Mar 31, 2023
Company Overview
VRL Logistics Limited (the âCompanyâ) having CIN L60210KA1983PLC005247 was incorporated under the Companies Act, 1956, on March 31, 1983. The Company is engaged in logistics services dealing mainly in domestic transportation of goods. Other businesses include bus operations, transport of passengers by air, sale of power and sale of certified emission reductions (CER) units generated from operation of windmills.
The Company has, during the year, executed a Business Transfer Agreement for the sale / transfer of its Wind Power Business and Bus Operations Business as a going concern on a slump sale basis w.e.f. 31 July 2022 for Wind Power Business and 31 December 2022 for Bus Operations Business.
The operations of the Company are spread all over the country through various branches and transshipment hubs. The Company has its registered office in Hubballi, Karnataka.
a) Basis for preparation of financial Statements
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the âInd ASâ), as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (âActâ) read with the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and other relevant provisions of the Act.
The financial statements have been prepared on a historical cost convention and accrual basis, except for certain financial assets and liabilities measured at fair value and plan assets towards defined benefit plans, which are measured at fair value.
The financial statements have been prepared on a going concern basis and the accounting policies are applied consistently to all the periods presented in financial statement.
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle (twelve months) and other criteria set out in the Division II of Schedule III to the Act.
b) Functional and presentation currency
The financial statements are presented in currency INR, which is the functional and presentation currency of the Company.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.
d) Significant management judgements in applying accounting policies and estimation uncertainty
The estimates and judgements used in the preparation of the financial statements are continuously evaluated by the Company and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances that occurred after that date but provide additional evidence about conditions existing as at the reporting date. Actual results may differ from these estimates. Continuous evaluation is done on the estimation and judgments based on historical experience and other factors, including expectations of future events that are believed to be reasonable. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods of the revision if it affects both current and future periods.
Information about critical judgments in applying accounting policies, as well as estimates and assumptions that have the most significant effect to the carrying amounts of assets and liabilities within the next financial year, are as follows:
i) Impairment of non-financial assets
In assessing impairment, Management estimates the recoverable amount of each asset or cash-generating unit based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.
ii) Depreciation and useful lives of property, plant and equipment
Property, plant and equipment are depreciated over the estimated useful lives of the assets, after taking into account their estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation to be recorded during any reporting period. The useful lives and residual values are based on the Companyâs historical experience with similar assets and take into account anticipated technological changes. The depreciation for future periods is adjusted if there are significant changes from previous estimates.
iii) Recoverability of trade receivables
Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. Since the cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.
v) Contingent Liabilities
Management has estimated the possible outflow of resources at the end of each annual reporting financial year, if any, in respect of contingencies / litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
vi) Defined benefit obligation (âDBOâ)
Managementâs estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument.
Management bases its assumptions on observable data as far as possible, but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an armâs length transaction at the reporting date.
viii) Leases - Estimating the incremental borrowing rate
The Company cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Company would have
to pay to borrow over a similar term, and with a similar security, the fund necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.
e) Recent Regulatory Pronouncements
Ministry of Corporate Affairs (âMCAâ) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 31 March 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:
i) Ind AS 1 - Presentation of Financial Statements
This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after 01 April 2023.
ii) Ind AS8 - Accounting Policies, Changes in Accounting Estimates and Errors
This amendment has introduced a definition of âaccounting estimatesâ and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after 01 April 2023.
This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after 01 April 2023.
Based on the preliminary assessment, the Company does not expect the above amendments to have any significant impact in its financial statements.
1. Significant Accounting Policiesa) Property, plant and equipment (including Capital work-in-progress)
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation and impairment, if any. Historical cost of items of property, plant and equipment includes expenditure that is directly attributable to the acquisition and installation, borrowing costs during the construction period and excludes any duties / taxes recoverable.
Subsequent cost is included in the assetâs carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of such item can be measured reliably.
If significant parts of an item of property, plant and equipment have different useful lives then they are accounted for as separate components of property, plant and equipment. The Company has recognised major inspection costs relating to aircraft engine and airframe overhauls and other major maintenance expenditure as separate components for aircrafts.
The carrying amount of any component accounted for as a separate asset is de-recognised when replaced or disposed. All other repairs and maintenance expenses are charged to Statement of Profit and Loss during the reporting period in which they are incurred.
An item of property plant and equipment is derecognized on disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising on retirement or disposal of items of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is de-recognized.
