2 MATERIAL ACCOUNTING POLICY
INFORMATION:
2.1 Statement of Compliance:
These Standalone Financial. Statements
have been prepared in accordance with
the Indian Accounting Standard (referred
to as "Ind AS") as prescribed under section
133 of the Companies Act, 2013 read with
Companies (Indian Accounting Standards)
RuLes as amended from time to time.
2.2 Basis for preparation of Standalone
Financial Statements:
These StandaLone FinanciaL Statements
have been prepared in accordance with
the Indian Accounting Standard (referred
to as "Ind AS") are presented in Indian
rupees ("INR") which is aLso the Company's
functional currency. ALL amounts have been
reported in Indian Rupees MiLLion, except
for share and earnings per share data,
unLess otherwise stated. These StandaLone
FinanciaL Statements have been prepared
on the historicaL cost basis and on an
accruaL basis, except for certain financiaL
instruments which are measured at fair
vaLues at the end of each reporting period,
as expLained in the materiaL accounting
poLicy information beLow. ALso, net defined
benefit - assets / LiabiLities which is vaLued at
fair vaLue of pLan assets Less present vaLue
of defined benefit obLigation. HistoricaL cost
is generaLLy based on the fair vaLue of the
consideration given in exchange for goods
and services.
The statement of cash fLows has been
prepared under indirect method, whereby
profit or Loss is adjusted for the effects
of transactions of a non-cash nature, any
deferraLs or accruaLs of past or future
operating cash receipts or payments and
items of income or expense associated
with investing or financing cash fLows. The
cash fLows from operating, investing and
financing activities of the Company are
segregated. The Company considers aLL
highLy Liquid investments that are readiLy
convertibLe to known amounts of cash to be
cash equivaLents
ALL assets and LiabiLities have been cLassified
as current and non-current as per the
Company's normaL operating cycLe of 12
months.
Current/non-current classification
The Company classifies an asset as current
asset when:
- it expects to reaLise the asset, or
intends to seU or consume it, in its
normaL operating cycLe;
- it hoLds the asset primariLy for the
purpose of trading;
- it expects to reaLise the asset within
tweLve months after the reporting
period; or
- the asset is cash or a cash equivaLent
unLess the asset is 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 classified as current when -
- it expects to realise the asset, or
intends to seLL or consume it, in its
normal operating cycle;
- it holds the liability primarily for the
purpose of trading;
- the liability is due to be settled within
twelve months after the reporting
period; or
- it does not have an unconditional right
to defer settlement of the liability
for at least twelve months after the
reporting period. Terms of a liability
that could, at the option of the
counterparty, result in its settlement
by the issue of equity instruments do
not affect its classification.
All other liabilities are classified as non¬
current.
The operating cycle is the time between
deployment of resources and the realization
in cash or cash equivalents of the
consideration for such services rendered,
the Company's normal operating cycle is
twelve months.
In estimating the fair value of an asset or
liability, the Company takes into account
the characteristics of the asset or liability
that market participants would take into
account when pricing the asset or liability
at the measurement date. Fair value for
measurement and/or disclosure purpose
in these Standalone financial statements
is determined on such a basis, except for
share-based payment transactions that are
within the scope of Ind AS 102 Share-based
Payments, leasing transactions that are
within the scope of Ind AS 116 Leases, and
measurements that have some similarities
to fair value but are not fair value, such as
'value in use', in Ind AS 36 Impairment of
assets.
2.3 Use of Estimates and Judgements:
The preparation of Standalone Financial
Statements requires the management
of the Company to make estimates and
assumptions that affect the reported
amounts of assets and liabilities on the
date of Standalone Financial Statements,
disclosure of contingent liabilities as at the
date of the Standalone Financial Statements,
and the reported amounts of income and
expenses during the reported period. Actual
results may differ from these estimates.
Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the
period in which the estimates are revised
and future periods are affected.
