2 Material accounting policies
Material accounting policies adopted by the Company are as
under:
2.1 Basis of preparation of Standalone Financial Statements
(a) Statement of Compliance with Ind AS
These standalone financial statements have been prepared
in accordance with Indian Accounting Standards (Ind AS)
notified under Section 133 of the Companies Act, 2013
(the "Act") read with the Companies (Indian Accounting
Standards) Rules, 2015 as amended from time to time
and the other relevant provisions of the Act and Rules
thereunder.
Accounting policies have been consistently applied
to all the years presented except where a newly issued
accounting standard is initially adopted or a revision to
an existing accounting standard requires a change in the
accounting policy hitherto in use.
(b) Basis of measurement
The financial statements have been prepared on a
historical cost convention on accrual basis, except for
items that have been measured at fair value as required
by relevant Ind AS.
i) Certain financial assets and liabilities measured
at fair value (refer accounting policy on financial
instruments)
ii) Embedded derivative and
iii) Asset classified as held for sale
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. Based on the nature of services and the time
between the rendering of service and their realization in
cash and cash equivalents, the Company has ascertained
its operating cycle as twelve months for the purpose
of current and non-current classification of assets and
liabilities.
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, if any, are recognized in the year
in which the estimates are revised and in any future years
affected. Refer note 3 for detailed discussion on estimates
and judgments.
2.2 Property, plant and equipments
a) Property, plant and equipments are stated at their original
cost of acquisition or construction less accumulated
depreciation and impairment loss, if any. The cost of
property, plant and equipments comprises of its purchase
price including duties, taxes, freight and any other
directly attributable cost of bringing the asset to its
working condition for its intended use. However, cost
excludes indirect taxes wherever credit of the duty or tax
is availed of.
b) All indirect expenses incurred during acquisition /
construction of property, plant and equipments &
including interest cost on funds deployed for the
property, plant and equipments are treated as incidental
expenditure and are capitalised for the period until the
asset is ready for its intended use.
c) Advances paid towards the acquisition of property, plant
and equipments outstanding at each Balance Sheet date
is classified as capital advances under other non-current
assets and the cost of assets not put to use before such
date are disclosed under ‘Capital work-in-progress’.
d) Subsequent expenditure relating to property, plant and
equipments is capitalised only if such expenditure results
in an increase in the future benefits from such asset
beyond its previously assessed standard of performance.
e) Considering the nature of business activity, Runway and
Apron attached to Runway and hangar has been treated as
plant and equipment and depreciation has been provided
accordingly.
f) Where a significant component (in terms of cost) of an
asset has an economic useful life shorter than that of it’s
corresponding asset, the component is depreciated over
it’s shorter life.
Depreciation is provided on straight line method on Building,
Plant and Equipment and Computer - Hardware and on written
down value method on all other assets, based on the useful
lives of assets as prescribed under Part C of Schedule II of the
Companies Act, 2013. Depreciation on addition to property,
plant and equipments is provided on pro-rata basis from the
date the assets are ready for intended use. Depreciation on sale
/ deletion of property, plant and equipments is provided for
upto the date of sale, deduction or discard of property, plant
and equipment as the case may be. In case of impairment, if
any, depreciation is provided on the revised carrying amount
of the asset over its remaining useful life.
Based on the technical experts assessment of useful life,
following class of property, plant and equipments are being
depreciated over useful lives different from the prescribed
useful lives under Schedule II to the Companies Act, 2013.
Management believes that such estimated useful lives are
realistic and reflect fair approximation of the period over which
the assets are likely to be used. These estimates are based on
the technical evaluation which considered the nature and usage
of the assets, the operating conditions of the assets, anticipated
technological changes and maintenance support etc.
Depreciation methods, useful lives and residual values are
reviewed periodically at each financial year end and adjusted
prospectively, as appropriate.
2.3 Investment properties
Investment properties are measured initially at cost, including
transaction costs. Subsequent to initial recognition, investment
properties are stated at cost less accumulated depreciation and
accumulated impairment loss, if any.
The cost includes the cost of replacing parts and borrowing
costs for long-term construction projects if the recognition
criteria are met. When significant parts of the investment
properties are required to be replaced at intervals, the Company
depreciates them separately based on their specific useful lives.
All other repair and maintenance costs are recognized in profit
or loss as incurred.
Depreciation on investment properties is provided on a pro¬
rata basis on straight line method over the estimated useful
lives as assessed by the Management. Management believes
that such estimated useful lives are realistic and reflect fair
approximation of the period over which the assets are likely to
be used. These estimates are based on the technical evaluation
which considered the nature and usage of the assets, the
Investment properties are de-recognized either when they have
been disposed off or when they are permanently withdrawn
and no future economic benefit is expected from their disposal.
The difference between the net disposal proceeds and the
carrying amount of the asset is recognized in profit or loss in
the period of de-recognition.
