The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on
management''''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
b Tangible fixed assets
Tangible fixed assets are stated at cost, net of accumulated
depreciation and accumulated impairment losses, if any. The cost
comprises purchase price, borrowing costs if capitalisation criteria
are met and directly attributable cost of bringing the asset to its
working condition for the intended use. Any trade discounts and rebates
are deducted in arriving at the purchase price.
Subsequent expenditure related to an item of tangible fixed asset is
added to its book value only if it increases the future benefits from
the existing asset beyond its previously assessed standard of
performance. All other expenses on existing tangible fixed assets,
including day to day repairs and maintenance expenditure and cost of
replacing parts, are charged to the statement of profit and loss for
the period during which such expenses are incurred.
The Company adjusts exchange differences arising on translation/
settlement of long-term foreign currency monetary items pertaining to
the acquisition of a depreciable asset to the cost of the tangible
asset and depreciates the same over the remaining life of the asset. In
accordance with the Ministry of Corporate Affairs (''''MCA'''') circular
dated August 09, 2012, exchange differences adjusted to the cost of
tangible fixed assets are total differences, arising on long-term
foreign currency monetary items pertaining to the acquisition of a
depreciable asset, for the period. In other words, the Company does not
differentiate between exchange differences arising from foreign
currency borrowings to the extent they are regarded as an adjustment to
the interest cost and other exchange differences.
Gains or losses arising from derecognition of tangible fixed assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the tangible fixed assets and are recognised in the
statement of profit and loss when the tangible fixed asset is
c Depreciation on tangible fixed assets
Depreciation on tangible fixed assets is calculated on a straight-line
basis using the rates arrived at, based on the useful lives estimated
by the management, which coincides with the lives prescribed under
Schedule II of the Act. The Company has used the following useful lives
to provide depreciation on its tangible fixed assets. The identified
components are depreciated separately over their useful lives; the
remaining components are depreciated over the life of the principal
d Intangible assets and amortisation
intangible assets (Computer software) acquired separately are measured
on initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated amortisation and
accumulated impairment losses, if any.
Computer software is amortised based on the useful life of 6 years on a
straight line basis as estimated by the management.
Gains or losses arisingfrom derecognition of intangible assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the intangible assets and are recognised in the
statement of profit and loss when the intangible asset is derecognised.
e Impairment of tangible/ intangible assets
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Company
estimates the asset''''s recoverable amount. An asset''''s recoverable amount
is the higher of an asset''''s or cash-generating unit''''s (CGU) net selling
price and its value in use. The recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount. 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, if
available. If no such transactions can be identified, an appropriate
valuation model is used.
The Company bases its impairment calculation on detailed budgets and
forecast calculations which are prepared separately for each of the
Company''''s CGUs to which the individual assets are allocated. These
budgets and forecast calculations are generally covering a period of
five years. For longer periods, a long term growth rate is calculated
and applied to project future cash flows after the fifth year.
impairment losses of operations, including impairment on inventories,
are recognised in the statement of profit and loss, except for
previously revalued tangible fixed assets, where the revaluation was
taken to revaluation reserve. In this case, the impairment is also
recognised in the revaluation reserve up to the amount of any previous
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
An assessment is made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer
exist or may have decreased. If such indication exists, the Company
estimates the asset''''s or CGU''''s recoverable amount. A previously
recognised impairment loss is reversed only if there has been a change
in the assumptions used to determine the asset''''s recoverable amount
since the last impairment loss was recognised. The reversal is limited
so that the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised
for the asset in prior years. Such reversal is recognised in the
statement of profit and loss unless the asset is carried at a revalued
amount, in which case the reversal is treated as a revaluation
Where the Company is lessee
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to the ownership of the leased
item, are capitalised at the inception of the lease term at the lower
of the fair value of the leased property and present value of the
minimum lease payments. Lease payments are apportioned between the
finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability.
