Accounting Policies of K&R Rail Engineering Ltd. Company

Mar 31, 2023

Significant accounting policies

³.¹ Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company
and the amount can be reliably measured.

• Revenue is measured at the fair value of consideration received or receivable taking into account the
amount of discounts, volume rebates and GST are recognised when all significant risks and rewards of
ownership of the goods sold are transferred.

• The recognition of revenue and expenses by reference to the stage of complete of a contract is referred to
as the percentage of completion method. Under this method, contract revenue is matched with the contract
costs incurred in reaching the stage of completion, resulting in the reporting of revenue, expenses and
profit which can be attributed to the proportion of work completed at the reporting date as per the IAS and
Income Disclosure Standards.

• Interest income is accrued on, time basis, by reference to the principal outstanding and at the effective
interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset’s net carrying amount on initial recognition.

³.² Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
and rewards of ownership to the lessee. All other leases are classified as operating leases.
Leases under which the Company assumes substantially all the risks and rewards of ownership are
classified as finance leases. Such assets are capitalized at fair value of the asset or present value of the
minimum lease payments at the inception of the lease, whichever is lower. Assets held under leases that do
not transfer substantially all the risks and reward of ownership are not recognized in the balance sheet.

Lease payments under operating lease are generally recognised as an expense in the statement of profit and
loss on a straight-line basis over the term of lease unless such payments are structured to increase in line
with the expected general inflation to compensate for the lessor’s expected inflationary cost increases.
Further, at the inception of above arrangement, the Company determines whether the above arrangement is
or contains a lease. At inception or on reassessment of an arrangement that contains a lease, the Company
separates a payments and other consideration required by the arrangement into those for the lease and
those for other elements on the basis of their relative fair values.

If the Company concludes for a finance lease that it is impracticable to separate the payments reliably, then
an asset and a liability are recognised at an amount equal to the fair value of the underlying asset;
subsequently, the liability is reduced as payments are made and an imputed finance cost on the liability is
recognised using the Company’s incremental borrowing rate.

Minimum lease payments made under finance leases are apportioned between the finance charge and the
reduction of the outstanding liability. The finance charge is allocated to each period during the lease term
so as to produce a constant periodic rate of interest on the remaining balance of the liability.

³.³ Foreign currencies

In preparing the financial statements of the Company, transactions in currencies other than the company’s
functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of
the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical
cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognised in
profit or loss in the period in which they arise.

3.⁴ Borrowing costs

Specific borrowing costs that are attributable to the acquisition, construction or production of a qualifying
asset are capitalized as part of the cost of such asset till such time the asset is ready for its intended use and
borrowing costs are being incurred. A qualifying asset is an asset that necessarily takes a substantial period
of time to get ready for its intended use. All other borrowing costs are recognised as an expense in the
period in which they are incurred.

Borrowing cost includes interest expense, amortization of discounts, ancillary costs incurred in connection
with borrowing of funds and exchange difference arising from foreign currency borrowings to the extent
they are regarded as an adjustment to the Interest cost.

³.⁵ Taxation

Income tax expense consists of current and deferred tax. Income tax expense is recognized in the income
statement except to the extent that it relates to items recognized directly in equity, in which case it is
recognized in equity.

Current tax

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax

Deferred tax is recognized using the balance sheet method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial
recognition of assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit; differences relating to investments in subsidiaries and jointly controlled
entities to the extent that it is probable that they will not reverse in the foreseeable future; and taxable
temporary differences arising upon the initial recognition of goodwill. Deferred tax is measured at the tax
rates that are expected to be applied to the temporary differences when they reverse, based on the laws that
have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are
offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to
income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but
they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be
realized simultaneously.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be
available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be
realized.

3.⁶ Earnings per share

The Company presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. The basic
earnings per share is computed by dividing the net profit attributable to equity shareholders for the period
by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed by dividing the net profit attributable to equity shareholders for the
year relating to the dilutive potential equity shares, by the weighted average number of equity shares
considered for deriving basic earnings per share and the weighted average number of equity shares which
could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are
deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share.

³.⁷ Property, plant and equipment

The initial cost of PPE comprises its purchase price, including import duties and non-refundable purchase
taxes, and any directly attributable costs of bringing an asset to working condition and location for its
intended use, including relevant borrowing costs and any expected costs of decommissioning, less
accumulated depreciation and accumulated impairment losses, if any.

Expenditure incurred after the PPE have been put into operation, such as repairs and maintenance, are
charged to the Statement of Profit and Loss in the period in which the costs are incurred.
If significant parts of an item of PPE have different useful lives, then they are accounted for as separate
items (major components) of PPE.

Material items such as spare parts, stand-by equipment and service equipment are classified as PPE when
they meet the definition of PPE as specified in Ind AS 16 - Property, Plant and Equipment.

3.8 Expenditure during construction
period

Expenditure during construction period (including financing cost related to borrowed funds for
construction or acquisition of qualifying PPE) is included under Capital Work-in-Progress, and the same is
allocated to the respective PPE on the completion of their construction. Advances given towards
acquisition or construction of PPE outstanding at each reporting date are disclosed as Capital Advances
under “Other non-current Assets”.