2.4 Fair value measurement
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
? In the absence of a principal market, in the most
advantageous market for the asset or liability accessible
to the Group.
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 financial statements are categorized 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.
2.5 Revenue Recognition
Revenue is measured at fair value of the consideration received
or receivable. Revenue is reduced for estimated customer
returns, rebates and other similar allowances.
Ind AS 115 Revenue from contracts with customers, outlines a
single comprehensive model of accounting for revenue arising
from contracts with customers.
The Company recognises revenue from operations based on
five step model as set out in Ind AS 115:
Step 1: Identify contract(s) with a customer: A Contract is
defined as an agreement between two or more parties that
creates enforceable rights and obligations and sets out the
criteria for every contract that must be met.
Step 2: Identify performance obligations in the contract:
A performance obligation is a promise in a contract with a
customer to transfer a good or service to the customer.
Step 3: Determine the transaction price: The transaction price
is the amount of consideration to which the Company expects
to be entitled in exchange for transferring promised goods or
services to a customer, excluding amounts collected on behalf
of third parties.
Step 4: Allocate the transaction price to the performance
obligations in the contract: For a contract that has more than one
performance obligation, the Company allocates the transaction
price to each performance obligation in an amount that depicts
the amount of Consideration to which the Company expects
to be entitled in exchange for satisfying each performance
obligation.
Step 5: Recognise revenue when the Company satisfies a
performance obligation.
Rental income arising from operating leases (leases of hangar)
is accounted for on a straight-line basis or another systematic
basis over the lease terms based on agreement/contract entered
into with the third party and is included in revenue in the
Statement of Profit or Loss due to its operating nature.
Training fees received, being non-refundable, is accounted
over the training period.
The Company presents revenues net of indirect taxes in its
Statement of Profit and loss.
Revenue recognized in excess of billings is classified as
contract assets (‘Unbilled revenue’) included in other current
financial assets.
Billings in excess of revenue recognized is classified as
contract liabilities (‘Deferred revenue’) included in other
current liabilities.
Other Income
Interest Income is recognised on 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. The Company recognizes duty drawback
and income from duty credit scrips only when there is
reasonable assurance that the conditions attached to them will
be complied with and the duty drawback and duty credit scrips
will be received.
Commission income is recognised when the right to receive
payment is established.
2.6 Taxes
The Company’s tax jurisdiction is India. Tax expenses for
the year, comprising current tax, deferred tax and minimum
alternate tax credit if any are included in the determination of
the net profit or loss for the year.
(a) Current income-tax
Current tax is the amount of tax payable on the taxable
income for the year as determined in accordance with
the provisions of the Income Tax Act, 1961. Current tax
assets and liabilities are measured at the amount expected
to be recovered or paid to the taxation authorities. 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.
(b) Minimum Alternate Tax
Minimum Alternate Tax (MAT) under the provisions of
the Income Tax Act, 1961 is recognised as current tax
in the Statement of Profit and Loss. The credit available
under the Income tax act, in respect of MAT paid is
recognised as asset only when and to the extent there is
convincing evidence that the Company will pay normal
income tax during the period for which the MAT credit
can be carried forward for set- off against the normal tax
liability. MAT credit recognised as an asset is reviewed at
each Balance Sheet date and written down to the extent
the aforesaid convincing evidence no longer exists.
(c) 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 which case, the tax is also recognised in other
comprehensive income or directly in Equity, respectively.
2.7 Leases
As a lessee
The Company’s lease asset classes primarily consist of leases
for buildings. The Company assesses whether a contract
contains a lease at the 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
recognizes a Right-Of-Use (ROU) asset and a corresponding
lease liability for all lease arrangements in which it is a lessee,
except for leases with a term of 12 months or less (short-term
leases) and low-value leases. For these short-term and low-
value leases, the Company recognizes the lease payments as
an operating expense on a straight-line basis over the term of
the lease.
As a lessor
Leases for which the Company is a lessor is classified as a
finance or operating lease. Whenever the terms of the lease
transfer substantially all the risks and rewards of ownership to
the lessee, the contract is classified as a finance lease. All other
leases are classified as operating leases.
For operating leases, rental income is accounted for on a
straight-line basis or another systematic basis over the lease
terms based on agreement/contract entered into with the third
party and is included in revenue in the Statement of Profit or
Loss due to its operating nature.
Leases are classified as finance leases when substantially all of
the risks and rewards of ownership transfer from the company
to the lessee. Amounts due from lessees under finance leases
are recorded as receivables at the companies net investment
in the leases. Finance lease income is allocated to accounting
periods so as to reflect a constant periodic rate of return on the
net investment outstanding in respect of the lease.
2.8 Impairment of non-financial assets
The Company assesses at each reporting date as to 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
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 inflows from
continuing use that are largely independent of the cash inflows
of other assets or groups of assets (the “cash-generating unit”).
|