2.1 Statement of Compliance :
The Company's financial statements have been prepared in accordance with the provisions of the Companies Act, 2013 and
the Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 and
amendments thereto issued by Ministry of Corporate Affairs under section 133 of the Companies Act, 2013. In addition,
the guidance notes/announcements issued by the Institute of Chartered Accountants of India (ICAI) are also applied except
where compliance with other statutory promulgations require a different treatment.
2.2 Basis of preparation of financial statements :
These financial statements have been prepared on the historical cost basis, except for certain financial instruments which 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.
In estimating the fair value of an asset or liability, the company takes into account the characteristics of the asset or liability if
market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
Fair value for measurement and/or disclosure purpose in these 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 Payment, leasing transactions that are
within the scope of Ind AS 17 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.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the
degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at
measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either
directly or indirectly; and
Level 3 Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in
part using a valuation model based on assumptions that are neither supported by prices from observable current market
transactions in the same instrument nor are they based on available market data.
2.3 Use of Estimates :
The preparation of financial statements requires the management of the company to make estimates and assumptions to be
made that affect the reported amounts of assets and liabilities on the date of financial statements, disclosure of contingent
liabilities as at the date of the financial statements, and the reported amounts of income and expenses during the reported
period. 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.
i) Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the
revenue can be reliably measured regardless of the time of receipt of the consideration.Revenue towards satisfaction
of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to
that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration
on account of various discounts and schemes offered by the company as part of contract. Taxes and duties collected on
behalf of the government are excluded.
The specific recognition criteria of revenue recognition have been defined in para 2.7.
ii) Income tax
Significant judgements are involved in determining the provision for income taxes, including amount expected to be
paid/recovered for uncertain tax positions.
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 well 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 2.5.
iv) Provisions
Provision is recognised when the Company has a present obligation as a result of past event and it is probable that an
outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These
are reviewed at each balance sheet date adjusted to reflect the current best estimates. The policy for the same has been
explained under Note 2.17
v) Fair value measurement of financial instruments
The Company measures financial instruments, such as, Investments at fair value at each balance sheet date using
valuation techniques. 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: a) In the principal market
for the asset or liability, or b) In the absence of a principal market, in the most advantageous market for the asset or
liability the principal or the most advantageous market must be accessible by the Company. The fair value of an asset
or a liability is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset
takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best
use or by selling it to another market participant that would use the asset in its highest and best use. The Company uses
valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure
fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets
and liabilities for which fair value is measured or disclosed in the standalone 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 for assets and liabilities that are recognised in the standalone financial statements on a recurring basis, the
Company determines whether transfers have occurred between levels in the hierarchybyre-assessing categorisation (based
on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of
the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
2.4 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:
i. Expected to be realised or intended to be sold or consumed in normal operating cycle,
ii. Held primarily for the purpose of trading,
iii. Expected to be realised within twelve months after the reporting period, or
iv. 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:
i. It is expected to be settled in normal operating cycle,
ii. It is held primarily for the purpose of trading,
iii. It is due to be settled within twelve months after the reporting period, or
iv. There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Operating cycle for the business activities of the company covers the duration of the specific project/contract/project line/
service including the defect liability period, wherever applicable and extends up to the realization of receivables (including
retention monies) within the agreed credit period normally applicable to the respective lines of business. For non-project
related assets and liabilities, operating cycle is 12 months.
2.5 Property,Plant & Equipment and Intangible assets (Including Capital work-in-Progress) :
Property, Plant & Equipment and intangible assets are stated at actual cost less accumulated depreciation and net of
impairment. The actual cost capitalised includes material cost, freight, installation cost, duties and taxes, eligible borrowing
costs and other incidental expenses incurred during the construction/installation stage.
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value
considered at 5%.
The estimated useful lives and residual values of the Property, Plant & Equipment and Intangible assets are reviewed at the
end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
The cost of software purchased for internal use is capitalized and amortized in three years.
