2 Significant accounting policies
2.1 Statement of compliance
The financial statements complies in all material aspects with Indian Accounting Standards (Ind AS) notified under the Companies (Indian
Accounting Standards) Rules, 2015 as amended and notified under Section 133 of the Companies Act, 2013 (the "Act") and other relevant
provisions of the Act and other accounting principles generally accepted in India.
2.2 Basis of preparation and presentation
This note provides a list of the significant accounting policies adopted in the preparation of these standalone financial statements. These
policies have been consistently applied to all the years presented, unless otherwise stated.
2.2.1 Historical cost convention
The Company follows the mercantile system of accounting and recognizes income and expenditure on an accrual basis. The financial
statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end
of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
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, regardless of whether that price is directly observable or estimated using another valuation technique.
2.2.2 Current & Non Current Classification
All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria as set
out in the Division II of Schedule III to the Companies Act, 2013. Based on the nature of products and services and the time between acquisition
of assets for processing and their realisation in cash and cash equivalent, the Company has ascertained its operating cycle as twelve (12)
months for the purpose of current or non-current classification of assets and liabilities.
The Company's financial statements are presented in Indian Rupees (?), which is its functional currency and all values are rounded to the
nearest crore (? 0,000,000) in two decimals except when otherwise indicated.
2.3 Use of Estimates
The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of
assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that
the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates
and the differences between the actual results and the estimates are recognised in the periods in which the results are known /materialise.
2.4 Inventories
The inventories of materials on hand at the end of the year are valued at lower of cost or net realisable value. The cost is being determined on
First-In-First out method. Cost of work-in-progress comprises raw materials, direct labour, other direct costs and related production overheads.
2.5 Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term investments with an original maturity of
three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
2.6 Borrowing Cost
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are
capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets
that necessarily take a substantial period of time to get ready for their intended use or sale.Other borrowing costs are expensed in the period
in which they are incurred.
2.7 Revenue recognition
The Company recognises revenue from contracts with customers when it satisfies a performance obligation by transferring promised 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 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 recogntion 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.
Contract revenue is recognised over time to the extent of performance obligation satisfied and control is transferred to the customer. The
Company recognizes revenue and profit/loss on the basis of stage of completion achieved under each contract. The recognition of revenue
and profit/loss therefore rely on degree of completion achieved under each contract.
Costs to obtain a contract which are incurred regardless of whether the contract was obtained are charged-off in Profit & Loss immediately in
the period in which such costs are incurred.
Contracts executed in Joint Ventures / Consortium under work sharing arrangement are accounted in accordance with the accounting policy
followed by the Company as that of an independent contract to the extent work is executed. In case where the contracts are executed
independently by the Joint Ventures the share of profit / (Loss) is recognized as an income / (Loss) in the Books of account of the Company in
the year in which the relative contract/s is/are completed / Income received.
Revenue is disclosed net of Goods and Service Tax (GST) as applicable.
Other Income
Interest Income is recognised on the basis of effective interest method as set out in IND AS 109 on Financial Instruments and where no
significant uncertainty as to measurability or collectability exists.
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.
2.8 Employee Benefit
2.8.1 Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the
period in which the employees render the related service are recognised in respect of employees' services up to the end of the reporting period
and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit
obligations in the balance sheet.
2.8.2 Other long-term employee benefit obligations
The liabilities for earned leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render
the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided
by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the appropriate
market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a
result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for
at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
2.8.3 Post-employment obligations
(i) Defined benefit provident fund plan
The Company's contribution to provident fund is charged to Statement of Profit and Loss.
(ii) Defined benefit Gratuity fund plan
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit
obligation at the end of the reporting period less the fair value of plan. The defined benefit obligation is calculated annually as provided by LIC.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market
yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The net
interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets.
This cost is included in employee benefit expense in the statement of profit and loss. Remeasurement gains and losses arising from experience
adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income.
They are included in retained earnings in the statement of changes in equity and in the balance sheet.
The Company does not have scheme of leave encashment.