Finance charges are recognised as finance costs in the statement of
profit and loss. Lease management fees, legal charges and other initial
direct costs of lease are capitalised.
A leased asset is depreciated on a straight-line basis over the useful
life of the asset. However, if there is no reasonable certainty that
the Company will obtain the ownership by the end of the lease term, the
capitalised asset is depreciated on a straight-line basis over the
shorter of the estimated useful life of the asset or the lease term.
Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
g Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred in connection with the arrangement of borrowings.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalised as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
investments, which are readily realisable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties. If an investment is acquired, or
partly acquired, by the issue of shares or other securities, the
acquisition cost is the fair value of the securities issued. If an
investment is acquired in exchange for another asset, the acquisition
is determined by reference to the fair value of the asset given up or
by reference to the fair value of the investment acquired, whichever is
more clearly evident.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis. Long-
term investments are carried at cost. However, provision for diminution
in value is made to recognise a decline other than temporary in the
value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
Raw materials, components, stores and spares are valued at lower of
cost and net realisable 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. Cost of raw materials, components
and stores and spares is determined on a weighted average basis.
Net realisable 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.
Costs incurred that relate to future activities on the contract are
recognised as "Contract work in progress".
Contract work in progress comprising construction costs and other
directly attributable overheads is valued at lower of cost and net
j 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. The following specific recognition criteria must
also be met before revenue is recognised:
Revenue from construction activity
Construction revenue and costs are recognised by reference to the stage
of completion of the construction activity at the balance sheet date,
as measured by the proportion that contract costs incurred for work
performed to date bear to the estimated total contract costs. Where the
outcome of the construction cannot be estimated reliably, revenue is
recognised to the extent of the construction costs incurred if it is
probable that they will be recoverable. In the case of contracts with
defined milestones and assigned price for each milestone, it recognises
revenue on transfer of significant risks and rewards which coincides
with achievement of milestone and its acceptance by its customer.
Provision is made for all losses incurred to the balance sheet date.
Any further losses that are foreseen in bringing contracts to
completion are also recognised. Variations in contract work, claims
and incentive payments are recognised to the extent that it is probable
that they will result in revenue and they are capable of being reliably
measured. Contract revenue earned in excess of billing has been
reflected as unbilled revenue and billing in excess of contract revenue
has been reflected as unearned revenue.
Dividend income is recognised when the Company''''s right to receive
dividend is established by the reporting date.
Income from management/ technical services
Income from management/technical services is recognised as per the
terms of the agreement on the basis of services rendered.
interest income on loans, investments and bank deposits are recognised
on a time proportion basis taking into account the amounts invested and
the rate applicable.
k Foreign currency translation
Foreign currency transactions and balances
(i) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non-monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
(iii) Exchange differences
The Company accounts for exchange differences arising on translation/
settlement of foreign currency monetary items as below:
1. Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalised and
depreciated over the remaining useful life of the asset.
2. Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortised over the remaining life
of the concerned monetary item.
3. All other exchange differences are recognised as income or as
expenses in the period in which they arise.
For the purpose of (iii)(l) and (iii)(2) above, the Company treats a
foreign monetary item as "long-term foreign currency monetary item", if
it has a term of twelve months or more at the date of its origination.
In accordance with MCA circular dated August 09,2012, exchange
differences for this purpose, are total differences arising on
long-term foreign currency monetary items for the period. In other
words, the Company does not differentiate between exchange differences
arising from foreign currency borrowings to the extent they are
regarded as an adjustment to the interest cost and other exchange
iv) Forward exchange contracts entered into to hedge foreign currency
risk of an existing asset/ liability
The premium or discount arising at the inception of forward exchange
contract entered into for the purpose of hedging foreign currency risk
on monetary items are amortized and recognized as an expense/ income
over the life of the contract. Exchange differences on such contracts,
except the contracts which are long-term foreign currency monetary
items for acquisition of Fixed Assets, are recognized in the Statement
of Profit and Loss in the period in which the exchange rates change.