Technical know-how is amortized in six years.
An item of Property, Plant & Equipment and intangible assets is derecognised upon disposal or when no future
economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the
disposal or retirement of an item of Property, Plant & Equipment and intangible assets are determined as the
difference between the sales proceeds and the carrying amount of the asset and is recognised in the profit or loss.
Capital work-in-progress, representing expenditure incurred in respect of assets under development and not ready for their
intended use, are carried at cost. Cost includes related acquisition expenses and other direct expenditure.
Depreciation & Amortisation
Depreciation on Property, Plant & Equipment including assets taken on lease is charged on depreciable amount of assets
based on straight line method on an estimated useful life as prescribed in Schedule II to the Companies Act, 2013. For any
addition / disposal of assets, depreciation is charged on prorata basis on depending upon the number of days assets was in
use.
The company has taken technical report on balance useful life of assets. Accordingly, depreciation has been calculated based
on such revised useful life of the assets.
Depreciation is not recorded on capital work-in-progress until construction and installation are complete and the asset is
ready for its intended use.
2.6 Impairment of Assets :
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication
exists, the Company estimates the asset's recoverable amount. The recoverable amount of the tangible & intangible assets is
estimated as the higher of its net selling price and its value in use. 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. In determining net selling price, recent market transactions are taken into account.
An impairment loss is recognised whenever the carrying amount of an tangible & intangible asset or a cash generating unit
exceeds its recoverable amount. Impairment loss is recognised in the statement of profit and loss. 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 subject to a maximum of depreciable historical cost.
2.7 Revenue recognition :
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable
consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of
variable consideration on account of various discounts and schemes offered by the company as part of the contract. The same
is recognised when the entity satisfies such performance obligations.
A Product Sales
i. In case of sale of products the revenue is recognised at a point in time .
ii. Domestic sales of manufactured items are recognized on dispatch and are stated net of returns, discounts and
rebates. Sales are recorded exclusive of applicable taxes.
iii. Amount recognised as sales are adjusted for any variable consideration as per terms of the contract.
iv. Export sales are recognized on date of bill of lading/ airway bill and/or passing of rights to the customer,
whichever is earlier and initially recorded at the relevant exchange rates prevailing on the date of transaction.
v. Income on items delivered directly by suppliers/sub-contractors to the client is recognized on dispatch and
receipt of suppliers'/sub-contractors' invoices.
vi. Income on account of price variation on sale of goods is recognized on the acceptance of the claim by the client
and on certainty of its realization.
B Contract Revenue
i. In case of contracts which involves supply of goods and services and where company transfers control and
satisfies performance obligation over time, the revenue is recognised over time. The company recognises
revenue for a performance obligation satisfied over time only if its progress towards complete satisfaction of the
performance obligation is reasonably measured. The company has used Input Method for measuring progress.
ii. When the final outcome of a contract cannot be reliably estimated, contract revenue is recognized only to the
extent of costs incurred that are expected to be recovered. Expected loss is recognized immediately when it is
probable that the total estimated contract costs will exceed total contract revenue.
iii. Escalation claims explicitly mentioned in contracts with customers and which cannot be reversed subsequently
are considered as variable claims. The claims have been estimated using the expected value method.
C Service Revenue
Revenue from services are recognized as and when the services are performed.
D Interest and Dividend Income
i. Interest income is recognised using effective interest rate method.
ii. Dividend income is recognised when the Company's right to receive dividend is established
iii. Export Benefits
Export benefits are recognized on actual basis.
iv. All other incomes are recognised on accrual basis.
2.8 Liquidated damages :
When revenue has been recognised after the contractual delivery period the amount of liquidated damages as per the terms
of the contract has been reduced from the amount of revenue recognised.
When revenue has not been recognised and the contractual delivery date is over the amount of liquidated damages to be
imposed by the customer has been recognised as an expense and adequate provisions have been made.
