2.2 Material accounting policies

A. Property, plant and equipment
Recognition and Measurement

Property, plant and equipment are stated at cost,
net of accumulated depreciation and accumulated
impairment losses, if any. Freehold land is stated
at cost.

The cost of an item of property, plant and
equipment comprises:

a) its purchase price, including non-refundable
purchase taxes, after deducting trade
discounts and rebates.

b) any costs directly attributable to bringing
the asset to the location and condition
necessary for it to be capable of operating in
the manner intended by the management.

c) the initial estimate of the costs of dismantling
and removing the item and restoring the site
on which it is located.

If significant parts of an item of property, plant
and equipment have different useful lives, then
they are accounted for as separate items (major
components) of property, plant and equipment
and depreciated accordingly.

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.

Transition to Ind AS

On transition to Ind AS, the Company has elected
to continue with the carrying value of all of its
property, plant and equipment measured as per
the previous GAAP and use that carrying value
as the deemed cost of the property, plant and
equipment.

Depreciation methods, estimated useful lives
and residual value

Depreciation is calculated on written down
value basis using the useful lives as prescribed
under Schedule II to the Companies Act, 2013.
If the management's estimate of the useful
life of a property plant & equipment at the time
of acquisition of the asset or of the remaining
useful life on a subsequent review is shorter
than that envisaged in the aforesaid schedule,
depreciation is provided at a higher rate based
on the management’s estimate of the useful life/
remaining useful life.

Depreciation on additions during the year is
provided on pro rata basis with reference to
month of addition/installation.

The property, plant and equipment acquired under
finance leases is depreciated over the asset’s
useful life or over the shorter of the asset’s useful
life and the lease term if there is no reasonable
certainty that the company will obtain ownership
at the end of the lease term. Leasehold land is
amortised on a straight-line basis over the balance
period of lease.

The residual values are not more than 5% of the
original cost of the asset.

Derecognition

An item of property, plant and equipment and any
significant part initially recognized is derecognised
upon disposal or when no future economic
benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the
asset (calculated as the difference between the
net disposal proceeds and the carrying amount of
the asset) is included in the statement of profit and
loss when the asset is derecognised.

B. Capital Work In Progress

Cost of assets not ready for intended use, as on
balance sheet date is shown as capital work in
progress. Advances given towards acquisition
of property, plant and equipment outstanding at
each balance sheet date are disclosed as other
non-current assets.

C. Intangible Assets

Identifiable intangible assets are recognised when
the Company controls the asset, it is probable that
future economic benefits attributed to the asset
will flow to the Company and the cost of the asset
can be reliably measured. At initial recognition,
the separately acquired intangible assets are
recognised at cost. Following initial recognition,
the intangible assets are carried at cost less
any accumulated amortization and accumulated
impairment losses, if any. Subsequent expenditure
is capitalised only when it increases the future
economic benefits embodied in the specific asset
to which it relates.

The Company amortized intangible assets over
their estimated economic useful lives using the
written down value basis as per Companies
Act 2013. The management has estimated the

The estimated useful life and amortization method
reviewed at the end of each reporting period,
with the effect of any changes in estimate being
accounted for on a prospective basis.

D. Investment Property
Recognition and Measurement

Land and Building held to earn rental or for capital
appreciation or both, rather than for use in the
production or supply of goods or services or for
administrative purposes: or sale in the ordinary
course of business is recognised as investment
property. Land held for a currently undetermined
future use is also recognised as Investment
Property.

Investment property is measured initially at its
cost, including related transaction costs and
where applicable borrowing costs. Subsequent
expenditure is capitalised to the asset's carrying
amount only when it is probable that future
economic benefits associated with the expenditure
will flow to the Company and the cost of the item
can be measured reliably. All other repairs and
maintenance costs are expensed when incurred.
When part of an investment property is replaced,
the carrying amount of the replaced part is
derecognised.