Any profit or loss arising on cancellation or renewal of such forward
exchange contract is also recognized as income or as expense for the
period. Any gain/ loss arising on forward contracts which are long-term
foreign currency monetary items is recognized in accordance with
paragraphs (iii)(l) and (iii)(2) above.
I Retirement and other employee benefits
(i) Defined contribution plans
Retirement benefit in the form of provident fund, superannuation fund
and pension fund are defined contribution schemes. The Company has no
obligation, other than the contributions payable to the provident fund,
pension fund and superannuation fund. The Company recognizes
contribution payable to the provident fund, pension fund and
superannuation fund schemes as an expenditure, when an employee renders
the related service. If the contribution payable to the scheme for
service received before the balance sheet date exceeds the contribution
already paid, the deficit payable to the scheme is recognised as a
liability after deducting the contribution already paid. If the
contribution already paid exceeds the contribution due for services
received before the balance sheet date, then excess is recognised as an
asset to the extent that the pre payment will lead to, for example, a
reduction in future payment or a cash refund.
(ii) Defined benefit plan
Gratuity liability is a defined benefit obligation and is provided on
the basis of actuarial valuation, based on projected unit credit method
at the balance sheet date, carried out by an independent actuary.
Actuarial gains and losses comprise experience adjustments and the
effect of changes in the actuarial assumptions and are recognised in
full in the period in which they occur in the statement of profit and
loss as an income or expense.
(iii) Other long term employee benefits
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
year end. Actuarial gains/ losses are immediately taken to the
statement of profit and loss and are not deferred. The Company
presents the entire leave as a current liability in the balance sheet,
since it does not have an unconditional right to defer its settlement
for twelve months after the reporting date.
(iv) Short term employee benefits
Accumulated leave, which is expected to be utilised within the next
twelve months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
m Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or 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 potential dilutive equity shares.
n Income taxes
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income tax Act, 1961 (the ''''IT Act'''') enacted in
India. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognised directly in equity is
recognised in equity and not in the statement of profit and loss.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date. Deferred income tax
relating to items recognised directly in equity is recognised in equity
and not in the statement of profit and loss.
Deferred tax liabilities are recognised for all taxable timing
differences. Deferred tax assets are recognised for deductible timing
differences 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. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable
At each reporting date, the Company re-assesses unrecognised deferred
tax assets. It recognises unrecognised deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum Alternate Tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognises MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the Company recognises MAT
credit as an asset in accordance with the Guidance Note on Accounting
for credit available in respect of MAT under the IT Act, the said asset
is created by way of credit to the statement of profit and loss and
shown as "MAT credit entitlement." The Company reviews the "MAT credit
entitlement" asset at each reporting date and writes down the asset to
the extent the Company does not have convincing evidence that it will
pay normal tax during the specified period.
o Segment reporting
Identification of segments
The Company''''s operating businesses are organised and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statement of the Company as a whole.
p Shares/ debentures issue expenses and premium on redemption
Shares issue expenses incurred are adjusted in the year of issue and
debenture issue expenses and redemption premium payable on debentures
are adjusted over the term of debentures to the securities premium
account, net of taxes, as permitted/prescribed under Section 78 of the
Companies Act, 1956/Section 52 of the Companies Act, 2013 to the extent
of balance available in premium account.
A provision is recognised when the Company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting date and
adjusted to reflect the current best estimates.
Where the Company expects some or all of a provision to be reimbursed,
for example under an insurance contract, the reimbursement is
recognised as a separate asset but only when the reimbursement is
virtually certain. The expense relating to any provision is presented
in the statement of profit and loss net of any reimbursement.
r Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognised
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognised because it cannot be measured reliably. The Company does not
recognise a contingent liability but discloses its existence in the
s Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and cash/ cheques/ drafts on hand and short-term
investments with an original maturity of three months or less.
t Corporate Social Responsibility (''''CSR'''') expenditure
The Company charges its CSR expenditure during the year to the
statement of profit and loss.