Advances paid towards the acquisition of property, plant and equipment outstanding at each reporting date are classified as Capital Advances under Other Non-Current Assets. Assets acquired but not ready for use are classified under Capital Work in Progress and are stated at cost comprising of direct costs and related incidental expenses.
b) Investment Property
Investment property is the property that is not occupied by the Company and which is held to earn rentals or for capital appreciation, or both. Upon initial recognition, an investment property is measured at cost, including directly attributable overheads, if any. Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation and accumulated impairment loss, if any.
Any gain or loss on disposal of an investment property is recognised in Statement of Profit and Loss, unless any other standard specifically requires otherwise.
Company depreciates the investment property using the straight-line method over the useful lives of assets as prescribed under Part C of Schedule II of the Act
Though, the Company measures investment property using cost - based measurement, the fair value of investment property is disclosed in Notes.
The fair value is determined by an independent valuer who holds a recognised and relevant professional qualification and has recent experience in the location and category of the investment property being valued.
Investment properties are de-recognised either when they have been disposed off or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the Statement of Profit and Loss in the period of de-recognition.
c) Intangible assets
Intangible assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any. Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised as income or expense in the Statement of Profit and Loss.
d) Depreciation/Amortisation
i. Depreciation is provided under the straight line method over the useful lives of assets as prescribed under Part C of Schedule II of the Act except on Vehicles and Wind Turbine Generators (part of Plant and equipment).
Vehicles and Wind Turbine Generators are depreciated over a period of nine years and nineteen years respectively, based on internal assessment and independent technical evaluation carried out by external valuer; the Management believes that the useful life, as mentioned, represents the period over which Management expects to use these assets. Therefore, the useful life adopted for these assets are different from the useful life as prescribed under Part C of Schedule II of the Act.
Major inspection costs relating to engine and airframe overhauls and other heavy maintenance expenditure are identified as separate components for aircrafts and are depreciated over the expected life between major overhauls and remaining useful life of the aircraft, whichever is lower.
ii. Cost of leasehold improvements is amortized over the period of the lease or its useful life, whichever is lower.
iii. Computer Software is amortized over a period of five years.
An assetâs carrying amount is written down to its recoverable amount immediately, if the assetâs carrying amount is greater than its estimated recoverable amount.
The residual value of an asset is not more than 5% of the original cost of that asset. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
e) Measurement and recognition of leases
The Company considers whether contract is, or contains a lease. A lease is defined as âa contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for considerationâ.
To apply this definition, the Company assesses whether the contract meets three key evaluations which are whether:
i. the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Company.
ii. the Company has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract.
iii. the Company has the right to direct the use of the identified asset throughout the period of use. The Company assesses whether it has the right to direct âhow and for what purposeâ the asset is used throughout the period of use.
At lease commencement date, the Company recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Company and any lease payments made in advance of the lease commencement date.
The Company depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Company also assesses the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Company measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Companyâs incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance, fixed), and payments arising from options reasonably certain to be exercised. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest expenses. It is remeasured to reflect any reassessment or modification.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset or Statement of Profit and Loss, as the case may be.
The Company has elected to account for short-term leases and leases of low-value assets using the exemption given under Ind AS 116, Leases. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term or on another systematic basis if that basis is more representative of the pattern of the Companyâs benefit.
f) Impairment of non-financial assets
At the end of each reporting period, the Company assesses whether there is any indication that a nonfinancial asset may be impaired. If any such indication exists, the recoverable amounts are estimated in order to determine the extent of the impairment loss (if any). An impairment loss is recognised whenever the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount. The impairment loss, if any, is recognised in the Statement of Profit and Loss in the period in which impairment takes place.
Recoverable amount is higher of an assetâs or cash generating unitâs net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.
g) Foreign currency transactionsForeign currency transactions and balances
i. Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the date of the transaction.
ii. Monetary assets and liabilities denominated in foreign currencies at the year-end are restated at the rate of exchange prevailing on the date of the Balance Sheet.
iii. Any exchange difference on account of settlement of foreign currency transactions and restatement of monetary assets and liabilities denominated in foreign currency is recognized in the Statement of Profit and Loss.
iv. Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.
A financial instrument is any contract that gives rise to a financial asset in one entity and a financial liability or equity instrument in another entity.