Critical accounting estimates,
judgement, and assumptions
i) Revenue Recognition
The Company applies the percentage
of completion method in accounting
for its fixed price development
contracts. Use of the percentage
of completion method requires the
Company to estimate the efforts or
costs expended to date (input method)
as a proportion of the total, efforts or
costs to be expended. Efforts or costs
expended have been used to measure
progress towards completion as
there is a direct relationship between
input and productivity. Provisions
for estimated losses, if any, on
uncompleted contracts are recorded
in the period in which such losses
become probable based on the
expected contract estimates at the
reporting date.
The Company's contracts with
customers could include promises
to transfer multiple products and
services to a customer. The Company
assesses the products / services
promised in a contract and identifies
distinct performance obligations
in the contract. Identification of
distinct performance obligation
involves judgement to determine the
deliverables and the ability of the
customer to benefit independently
from such deliverables. Judgement
is also required to determine the
transaction price for the contract and
to ascribe the transaction price to each
distinct performance obligation. The
transaction price could be either a fixed
amount of customer consideration or
variable consideration with elements
such as volume discounts, service
level credits, performance bonuses,
price concessions and incentives. The
transaction price is also adjusted
for the effects of the time value
of money if the contract includes a
significant financing component. Any
consideration payable to the customer
is adjusted to the transaction
price, unless it is a payment for a
distinct product or service from the
customer. The estimated amount of
variable consideration is adjusted
in the transaction price only to the
extent that it is highly probable that
a significant reversal in the amount
of cumulative revenue recognised will
not occur and is reassessed at the end
of each reporting period. The Company
allocates the elements of variable
considerations to all the performance
obligations of the contract unless
there is observable evidence that
they pertain to one or more distinct
performance obligations.
The Company exercises judgments
while determining the transaction
price allocated to performance
obligations using the expected cost
plus margin approach.
ii) Income taxes and deferred taxes
The major tax jurisdiction for
the Company is India. Significant
judgments are involved in determining
the provision for income taxes
including judgment on whether
tax positions are probable of being
sustained in tax assessments. A tax
assessment can involve complex
issues, which can only be resolved over
extended time periods. Deferred tax
is recorded on temporary differences
between the tax bases of assets and
liabilities and their carrying amounts,
except when the deferred income
tax arises from the initial recognition
of goodwill or an asset or liability in
a transaction that is not a business
combination and affects neither
accounting nor taxable profit or loss
at the time of the transaction, at
the rates that have been enacted or
substantively enacted at the reporting
date. The ultimate realization of
deferred tax assets is dependent
upon the generation of future taxable
profits during the periods in which
those temporary differences and
tax loss carry forwards become
deductible. The Company considers
the expected reversal of deferred tax
liabilities and projected future taxable
income in making this assessment.
The amount of the deferred tax assets
considered reaLizabLe, however, couLd be
reduced in the near term if estimates of
future taxabLe income during the carry¬
forward period are reduced. The poLicy
for the same has been expLained under
Note 2.14.
iii) Property, plant and equipment
Property, plant and equipment
represent a significant proportion of the
asset base of the Company. The charge
in respect of periodic depreciation is
derived after determining an estimate
of an asset's expected useful life and
the expected residual value at the
end of its Life. The usefuL Lives and
residual values of Company's assets are
determined by management at the time
the asset is acquired and reviewed at the
end of each reporting period. The lives
are based on historical experience with
similar assets as weH as anticipation of
future events, which may impact their
life, such as changes in technology. The
policy for the same has been explained
under Note 2.4.
iv) Impairment testing
Investments in subsidiaries are tested
for impairment at least annuaHy
and when events occur or changes
in circumstances indicate that the
recoverabLe amount of the asset or
cash generating units to which these
pertain is Less than its carrying vaLue.
The recoverabLe amount of cash
generating units is higher of vaLue-in¬
use and fair vaLue Less cost to dispose.
The caLcuLation of vaLue in use of a
cash generating unit invoLves use of
significant estimates and assumptions
which incLudes turnover and earnings
multiples, growth rates and net margins
used to caLcuLate projected future cash
flows, risk-adjusted discount rate, future
economic and market conditions. The
policy for the same has been explained
under Note 2.8.
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