Gain or Loss on Disposal

Any gain or loss on disposal of an Investment
Property is recognised in the Statement of Profit
and loss.

E. Impairment

i. Impairment of financial Assets

The Company recognises loss allowances for
expected credit losses on:

- financial assets measured at amortised cost;

- contract assets recognised under contract
with customers; and

- financial assets measured at FOCI- debt
investments.

At each reporting date, the Company assesses
whether financial assets carried at amortised cost
are credit-impaired. A financial asset is 'credit-
impaired' when one or more events that have a
detrimental impact on the estimated future cash
flows of the financial asset have occurred.

Evidence that a financial asset is credit-impaired
includes the following observable data:

- significant financial difficulty of the borrower
or issuer;

- a breach of contract such as a default or
being past due for 90 days or more;

- the restructuring of a loan or advance by
each entity in the Company on terms that
such entity would not consider otherwise;

- it is probable that the borrower will enter
bankruptcy or other financial reorganisation;

- the disappearance of an active market for a
security because of financial difficulties.

The Company measures loss allowances at an
amount equal to lifetime expected credit losses,
except for bank balances for which credit risk (i.e.
the risk of default occurring over the expected
life of the financial instrument) has not increased
significantly since initial recognition, which are
measured as 12 month expected credit losses.

Loss allowances for trade receivables are always
measured at an amount equal to lifetime expected
credit losses. Lifetime expected credit losses are
the expected credit losses that result from all
possible default events over the expected life of
a financial instrument. Twelve months expected
credit losses are the portion of expected credit
losses that result from default events that are
possible within 12 months after the reporting
date (or a shorter period if the expected life of the
instrument is less than 12 months).

In all cases, the maximum period considered when
estimating expected credit losses is the maximum
contractual period over which the Company is
exposed to credit risk. When determining whether
the credit risk of a financial asset has increased
significantly since initial recognition and when
estimating expected credit losses, the Company
considers reasonable and supportable information
that is relevant and available without undue cost
or effort. This includes both quantitative and

qualitative information and analysis, based on the
Companies historical experience and informed
credit assessment and including forward-looking
information.

ii. Impairment of non-financial assets

The Companies non-financial assets, other than
inventories and deferred tax assets, are reviewed
at each reporting date to determine whether
there is any indication of impairment. If any such
indication exists, then the asset's recoverable
amount is estimated.

For impairment testing, assets that do not
generate independent cash inflows are grouped
together into cash-generating units (CGUs).
Each GU represents the smallest group of assets
that generates cash inflows that are largely
independent of the cash inflows of other assets or
CGUs.

The recoverable amount of a CGU (or an individual
asset) is the higher of its value in use and its fair
value less costs to sell. Value in use is based on
the estimated future cash flows, 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
GU (or the asset).

The Companies assets (e.g., central office building
for providing support to various CGUs) do not
generate independent cash inflows. To determine
impairment of a corporate asset, recoverable
amount is determined for the CGUs to which the
corporate asset belongs.

An impairment loss is recognised if the carrying
amount of an asset or GU exceeds its estimated
recoverable amount. Impairment losses are
recognised in the Statement of Profit and Loss.
Impairment loss recognised in respect of a CGU
is allocated first to reduce the carrying amount
of any goodwill allocated to the GU, and then to
reduce the carrying amounts of the other assets
of the CGU (or group of CGUs) on a pro rata basis.

In respect of other assets for which impairment
loss has been recognised in prior periods, the
Company reviews at each reporting date whether
there is any indication that the loss has decreased
or no longer exists. An impairment loss is reversed
if there has been a change in the estimates used
to determine the recoverable amount. Such a
reversal is made only to the extent that the asset's
carrying amount does not exceed the carrying

amount that would have been determined, net of
depreciation or amortisation, if no impairment loss
had been recognised.

F. Inventories

Inventories include finished goods, raw materials
and Work in Progress. The inventory is valued at
cost or Net Realisable Value, whichever is lower.
Cost is ascertained on weighted average basis.