2.9 Taxation
2.9.1 The Income tax expense or credit for the year is the tax payable on the current year's taxable income based on the applicable income tax rate
adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
Current and deferred tax is recognised in the profit and loss except to the extent it relates to items recognised directly in equity or other
comprehensive income, in which case it is recognised in equity or other comprehensive income respectively.
2.9.2 Current Tax
The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date where the
Company operates and generates taxable income.
Current tax assets and tax liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities
and Company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
2.9.3 Deferred Tax
Deferred Tax charge or credit is recognised on timing differences, being the difference between the taxable income and accounting income
that originate in one period and are capable of reversal in one or more subsequent periods. It is calculated using the applicable tax rates and
tax laws that have been enacted by the balance sheet date.
Deferred tax assets are recongnised only to the extent that there is reasonable certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised.
2.9.4 Minimum Alternative Tax (‘MAT’)
Minimum Alternative Tax (‘MAT') credit is recognised as an asset only when and to the extent there is convincing evidence that the Company
will pay normal income-tax during the specified period. In the year in which the MAT credit becomes eligible to be recognised as an asset, the
said asset is created by way of a credit to the statement of profit and loss. The Company reviews the same at each balance sheet date and
writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that Company will
pay normal income-tax during the specified period.
2.10 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 and financial liabilities are recognised when a Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or
issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added
to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or
loss.
2.10.1 Financial Assets
(i) Classification of Financial Assets
The Company classifies its financial assets in the following measurement categories:
(a) those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss); and
(b) 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.
(a) For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income.
(b) For investments in debt instruments, this will depend on the business model in which the investment is held.
(c) For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial
recognition to account for the equity investment at fair value through other comprehensive income.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
(ii) Measurement of Financial Assets
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit
or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at
fair value through profit or loss are expensed in profit or loss.
2.10.1. a Debt instruments
Subsequent measurement of debt instruments depends on the Company's business model for managing the asset and the cash flow
characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and
interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part
of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets
is included in other income using the effective interest rate method.
Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the
financial assets, where the assets' cash flows represent solely payments of principal and interest, are measured at fair value through other
comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or
losses, interest income and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised,
the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other income or other
expenses (as applicable). Interest income from these financial assets is included in other income using the effective interest rate method.
Fair value through profit or loss (FVTPL): Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through
profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging
relationship is recognised in profit or loss and presented net in the statement of profit and loss within other income or other expenses (as
applicable) in the period in which it arises. Interest income from these financial assets is included in other income or other expenses, as
applicable.
2.10.1. b Equity instruments
The Company subsequently measures all equity investments at fair value (except investment in subsidiaries and associates which are valued
at ammortised cost). Where the Company's management has selected to present fair value gains and losses on equity investments in other
comprehensive income and there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such
investments are recognised in profit or loss as other income when the Company's right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in other income or other expenses, as applicable
in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not
reported separately from other changes in fair value.
2.10.1. c Fair Value Hedge
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value and changes therein
are recognised in statement of profit and loss.
(iii) 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 FVOCI
debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there
is significant increase in credit risk full lifetime ECL is used.
(iv) Derecognition of financial assets
A financial asset is derecognised only when -
(a) The Company has transferred the rights to receive cash flows from the financial asset or
(b) retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows
to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of
the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards
of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset,
the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the
financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
2.10.2 Financial Liabilities
(i) Measurement
Financial liabilities are initially recognised at fair value, reduced by transaction costs(in case of financial liability not at fair value through profit
or loss), that are directly attributable to the issue of financial liability. After initial recognition, financial liabilities are measured at amortised cost
using effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash outflow (including all fees
paid, transaction cost, and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter
period, to the net carrying amount on initial recognition. At the time of initial recognition, there is no financial liability irrevocably designated as
measured at fair value through profit or loss.
(ii) Derecognition
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.
2.10.3 (i) Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over
the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is
deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn
down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
(ii) Borrowings are classified as current financial liabilities unless the Company has an unconditional right to defer settlement of the liability
for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or
before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does
not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the financial statements for
issue, not to demand payment as a consequence of the breach.
