), but not for sale
in ordinary course of business or for administrative
purpose. Investment properties are measured initially at
cost, including transaction costs. Subsequent to initial
recognition, investment properties are stated at cost less
accumulated depreciation and impairment losses, if any.
Any gain or loss on disposal of investment property is
recognised in profit and loss.
h. Investments in Subsidiaries, Associates and Joint
Ventures:
Investments in Subsidiaries, Associates and Joint
Ventures are carried at cost less accumulated impairment
losses, if any. Where an indication of impairment exists,
the carrying amount of the investment is assessed and
written down immediately to its recoverable amount.
On disposal of investments in subsidiaries, associates
and joint venture, the difference between net disposal
proceeds and the carrying amounts are recognised in the
Statement of Profit and Loss.
i. Leases
The Company, as a lessee, recognises a right-of-use
asset and a lease liability for its leasing arrangements,
if the contract conveys the right to control the use of an
identified asset. The contract conveys the right to control
the use of an identified asset, if it involves the use of an
identified asset and the Company has substantially all
of the economic benefits from use of the asset and has
right to direct the use of the identified asset. The cost of
the right-of-use asset shall comprise of the amount of the
initial measurement of the lease liability adjusted for any
lease payments made at or before the commencement
date plus any initial direct costs incurred. The right-of-
use assets is subsequently measured at cost less any
accumulated depreciation, accumulated impairment
losses, if any and adjusted for any remeasurement of
the lease liability. The right-of-use assets is depreciated
using the straight-line method from the commencement
date over the shorter of lease term or useful life of right-
of-use asset.
The Company measures the lease liability at the present
value of the lease payments that are not paid at the
commencement date of the lease. The lease payments
are discounted using the interest rate implicit in the lease,
if that rate can be readily determined. If that rate cannot
be readily determined, the Company uses incremental
borrowing rate.
For short-term and low value leases, the Company
recognises the lease payments as an operating expense
on a straight-line basis over the lease term.
j. Impairment of non-financial assets
The carrying amounts of property, plant and equipment
are reviewed at each balance sheet date if there is any
indication of impairment based on internal/external
factors. An impairment loss is recognised in the
statement of profit and loss when the carrying amount
of an asset exceeds its estimated recoverable amount.
If at the balance sheet date, there is an indication that
a previously assessed impairment loss no longer exists,
the recoverable amount is reassessed and the asset is
reflected at the recoverable amount but limited to the
carrying amount that would have been determined (net
of depreciation / amortisation) had no impairment loss
been recognised in prior accounting periods.
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