The cost of inventory include expenditure in
purchasing the materials, production and conversion
cost and other relevant costs incurred in bringing
them to their present location and condition.

Net realizable value is the estimated selling price
in the ordinary course of business, less estimated
costs of completion and estimated costs
necessary to make the sale.

G. Financial Instruments

i. Financial assets

Initial recognition and measurement

Financial assets are recognised when, and
only when, the Company becomes a party
to the contractual provisions of the financial
instrument. The Company determines the
classification of its financial assets at initial
recognition.

When financial assets are recognised initially,
they are measured at fair value. Transaction
costs that are directly attributable to the
acquisition or issue of financial assets, which
are not at fair value through profit or loss, are
adjusted to the fair value on initial recognition.

Classification:

a. Cash and Cash Equivalents

Cash comprises cash/cheques on
hand and demand deposits with
banks. Cash equivalents are short-term
balances (with an original maturity of
three months or less from the date of
acquisition), highly liquid investment
that are readily convertible into known
amounts of cash and which are subject
to insignificant risk of changes in value.

b. Debt Instruments

The Company classifies its debt
instruments, as subsequently measured
at amortised cost or fair value through
Other Comprehensive Income or fair

value through profit or loss based on
its business model for managing the
financial assets and the contractual
cash flow characteristics of the financial
asset

i. Financial assets at amortised cost

Financial assets are subsequently
measured at amortised cost if these
financial assets are held for collection
of contractual cash flows where those
cash flows represent solely payments of
principal and interest. Interest income
from these financial assets is included
as a part of the Company's income in
the Statement of Profit and Loss using
the effective interest rate method.

ii. Financial assets at fair value through
Other Comprehensive Income
(FVOCI)

Financial assets are subsequently
measured at fair value through Other
Comprehensive Income if these
financial assets 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. Movements
in the carrying value are taken through
Other Comprehensive Income, except
for the recognition of impairment gains
or losses, interest revenue and foreign
exchange gains or losses which are
recognised in the Statement of Profit
and Loss. When the financial asset is
derecognised, the cumulative gain or
loss previously recognised in Other
Comprehensive Income is reclassified
from Other Comprehensive Income to
the Statement of Profit and Loss.

iii. Financial assets at 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 such debt instrument that is
subsequently measured at FVTPL and
is not part of a hedging relationship as
well as interest income is recognised in
the Statement of Profit and Loss.

Equity Instruments

The Company subsequently measures all

equity investment (other than the investments
in subsidiaries, joint ventures and associates
which are measured at cost) at fair value. Where
the Company has elected to present fair value
gains and losses on equity investments in Other
Comprehensive Income (“OCI”), there is no
subsequent reclassification of fair value of gains
and losses to profit or loss. Dividends from such
investments are recognised in the Statement
of Profit and Loss as other income when the
Company's right to receive payment is established.

The Company has made an irrecoverable election
to present in Other Comprehensive Income
subsequent changes in the fair value of equity
investments that are not held for trading (except
investments in subsidiaries, joint ventures and
associates which are measured at cost).

When the equity investment is de-recognised, the
cumulative gain or loss previously recognised in
Other Comprehensive Income is reclassified from
Other Comprehensive Income to the Retained
Earnings directly.

De-recognition

A financial asset is de-recognised only when the
Company has transferred the rights to receive
cash flows from the financial asset. Where
the Company 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 de-recognised. Where the Company has
not transferred substantially all risks and rewards
of ownership of the financial asset, the financial
asset is not de-recognised. 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.

ii. Financial liabilities

Initial recognition and measurement

Financial liabilities are recognised when and only
when, the Company becomes a party to the
contractual provisions of the financial instrument.
The Company determines the classification of its
financial liabilities at initial recognition.

All financial liabilities are recognised initially at
fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial
liabilities, which are not at fair value through profit
or loss, are adjusted to the fair value on initial
recognition.