2.9 Inventories :
Inventories which comprise raw materials, work-in-progress, finished goods, stock-in-trade, stores and spares, and loose tools
are carried at the lower of cost or net realisable value.
a. Raw materials, Components, Stores and Spares are valued at lower of cost or net realizable value. However, materials
and other items held for use in the production of inventories are not written down below cost if the finished products
in which they will be incorporated are expected to be sold at or above cost. The cost includes freight inward, direct
expenses, duties and taxes, other than those subsequently recoverable. In case of Heavy Engineering Division, it is
arrived at on "FIFO Method" and other divisions on "Weighted Average Method".
b. Costs of Dies, Jigs, Tools and Patterns purchased/ manufactured are charged off in relevant year, at lower of cost or net
realizable value, arrived at after providing for suitable diminution/ amortization.
c. Goods-in-transit are valued at costs incurred till the Balance Sheet date.
d. Work-in-progress is valued at lower of cost or net realizable value. The cost includes direct material, direct labour, and
appropriate overheads booked on normal level of activity. The expenditure on uncompleted contracts is amortized
over the period of the contract on the basis of sales booked.
e. Finished goods are valued at lower of cost or net realizable value. Cost includes related overheads and wherever
applicable duties and other non recoverable taxes.
2.10 Government grants :
Government grants are recognised when there is reasonable assurance that the Company will comply with the conditions
attached to them and the grants will be received.
Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non¬
current assets are recognised as deferred revenue in the financial statements and transferred to profit or loss on a systematic
and rational basis over the useful life of the related assets.
Grants related to revenue are accounted for as other income in the period in which the related costs which Government
intend to compensate are accounted for to the extent there is no uncertainty in receiving the same. Incentives which are in
the nature of subsidies given by the Government which are based on the performance of the Company are recognised in the
year of performance/eligibility in accordance with the related scheme.
Government grants in the form of non-monetary assets, given at a concessional rate, are accounted for at their fair value.
2.11 Foreign currency transactions :
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and
liabilities denominated in foreign currencies are translated at the functional currency closing rates ofexchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in Statement of Profit and Loss
except to the extent of exchange differences which are regarded as an adjustment to interest costs on foreign currency
borrowings that are directly attributable to the acquisition or construction of qualifying assets, are capitalized as cost of assets.
Additionally, exchange gains or losses on foreign currency borrowings taken prior to April 1, 2016 which are related to the
acquisition or construction of qualifying assets are adjusted in the carrying cost of such assets. Non-monetary items that are
measured in terms of historical cost in a foreign currency are recorded using the exchange rates at the date of the transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when
the fair value was measured. The gain or loss arising on translation of non-monetary items measured at fair value is treated in
line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose
fair value gain or loss is recognised in OCI or Statement of Profit and Loss are also recognised in OCI or Statement of Profit and
Loss, respectively).
2.12 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
Initial recognition and measurement
All financial assets are recognized initially at fair value, plus in the case of financial assets not recorded at fair value through
profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial asset. However, trade receivables
that do not contain a significant financing component are measured at transaction price.
Following are the categories of financial instrument:
a) Financial assets at amortised cost
b) Financial assets at fair value through other comprehensive income (FVTOCI)
c) Financial assets at fair value through profit or loss (FVTPL)
a) Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost using the effective interest rate method if these financial
assets are held within a business whose objective is to hold these assets in order to collect contractual cash flows
and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
b) Financial assets at fair value through other comprehensive income (FVTOCI)
Debt financial assets measured at FVOCI:
Debt instruments are subsequently measured at fair value through other comprehensive income if it is held within
a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets
and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Equity Instruments designated at FVOCI:
On initial recognition, the Company makes an irrevocable election on an instrument-by-instrument basis to present
the subsequent changes in fair value in other comprehensive income pertaining to investments in equity instruments,
other than equity investment which are held for trading. Subsequently, they are measured at fair value with gains and
losses arising from changes in fair value recognised in other comprehensive income and accumulated in the 'Reserve
for equity instruments through other comprehensive income' The cumulative gain or loss is not reclassified to profit or
loss on disposal of the investments.
c) Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition
to present subsequent changes in fair value in other comprehensive income for investments in equity instruments
which are not held for trading. Other financial assets such as unquoted Mutual funds are measured at fair value through
profit or loss unless it is measured at amortised cost or at fair value through other comprehensive income on initial
recognition.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily
derecognised (i.e. removed from the Company's balance sheet) when:
a) the rights to receive cash flows from the asset have expired, or
b) the Company has transferred its rights to receive cash flows from the asset, and
i. the Company has transferred substantially all the risks and rewards of the asset, or
ii. the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but
has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither
transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset,
the Company continues to recognise the transferred asset to the extent of the Company's continuing involvement.
In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are
measured on a basis that reflects the rights and obligations that the Company has retained. Continuing involvement
that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount
of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss ('ECL') model for measurement and recognition
of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, deposits, trade
receivables and bank balance
b) Financial assets that are debt instruments and are measured at FVTOCI.
c) Financial guarantee contracts which are not measured as at FVTPL.
The Company follows 'simplified approach' for recognition of impairment loss allowance on trade receivables. The
application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises
impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether
there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly,
12-month ECL is used to provide for impairment loss. However, if credit riskhas increased significantly, lifetime ECL is used. If,
in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit
risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial
instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within
12 months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract
and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. When
estimating the cash flows, an entity is required to consider:
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the
Statement of Profit and Loss . This amount is reflected under the head 'other expenses' in the Statement of Profit and
Loss. In the balance sheet, ECL is presented as an allowance, i.e., as an integral part of the measurement of those
assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the
Company does not reduce impairment allowance from the gross carrying amount.
Offsetting:
Financial assets and financial liabilities are offset and the net amount is reported in the standalone balance sheet if
there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net
basis, to realise the assets and settle the liabilities simultaneously.
Financial liabilitiesInitial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and
borrowings, payables. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings
and payables, net of directly attributable transaction costs. The Company's financial liabilities include trade and other
payables, loans and borrowings.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities designated upon initial recognition as
at fair value through profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the
initial date of recognition and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value
gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently
transferred to P&L. However, the Company may transfer the cumulative gain or loss within equity. All other changes
in fair value of such liability are recognised in the statement of profit or loss. The Company has not designated any
financial liability as at fair value through profit and loss.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the
initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value
gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently
transferred to P&L. However, the Group may transfer the cumulative gain or loss within equity. All other changes in fair
value of such liability are recognised in the statement of profit or loss.
Loans and borrowings
This is the category most relevant to the Company. After initial recognition, interest-bearing loans and borrowings
are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit
or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost
is calculated by taking into account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
This category generally applies to borrowings.
De-recognition
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 and loss.
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to
reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance
with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value,
adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability
is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109
and the amount recognised less cumulative amortisation.
Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition,
no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets
which are debt instruments, a reclassification is made only if there is a change in the business model for managing
those assets. Changes to the business model are expected to be infrequent. The Company's senior management
determines change in the business model as a result of external or internal changes which are significant to the
Company's operations. Such changes are evident to external parties. A change in the business model occurs when the
Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies
financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of
the immediately next reporting period following the change in business model. The Company does not restate any
previously recognised gains, losses (including impairment gains or losses) or interest.
2.13 Employee benefits :i) Gratuity
The Company accounts for its gratuity liability, a defined retirement benefit plan covering eligible employees. The
gratuity plan provides for a lump sum payment to employees at retirement, death, incapacitation or termination of the
employment based on the respective employee's salary and the tenure of the employment. Liabilities with regard to a
Gratuity plan are determined based on the actuarial valuation carried out by an independent actuary as at the Balance
Sheet date using the Projected Unit Credit method.