Financial AssetsInitial recognition
In the case of financial assets, not recorded at fair value through profit or loss (FVTPL), financial assets are recognised initially at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in following categories:
i. Financial Assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model with an objective 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. Interest income from these financial assets is included in finance income using the effective interest rate ("EIR") method. Impairment gains or losses arising on these assets are recognised in the Statement of Profit and Loss.
ii. Financial Assets measured at fair value
Financial assets are measured at fair value through other comprehensive income (FVOCI) if these financial assets are held within a business model with an objective to hold these assets in order to collect contractual cash flows or to sell these 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. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in the Statement of Profit and Loss.
Financial assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss.
Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies the expected credit loss ("ECL") model for measurement and recognition of impairment loss on financial assets and credit risk exposures.
The Company follows âsimplified approachâ for recognition of impairment loss allowance on trade receivables. Simplified approach does not require the Company to track changes in credit risk.
Rather, it recognises impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines 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 risk has 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.
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. 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 impairment loss allowance (or reversal) recognised during the period is recorded as expense/ income in the Statement of Profit and Loss.
De-recognition of Financial Assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the financial asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the assets and an associated liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
All equity investments in the scope of Ind AS 109, Financial Instruments, are measured at fair value. For equity instruments, the Company may make an irrevocable selection to present the subsequent fair value changes in Other Comprehensive Income (OCI). The Company makes such election on an instrument-byinstrument basis. The classification is made on initial recognition and is irrevocable.
There is no recycling of the amounts from OCI to profit or loss, even on sale of investment.
Equity instruments included within the FVTPL (fair value through profit and loss) category are measured at fair value with all changes in fair value recognized in the profit or loss.
Financial LiabilitiesInitial Recognition
Financial liabilities are classified, at initial recognition, as financial liabilities at FVTPL, loans and borrowings and payables as appropriate. 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.
Subsequent measurementFinancial liabilities at FVPL
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are 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. Amortisation is recognised as finance income in the Statement of Profit and Loss.
Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the Statement of Profit and Loss.
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.
Where the terms of a financial liability are re-negotiated and the Company issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in the Statement of Profit and Loss; measured as a difference between the carrying amount of the financial liability and the fair value of equity instrument issued.
De-recognition of Financial Liabilities
Financial liabilities are de-recognised when the obligation specified in the contract is discharged, cancelled or expired. 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 de-recognition of the original liability and recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the 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. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business.
The Company measures financial assets and financial liability at fair value at each balance sheet date.
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:
- In the principal market for the asset or liability, or
- 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 participantâs 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 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 financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-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.
The Companyâs Valuation team determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement.
Consumables, stores and spares are valued at lower of cost and net realisable value; cost is computed on first-in-first out basis. The cost of inventories comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Stores and spares which do not meet the definition of property, plant and equipment are accounted as inventories. Obsolete, defective, unserviceable and slow/nonmoving stocks are duly provided for. Net realisable value is estimated selling price in ordinary course of business less the estimated cost necessary to make the sale.
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments maturing within 90 days from the date of acquisition. Cash and cash equivalents are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.
Revenue is recognized on satisfaction of performance obligation upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.
Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable excluding taxes or duties collected on behalf of the government and reduced by any rebates and trade discount allowed.
Contract assets includes costs incurred to fulfill a contract with a customer. Where the amount of consideration received from a customer exceeds the amount of revenue recognized, this gives rise to a contract liability.
The specific recognition criteria described below must also be met before income is recognised.
i. Revenue from Goods transport and Courier service is recognised as and when goods and documents are delivered.
ii. Revenue from Bus operations and Transport of passengers by air is recognised as and when transportation is provided.
iii. Revenue from sale of power is recognised upon deposit of units of generated power at the grid of the purchasing electricity company.
iv. Revenue from sale of eligible carbon credit units such as Verified / Certified Emission Reductions units (VERs)/ (CERs) is recognised on completion of the validation process for units generated and entering of a definitive binding agreement for the sale of such units.
v. Revenue from hotel operations is recognized upon rendering of service.
vi. Interest income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
vii. Dividend income is recognised when the right to receive the dividend is established.
viii. Rent income is recognised on a straight-line basis over the period of the lease.
ix. Advertisement income is recognised when the related advertisement or commercial appears before the public.
m) Employee benefits Short term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employeesâ services upto the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
The Company''s contribution to Provident Fund and Employees State Insurance Scheme is determined based on a fixed percentage of the eligible employees'' salary and charged to the Statement of Profit and Loss on accrual basis. The Company has categorised its Provident Fund, labour welfare fund and the Employees State Insurance Scheme as a defined contribution plan since it has no further obligations beyond these contributions.