Subsequent measurement

After initial recognition, financial liabilities that are
not carried at fair value through profit or loss are
subsequently measured at amortised cost using
the effective interest method. Gains and losses
are recognised in the Statement of Profit and Loss
when the liabilities are derecognised, and through
the amortisation process

De-recognition

A financial liability is de-recognised 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
a de-recognition of the original liability and the
recognition of a new liability, and the difference in
the respective carrying amounts is recognised in
the Statement of Profit and Loss.

Equity Instruments

An equity instrument is any contract that
evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity
instruments issued by a Company are recognised
at the proceeds received.

H. Borrowing costs

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.

Interest income earned on the temporary
investment of specific borrowings pending their
expenditure on qualifying assets is deducted from
the borrowing costs eligible for capitalisation.
Other borrowing costs are expensed in the period
in which they are incurred.

I. Cash and Cash Equivalent

Cash and cash equivalent includes cash on hand,
other short-term, highly liquid investments with
original maturities 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, and bank overdrafts.

J. Statement of Cash Flows

Cash flows are reported using the indirect method,
whereby net profit before taxes for the period 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
item of income or expenses associated with
investing or financing cash flows. The cash flows
from operating, investing and financing activities
of the Company are segregated.

K. Earnings per share
Basic earnings per share

Basic earnings per share is calculated by dividing:

- the profit attributable to owners of the

company

- by the weighted average number of equity
shares outstanding during the financial year,
adjusted for bonus elements in equity shares
issued.

Diluted earnings per share

Diluted earnings per share adjusts the figures
used in the determination of basic earnings per
share to take into account:

- the profit attributable to owners of the

company

- the weighted average number of additional
equity shares that would have been
outstanding assuming the conversion of all
dilutive potential equity shares.

L. Revenue Recognition

Revenue from contracts with customer

Revenue from contracts with customers is
recognised when control of the goods or services
are transferred to the customer at an amount that
reflects the consideration to which the Company
expects to be entitled in exchange for those goods
or services. The Company assesses promises
in the contract that are separate performance
obligations to which a portion of transaction price
is allocated.

Revenue is measured based on the transaction
price as specified in the contract with the
customer. It excludes taxes or other amounts
collected from customers in its capacity as an
agent. In determining the transaction price, the
Company considers below, it any:

a. Variable consideration - This includes
bonus, incentives, discounts etc. It is
estimated at contract inception and
constrained until it is highly probable that a
significant revenue reversal in the amount
of cumulative revenue recognised will not
occur when the associated uncertainty with
the variable consideration is subsequently
resolved. It is reassessed at end of each
reporting period.

b. Significant financing component -

Generally, the Company receives short¬
term advances from its customers. Using
the practical expedient in Ind AS 115, the
Company does not adjust the promised
amount of consideration for the effects of a
significant financing component if it expects,
at contract inception, that the period
between the transfer of the promised good
or service to the customer and when the
customer pays for that good or service will
be one year or less.

c. Consideration payable to a customer -

Such amounts are accounted as reduction
of transaction price and therefore, of revenue
unless the payment to the customer is in
exchange for a distinct good or service that
the customer transfers to the Company.

In accordance with Ind AS 37, the Company
recognises a provision for onerous contract
when the unavoidable costs of meeting the
obligations under a contract exceed the
economic benefits to be received.

Contract modifications

Contract modifications are accounted for
when additions, deletions or changes are
approved either to the contract scope
or contract price. The accounting for
modifications of contracts involves assessing
whether the services added to the existing
contract are distinct and whether the pricing
is at the standalone selling price. Services
added that are not distinct are accounted
for on a cumulative catch up basis, while
those that are distinct are accounted for
prospectively, either as a separate contract,
if additional services are priced at the
standalone selling price, or as a termination
of existing contract and creation of a new
contract if not priced at the standalone
selling price.