Depreciation is the systematic allocation of the depreciable amount of PPE over its useful life and is
provided on a Straight Line basis over the useful lives as prescribed in Schedule II to the Act or as per
technical assessment.

Depreciable amount for PPE is the cost of PPE less its estimated residual value. The useful life of PPE is
the period over which PPE is expected to be available for use by the Company, or the number of
production or similar units expected to be obtained from the asset by the Company

The Company has componentised its PPE and has separately assessed the life of major components. In
case of certain classes of PPE, the Company uses different useful lives than those prescribed in Schedule II
to the Act. The useful lives have been assessed based on technical advice, taking into account the nature of
the PPE and the estimated usage of the asset on the basis of management’s best estimation of obtaining
economic benefits from those classes of assets.

Depreciation on additions is provided on a pro-rata basis from the month of installation or acquisition and
in case of Projects from the date of commencement of commercial production. Depreciation on
deductions/disposals is provided on a pro-rata basis up to the date of deduction/disposal.

³.¹⁰ Intangible assets and amortisation

Intangible assets are stated at cost less accumulated amortization and impairment. Intangible assets are
amortized over their respective estimated useful lives on a straight-line basis, from the date that they are
available for use.

Amortization

The estimated useful life of an identifiable intangible asset is based on a number of factors including the
effects of obsolescence, demand, competition and other economic factors (such as the stability of the
industry and known technological advances) and the level of maintenance expenditures required to obtain
the expected future cash flows from the asset.

3.11 Cash and cash
equivalents

Cash and cash equivalents in the Balance Sheet comprise cash at bank and in hand and short-term deposits
with banks that are readily convertible into cash which are subject to insignificant risk of changes in value
and are held for the purpose of meeting short-term cash commitments.

³.¹² Cash flow statement

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects
of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or
payments. The cash flows from operating, investing and financing activities of the Company are
segregated. Bank overdrafts are classified as part of cash and cash equivalent, as they form an integral part
of an entity’s cash management.

³.¹³ Government grants

Government grants are recognised where there is reasonable assurance that the grant will be received and
all attached conditions will be complied with.

Where the Company receives non-monetary grants, the asset and the grant are accounted at fair value and
recognised in the statement of profit and loss ove r the expected useful life of the asset.

³.¹⁴ Impairment of non financial assets

The carrying amounts of the Company’s non-financial assets, 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.

The recoverable amount of an asset or cash-generating unit (as defined below) is the greater of its value in
use and its fair value less costs to sell. 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 or the cash-generating unit. For the purpose of
impairment testing, assets are grouped together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows of other assets or groups of
assets (the “cash-generating unit”).

An impairment loss is recognized in the income statement if the estimated recoverable amount of an asset
or its cash-generating unit is lower than its carrying amount. Impairment losses recognized in prior periods
are assessed at each reporting date for any indications 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. An impairment loss is reversed 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 amortization, if no
impairment loss had been recognized. Goodwill that forms part of the carrying amount of an investment in
an associate is not recognized separately, and therefore is not tested for impairment separately. Instead, the
entire amount of the investment in an associate is tested for impairment as a single asset when there is
objective evidence that the investment in an associate may be impaired.

An impairment loss in respect of equity accounted investee is measured by comparing the recoverable
amount of investment with its carrying amount. An impairment loss is recognized in the income statement,
and reversed if there has been a favorable change in the estimates used to determine the recoverable
amount.

Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized 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.
Defined contribution plans

The Company’s contributions to defined contribution plans are charged to the income statement as and
when the services are received from the employees.

Defined benefit plans

The liability in respect of defined benefit plans and other post-employment benefits is calculated using the
projected unit credit method consistent with the advice of qualified actuaries. The present value of the
defined benefit obligation is determined by discounting the estimated future cash outflows using interest
rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be
paid, and that have terms to maturity approximating to the terms of the related defined benefit obligation.
In countries where there is no deep market in such bonds, the market rates on government bonds are used.
The current service cost of the defined benefit plan, recognized in the income statement in employee
benefit expense, reflects the increase in the defined benefit obligation resulting from employee service in
the current year, benefit changes, curtailments and settlements. Past service costs are recognized
immediately in income. The net interest cost is calculated by applying the discount rate to the net balance
of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit
expense in the income statement. Actuarial gains and losses arising from experience adjustments and
changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the
period in which they arise.

Termination benefits

Termination benefits are recognized as an expense when the Company is demonstrably committed, without
realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the
normal retirement date, or to provide termination benefits as a result of an offer made to encourage
voluntary redundancy.

Termination benefits for voluntary redundancies are recognized as an expense if the Company has made
an offer encouraging voluntary redundancy, it is probable that the offer will be accepted, and the number
of acceptances can be estimated reliably.

Other long-term employee benefits

The Company’s net obligation in respect of other long term employee benefits is the amount of future
benefit that employees have earned in return for their service in the current and previous periods. That
benefit is discounted to determine its present value. Re-measurements are recognized in the statement of
profit and loss in the period in which they arise.