Actuarial gains and losses are recognised in full in other comprehensive income and accumulated in equity in the
period in which they occur. Past service cost is recognised in profit or loss in the period of a plan amendment.
ii) Provident Fund
The eligible employees of the Company are entitled to receive the benefits of Provident fund, a defined contribution
plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered
employees' salary (currently at 12% of the basic salary) which are charged to the Statement of Profit and Loss on accrual
basis. The provident fund contributions are paid to the Regional Provident Fund Commissioner by the Company.
The Company has no further obligations for future provident fund."
iii) Superannuation and ESIC
Superannuation fund and Employees' State insurance scheme (ESI), which are defined contribution schemes, are
charged to the Statement of Profit and Loss on accrual basis.
The Company has no further obligations for future superannuation fund benefits other than its annual contributions.
iv) Compensated absences
The Company provides for the compensated absences subject to Company's certain rules. The employees are entitled
to accumulate leave subject to certain limits, for future encashment or availment. The liability is provided based on the
number of days of unavailed leave at each Balance Sheet date on the basis of an independent actuarial valuation using
the Projected Unit Credit method.
The liability which is not expected to occur within twelve months after the end of the period in which the employee
renders the related services are recognised based on actuarial valuation as at the Balance Sheet date.
Actuarial gains and losses are recognised in full in the Statement of Profit and Loss in the period in which they occur.
The company also offers a short term benefit in the form of encashment of unavailed accumulated compensated
absence above certain limit for all of its employees and same is being provided for in the books at actual cost.
v) Other short term employee benefits
Employee benefits such as salaries,incentives, overtime, bonus, ex-gratia and performance-linked rewards falling due
wholly within twelve months of rendering the service are classified as short-term employee benefits and are expensed
in the period in which the employee renders the service.
2.14 Borrowing costs :
Borrowing costs that are directly attributable to the acquisition or construction or production of qualifying assets are
capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get
ready for its intended use or sale. All other borrowing costs are charged to the Statement of Profit and Loss.
2.15 Taxation :
Tax expense comprises of current tax and deferred tax. Current tax is measured at the amount expected to be paid to /
recovered from the tax authorities, based on estimated tax liability computed after taking credit for allowances and exemption
in accordance with the local tax laws existing in the respective countries.
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 income taxes are recognised in other comprehensive income
or directly in equity, respectively.
Advance taxes and provisions for current income taxes are presented in the statement of financial position after off-setting
advance tax paid and income tax provision arising in the same tax jurisdiction and where the relevant tax paying units intends
to settle the asset and liability on a net basis.
Deferred income taxes
Deferred income tax is recognised using the balance sheet approach. Deferred income tax assets and liabilities are recognised
for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying
amount, 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 asset are recognised to the extent 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 reporting 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 tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in
the years in which the temporary differences are expected to be received or settled.
Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which gives rise to
future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is probable
evidence that the Company will pay normal income tax after the tax holiday period.
Deferred tax assets and liabilities are offset when it relates to income taxes levied by the same taxation authority and the
relevant entity intends to settle its current tax assets and liabilities on a net basis.
2.16 Earnings per Share :
Basic earnings/ (loss) per share are calculated by dividing the net profit / (loss) for the period attributable to equity shareholders
by the weighted average number of equity shares outstanding during the period. The weighted average number of equity
shares outstanding during the period are adjusted for any bonus shares issued during the period and also after the Balance
Sheet date but before the date the financial statements are approved by the Board of Directors.
For the purpose of calculating diluted earnings / (loss) per share, the net profit / (loss) for the period attributable to equity
shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all
dilutive potential equity shares.
The number of equity shares and potentially dilutive equity shares are adjusted for bonus shares as appropriate. The dilutive
potential equity shares are adjusted for the proceeds receivable, had the shares been issued at fair value. Dilutive potential
equity shares are deemed converted as of the beginning of the period, unless issued at a later date.
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