Cost to fulfil the contract

The Company recognises asset from the cost
incurred to fulfil the contract such as set up
and mobilisation costs and amortises it over the
contract tenure on a systematic basis that is
consistent with the transfer to the customer of the
goods or services to which the asset relates.

Contract balances
Contract assets

A contract asset is the right to consideration in
exchange for goods or services transferred to the
customer. If the Company performs its obligations
by transferring goods or services to a customer
before the customer pays consideration or before
payment is due, a contract asset is recognised
for the earned consideration that is conditional.
The contract assets are transferred to receivables
when the rights become unconditional. This
usually occurs when the Company issues an
invoice to the Customer.

Trade receivables

A receivable represents the Companies right to
an amount of consideration that is unconditional
ie. only the passage of time is required before
payment of consideration is due.

Contract liabilities

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 recognised as
revenue when the Company performs under the
contract.

The accounting policies for the specific revenue
streams of the Company are summarised below:

i. Sale of products

Revenue from the sale of products is
recognised at point in time when the control
of the goods is transferred to the customer
based on contractual terms i.e. either on
dispatch of goods or on delivery of the
products at the customer's location.

ii. Construction contracts

Revenue, where the performance obligation
is satisfied over time is recognised in
proportion to the stage of completion of
the contract. The stage of completion is
assessed by reference to surveys of work

performed. Otherwise, contract revenue is
recognised as an expense in the statement
of Profit and Loss in accounting periods in
which work to which they relate is performed.
An expected loss on a contract is recognised
immediately in the Statement of Profit and
Loss.

The Company recognises revenue at an
amount for which it has right to consideration
(i.e. right to invoice) from customer that
corresponds directly with the value of the
performance completed to the date.

Contract revenue includes the initial amount
agreed in the contract plus any variations in
contract work and claims payments, to the
extent that it is probable that they will result
in revenue and can be measured reliably.
The Company recognises bonus/ incentive
revenue on early completion of the project
upon acceptance of the corresponding claim
by the Customer.

iii. Job work income

Job work income is recognized when
the services are rendered and there are
no uncertainties involved to its ultimate
realization.

iv. Interest income

Interest income, including income arising
from other financial instruments measured
at amortised cost, is recognised using the
effective interest rate method.

v. Dividend income

Revenue is recognised when the company's
right to receive the payment is established,
when it is probable that the economic
benefits associated with the dividend will
flow to the entity and the amount of dividend
can be reliably measured. This is generally
when shareholders approve the dividend.

vi. Rental Income

Lease income from operating leases where
the Company is a lessor is recognized as
income on a straight-line basis over the
lease term unless the receipts are structured
to increase in line with expected general
inflation to compensate for the expected
inflationary cost increases. The respective
leased assets are included in the balance
sheet based on their nature.

vii. Revenue in respect of other income is
recognised when no significant uncertainty
as to its determination or realisation exists.

M. Leases

In accordance with IND AS 116, the Company
recognises a right of use asset and a lease liability
at the lease commencement date. The right of use
asset is initially measured at cost which comprise
the initial amount of lease liability adjusted for any
lease payments made before the commencement
date. The right of use asset is subsequently
depreciated using the straight-line method of the
balance lease term. In addition, the right of use
asset is periodically reduced by impairment loss,
if any and adjusted for certain remeasurements of
lease liability.

The lease liability is initially measured at the present
value of the lease payments that are not paid
at the commencement date, discounted using
the implicit rate in the lease or the incremental
borrowing rate, if that rate cannot be readily
available at the commencement date of the lease
for the estimated term of the obligation.

Lease payments included in the measurement of
the lease liability comprise the amounts expected
to be payable over the period of lease. The lease
liability is measured at amortised cost using
effective interest rate method. It is remeasured
when there is a change in future lease payments
arising from change in the index or rate.

The Company has applied the short-term lease
recognition exemption to its short-term leases
(i.e., those leases that have a lease term of 12
months or less from the commencement date and
do not contain a purchase option) and low-value
assets recognition exemption.