2.11 Financial guarantee contracts
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair
value and subsequently at the higher of the amount determined in accordance with Ind AS 37 Provisions, Contingent Liabilities and Contingent
Assets and the amount initially recognised less cumulative amortization, where appropriate.
2.12 Property, plant and equipment
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as
at April 1,2016 measured as per the previous GAAP and used those carrying value as the deemed cost of the property, plant and equipment.
Free-hold land is carried at cost. Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any.
Cost includes expenditure that is directly attributable to the acquisition of the assets.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, 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. The carrying
amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged
to profit or loss during the reporting period in which they are incurred.
Capital Work in Progress (‘CWIP') comprises amount paid towards acquisition of property, plant and equipment outstanding as of each
balance sheet date and construction expenditures, other expenditures necessary for the purpose of preparing the CWIP for it intended use and
borrowing cost incurred before the qualifying asset is ready for intended use. CWIP is not depreciated until such time as the relevant asset is
completed and ready for its intended use.
The Company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired. If any, such indication
exists, the carrying value of such asset is reduced to its recoverable amount and the impairment loss is charged to profit and loss account. If
at the balance Sheet date there is any deduction that a previously assessed impairment loss no longer exists, then such loss is reversed and
the asset is restated to that effect.
Depreciation and amortisation
Depreciation on Fixed Assets is calculated on “Straight Line Method” over the estimated useful life in the manner prescribed in Schedule II
of the Companies Act, 2013.w.e.f. 01.04.2014. Depreciation on Revalued Assets, is calculated on their respective book values, at the rates
considered applicable by the valuers.
Free hold land is not depreciated. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are
included in the Statement of Profit and Loss.
2.13 Foreign currency transactions
Transactions in foreign currency are recorded at the rate of exchange in force at the time transactions are affected. Exchange differences
arising on settlement of these transactions are recognized in the Statement of Profit and Loss.
Monetary items (other than those related to acquisition of fixed assets) denominated in foreign currency are revalued using the exchange rate
prevailing at date of the Balance Sheet and resulting exchange difference is recognized in the Statement of Profit and Loss. Non-monetary
foreign currency items are carried at cost.
2.14 Investment Property
Property that is held for rental or Capital appreciation and which is not occupied by the Company, is classified by Investing property. Investment
property is measured at cost including related transaction cost and where applicable borrowing cost. Investment properties are depreciated
at the same rate applicable for class of asset under Property, Plant and Equipment. An investment property is derecognised upon disposal or
when the investment property is permanently withdrawn from use and no further economic benefits expected from disposal. Any gain or loss
arising on derecognition of the property is included in profit or loss in the period in which the property is derecognised.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its investment properties recognised as at April
01,2016 measured as per the previous GAAP and use that carrying value as the deemed cost of investment properties.
2.15 Intangible assets
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as at April 1,2016
measured as per the previous GAAP and used those carrying value as the deemed cost of the intangible assets.
An intangible asset shall be recognised if, and only if: (a) it is probable that the expected future economic benefits that are attributable to the
asset will flow to the Company and (b) the cost of the asset can be measured reliably.
Amortisation on Intangible asset
Amortisation on intangible Assets is calculated on “Straight Line Method” over the period of useful life of asset as technically evaluated by the
management.
2.16 Earnings per share
2.16.1 Basic earnings per share
Basic earnings per share is calculated by dividing:
- the profit attributable to owners of the Company; and
- by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued
during the year.
2.16.2 Diluted earnings per share
Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into account:
- the after income tax effect of interest and other financing costs associated with dilutive potential equity shares; and
- the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential
equity shares.
2.17 Impairment of Assets :
The carrying amounts of all assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal / external
factors. An assets is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is charged to the
Statement of Profit and Loss in the year in which an asset is identified as impaired. An impairment loss recognised in prior accounting periods
is reversed if there has been change in the estimate of the recoverable amount.
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