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Mar 31, 2014

Accounting Policies:

a) The financial statements have been prepared to comply in all material respects with the accounting standards notified by Companies (Accounting Standard) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956 The accounts of the Company are prepared under the Historical Cost Convention and in accordance with applicable accounting Standards except otherwise Stated Though the accumulated losses of the Company are in excess of the Paid up Capital, the Company does not have intention to suspend the operational activities. Therefore, the accounts are being prepared on 'going concern basis' and Accounting Standards of Materiality and Prudence has been taken into consideration in preparing the accounts.

b) Inventory Valuation:

i Raw Materials, Consumable, Stores & Spares at cost price

ii Finished Goods at cost of production or at realizable value by applying accepted cost methods.

c) Fixed Assets:

Fixed Assets are valued at cost less accumulated depreciation. The cost of the asset comprises its purchase price and any directly attributable cost of bringing the assets into working condition for its intended use

d) Depreciation:

Depreciation on fixed assets is being provided on the fixed assets on straight line method at the rates prescribed under schedule XIV of the Companies Act, 1956 In view of NIL depreciable Assets as on 31.03.2014 no depreciation for the period stood provided.

e) Revenue Recognition;

The revenue is recognized to the extent it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

f) Retirements and other Employee Benefits :

The company does not have any employee / staff during the year.

g) Earning Per Share

Basic earning per share has been calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For calculating the diluted earning per share the net profit or loss for the period attributable to equity shareholders and the weighted average number of equity share outstanding during the year are adjusted to the effect of all dilutive potential equity shares

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Mar 31, 2013

A) The financial statements have been prepared to comply in all material respects with the accounting standards notified by Companies (Accounting Standard) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The accounts of the Company are prepared under the Historical Cost Convention and in accordance with applicable accounting Standards except otherwise Stated. Though the accumulated losses of the Company are in excess of the Paid up Capital, the Company does not have intention to suspend the operational activities. Therefore, the accounts are being prepared on ''going concern

I basis'' and Accounting Standards of Materiality and Prudence has been | taken into consideration in preparing the accounts,

b) Inventory Valuation

i Raw Materials, Consumable, Stores & Spares at cost price '' ii Finished Goods at cost of production or at realizable value by applying accepted cost methods.

c) Fixed Assets:

Fixed Assets are valued at cost less accumulated depreciation. The cost of the asset comprises its purchase price and any directly attributable cost of bringing the assets into working condition for its intended use

d) Depreciation:

I Depreciation on fixed assets is being provided on the fixed assets on i straight line method at the rates prescribed under schedule XIV of the | Companies Act, 1956. In view of NIL depreciable Assets as on 31.03.2013 no depreciation for the period stood provided.

e) Revenue Recognition:

The revenue is recognized to the extent it is probable that the economic '' benefits will flow to the company and the revenue can be reliably | measured.

f) Retirements and other Employee Benefits :

The company does not have any employee / staff during the year.

g) Earning Per Share

Basic earning per share has been calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted

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Mar 31, 2009

A) The accounts of the Company are prepared under the Historical Cost Convention and in accordance with applicable accounting Standards except otherwise - Stated. Though the accumulated losses of the Company are in excess of the Paid up Capital, the Company does not have intention to suspend the operational activities. Therefore, the accounts are being prepared on going concern basis and Accounting Standards of Materiality and Prudence has been taken into consideration in preparing the accounts.

b) Inventory Valuation:

i Raw Materials, Consumable, Stores & Spares at cost price.

ii Finished Goods at cost of production or at realizable value by applying accepted cost methods.

c) Fixed Assets:

Fixed Assets are valued at cost less accumulated depreciation. The cost of the asset comprises its purchase price and any directly attributable cost of bringing the assets into working condition for its intended use

d) Depreciation:

Depreciation on fixed assets is being provided on the fixed assets on straight line method at the rates prescribed under schedule XIV of the Companies Act, 4956. In view of NIL depreciable Assets as on 31.03.2007, no depreciation for the period stood provided.

e) Gratuity:

Gratuity is accounted for on payment basis. The company does not have any staff during the year.

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Mar 31, 2008

A) The accounts of the Company are prepared under the Historical Cost Convention and in accordance with applicable accounting Standards except otherwise Stated. Though the accumulated losses of the Company are in excess of the Paid up Capital, the Company does not have intention to suspend the operational activities. Therefore, the accounts are being prepared on going concern basis and Accounting Standards of Materiality and Prudence has been taken into consideration in preparing the accounts.

b) Inventory Valuation:

i Raw Materials, Consumable, Stores & Spares at cost price.

ii Finished Goods at cost of production or at realizable value by applying accepted cost methods.

c) Fixed Assets:

Fixed Assets are valued at cost less accumulated depreciation. The cost of the asset comprises its purchase price and any directly attributable cost of bringing the assets into working condition for its intended use

d) Depreciation:

Depreciation on fixed assets is being provided on the fixed assets on straight line method at the rates prescribed under schedule XIV of the Companies Act, 1956. In view of NIL depreciable Assets as on 31.03.2007, no depreciation for the period stood provided.

e) Gratuity:

Gratuity is accounted for on payment basis. The company does not have any staff during the year.