The Companyâs liability towards gratuity, being a defined benefit plan is accounted for on the basis of an independent actuarial valuation based on Projected Unit Credit Method. The liability or asset recognised in the balance sheet is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. Gratuity liability is funded by payments to the trust established for the purpose.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on the government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. Service cost and the net interest cost is included in employee benefit expense in the Statement of Profit and Loss. Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognised immediately in âother comprehensive incomeâ as income or expense.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in the Statement of Profit and Loss as past service cost.
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. Accumulated compensated absences which are expected to be availed or encashed subsequent to 12 months are treated as long term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end. The Companyâs liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Remeasurement as a result of experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss.
General and specific borrowing costs directly attributable to the acquisition/ construction of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets, until such time the assets are substantially ready for their intended use. All other borrowing costs are recognised as an expense in Statement of Profit and Loss in the period in which they are incurred.
Investment 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.
o) Borrowings and other financial liabilities
Borrowings and other financial liabilities are initially recognised at fair value (net of transaction costs incurred). Difference between the fair value and the transaction proceeds on initial recognition is recognised as an asset / liability based on the underlying reason for the difference.
Subsequently all financial liabilities are measured at amortised cost using the effective interest rate method
Borrowings are eliminated from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. The gain / loss is recognised in other equity in case of transactions with shareholders.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.
A receivable is classified as a âtrade receivableâ if it is in respect of the amount due on account of services rendered or sale of goods in the normal course of business. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the EIR method, less provision for impairment.
A payable is classified as a âtrade payableâ if it is in respect of the amount due on account of goods purchased or services received in the normal course of business. These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. These amounts are unsecured and are usually settled as per the payment terms stated in the contract. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the EIR method.
The income tax expense or credit for the period is the tax payable on the current periodâs taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
i. Current income tax liabilities and/or assets comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date.
ii. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to the applicable tax regulations which may be subject to interpretation and creates provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities.
iii. Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
iv. Deferred tax assets are recognised to the extent it is probable that the underlying tax loss or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Companyâs forecast of future operations results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit.
Deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit.
v. Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss, except where they relate to items that are recognised in other comprehensive income or directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or equity, respectively.
vi. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
s) Provisions, Contingent liabilities and Contingent Assets
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a 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 measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows specific to the liability. The unwinding of the discount is recognised as finance cost.
Contingent liabilities are disclosed in respect of possible obligations that arise from past events, whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. Such liabilities are disclosed by way of notes to the financial statements. No disclosure is made if the possibility of an outflow on this account is remote.
A contingent asset is not recognised but disclosed in the financial statements where an inflow of economic benefit is probable.
Provisions, contingent liabilities and contingent assets and commitments are reviewed at each balance sheet date.
t) 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 during the year.
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 after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
- the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
Mar 31, 2022
Company Overview
VRL Logistics Limited (the âCompanyâ) having CIN L60210KA1983PLC005247 was incorporated under the Companies Act, 1956, on 31 March, 1983. The Company is engaged in logistics services dealing mainly in domestic transportation of goods. Other businesses include bus operations, transport of passengers by air, sale of power and sale of certified emission reductions (CER) units generated from operation of windmills. The operations of the Company are spread all over the country through various branches and transshipment hubs. The Company has its registered office in Hubballi, Karnataka.
a) Basis for preparation of financial Statements
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the âInd ASâ), as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (âActâ) read with the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and other relevant provisions of the Act.
The financial statements have been prepared on a historical cost convention and accrual basis, except for certain financial assets and liabilities measured at fair value and plan assets towards defined benefit plans, which are measured at fair value.
The financial statements have been prepared on a going concern basis and the accounting policies are applied consistently to all the periods presented in financial statement.
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle (twelve months) and other criteria set out in the Division II of Schedule III to the Act.
b) Functional and presentation currency
The financial statements are presented in currency INR, which is the functional and presentation currency of the Company.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.
d) Significant management judgements in applying accounting policies and estimation uncertainty
The estimates and judgements used in the preparation of the financial statements are continuously evaluated by the Company and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances that occurred after that date but provide additional evidence about conditions existing as at the reporting date. Actual results may differ from these estimates. Continuous evaluation is done on the estimation and judgments based on historical experience and other factors, including expectations of future events that are believed to be reasonable. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods of the revision if it affects both current and future periods.