N. Joint Arrangements

Under Ind AS 111 Joint arrangements, investments
in joint arrangements are classified as either joint
operations or joint ventures. The classification
depends on the contractual rights and obligations
of each investor, rather than the legal structure
of the joint arrangement. The Company has joint
operations.

Joint Operations

The company recognises its direct right to the
assets, liabilities, revenues and expenses of joint
operations and its share of any jointly held or
incurred assets, liabilities, revenues and expenses.

These have been incorporated in the financial
statements under the appropriate headings. The
details of joint operations are set out in note 38.

O. Employee benefits

(i) During Employment benefits

Short term employee benefits

Short-term employee benefits are expensed
as the related service is provided. A liability
is recognised for the amount expected
to be paid if the Company has a present
legal or constructive obligation to pay this
amount as a result of past service provided
by the employee and the obligation can be
estimated reliably.

(ii) Post Employment benefits

(a) Defined contribution plans

A defined contribution plan is a post¬
employment benefit plan under which
a Company pays fixed contribution into
a separate entity and will have no legal
or constructive obligation to pay further
amounts.

Obligations for contributions to defined
contribution plans are expensed as
the related service is provided. Prepaid
contributions are recognised as an asset to
the extent that a cash refund or a reduction
in future payments is available.

(b) Defined benefit plans

The Company pays gratuity to the employees
who have has completed five years of
service with the Company at the time when
employee leaves the Company.

The gratuity liability amount is unfunded and
formed exclusively for gratuity payment to
the employees.

The liability in respect of gratuity and other
post-employment benefits is calculated
using the Projected Unit Credit Method
and spread over the periods during which
the benefit is expected to be derived from
employees' services.

Re-measurement of defined benefit plans in
respect of post-employment are charged to

Other Comprehensive Income.

Compensated Absences: Accumulated
compensated absences, which are
expected to be availed or encashed within
12 months from the end of the year are
treated as short term employee benefits. The
obligation towards the same is measured
at the expected cost of accumulated
compensated absences as the additional
amount expected to be paid as a result of
the unused entitlement as at the year end.

(iii) Termination benefits

Termination benefits are payable when
employment is terminated by the Company
before the normal retirement date or when
an employee accepts voluntary redundancy
in exchange for these benefits. In case
of an offer made to encourage voluntary
redundancy, the termination benefits
are measured based on the number of
employees expected to accept the offer.

P. Taxes

i. Current income tax

Current income tax assets and liabilities
are measured at the amount expected to
be recovered from or paid to the taxation
authorities. The tax rates and tax laws used
to compute the amount are those that are
enacted or substantively enacted, at the
reporting date in the countries where the
company operates and generates taxable
income.

Current income tax relating to items
recognised outside profit or loss is recognised
outside profit or loss (either in other
comprehensive income or in equity). Current
tax items are recognised in correlation to the
underlying transaction either in OCI or directly
in equity. Management periodically evaluates
positions taken in the tax returns with
respect to situations in which applicable tax
regulations are subject to interpretation and
establishes provisions where appropriate.

ii. Deferred tax

Deferred income tax is recognised using
the balance sheet approach, deferred tax is
recognised on temporary differences at the
balance sheet date between the tax bases

of assets and liabilities and their carrying
amounts for financial reporting purposes,
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.

Deferred income tax assets are recognised
for all deductible temporary differences, carry
forward of unused tax credits and unused
tax losses, 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 utilised.

The carrying amount of deferred income 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 income tax asset to be utilised.

Deferred income tax assets and liabilities are
measured at the tax rates that are expected
to apply in the period when the asset is
realized or the liability is settled, based on tax
rates (and tax laws) that have been enacted
or substantively enacted at the balance
sheet date.

Deferred tax assets and deferred tax liabilities
are offset if a legally enforceable right exists
to set off current tax assets against current
tax liabilities and the deferred taxes relate
to the same taxable entity and the same
taxation authority.