Information about critical judgments in applying accounting policies, as well as estimates and assumptions that have the most significant effect to the carrying amounts of assets and liabilities within the next financial year, are as follows:
i) Impairment of non-financial assets
In assessing impairment, management estimates the recoverable amount of each asset or cash-generating unit based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.
ii) Depreciation and useful lives of property, plant and equipment
Property, plant and equipment are depreciated over the estimated useful lives of the assets, after taking into account their estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation to be recorded during any reporting period. The useful lives and residual values are based on the Companyâs historical experience with similar assets and take into account anticipated technological changes. The depreciation for future periods is adjusted if there are significant changes from previous estimates.
iii) Recoverability of trade receivables
Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. Since the cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.
v) Contingent Liabilities
Management has estimated the possible outflow of resources at the end of each annual reporting financial year, if any, in respect of contingencies / litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
vi) Defined benefit obligation (âDBOâ)
Managementâs estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument.
Management bases its assumptions on observable data as far as possible, but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an armâs length transaction at the reporting date.
viii) Leases - Estimating the incremental borrowing rate
The Company cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the fund necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.
e) Recent Regulatory Pronouncements
i) Amendments to Schedule III of the Companies Act, 2013:
On March 24, 2021, the Ministry of Corporate Affairs ("MCA") through a notification, amended Schedule III of the Companies Act, 2013. The amendments revise Division I, II and III of Schedule III and are applicable from April 1,2021. Key amendments relating to Division II which relate to companies whose financial statements are required to comply with Companies (Indian Accounting Standards) Rules 2015 are:
⢠Lease liabilities should be separately disclosed under the head âFinancial Liabilitiesâ, duly distinguished as current or non-current.
⢠Certain additional disclosures in the Statement of Changes in Equity such as changes in equity share capital due to prior period errors and restated balances at the beginning of the current reporting period.
⢠Specified format for disclosure of shareholding of promoters.
⢠Specified format for ageing schedule of trade receivables, trade payables, capital work-in-progress and intangible asset under development.
⢠If a Company has not used funds for the specific purpose for which it was borrowed from banks and financial institutions, then disclosure of details of where it has been used.
⢠Specific disclosure under âadditional regulatory requirementâ such as compliance with approved schemes of arrangements, compliance with number of layers of companies, ratios, title deeds of immovable property not held in name of company, loans and advances to promoters, directors, key managerial personnel (KMP) and related parties, details of benami property held etc.
- Additional disclosures relating to Corporate Social Responsibility (CSR), undisclosed income and crypto or virtual currency specified under the head âadditional informationâ in the notes forming part of the standalone financial statements.
The Company will evaluate the amendments and its applicability to the Company and give effect to them as required by law.
ii) Code of Social Security, 2020
The Code on Social Security, 2020 (âCodeâ) relating to employee benefits during employment and postemployment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period when the Code becomes effective.
1. Significant Accounting Policiesa) Property, plant and equipment (including Capital work-in-progress)
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation and impairment, if any. Historical cost of items of property, plant and equipment includes expenditure that is directly attributable to the acquisition and installation, borrowing costs during the construction period and excludes any duties / taxes recoverable.
Subsequent cost is included in the assetâs carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of such item can be measured reliably.
If significant parts of an item of property, plant and equipment have different useful lives then they are accounted for as separate components of property, plant and equipment. The Company has recognised major inspection costs relating to aircraft engine and airframe overhauls and other major maintenance expenditure as separate components for aircrafts.
The carrying amount of any component accounted for as a separate asset is de-recognised when replaced or disposed. All other repairs and maintenance expenses are charged to Statement of Profit and Loss during the reporting period in which they are incurred.
An item of property plant and equipment is derecognized on disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising on retirement or disposal of items of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is de-recognized.
Advances paid towards the acquisition of property, plant and equipment outstanding at each reporting date are classified as Capital Advances under Other Non- Current Assets. Assets acquired but not ready for use are classified under Capital Work in Progress and are stated at cost comprising of direct costs and related incidental expenses.
Investment property is the property that is not occupied by the Company and which is held to earn rentals or for capital appreciation, or both. Upon initial recognition, an investment property is measured at cost, including directly attributable overheads, if any. Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation and accumulated impairment loss, if any.
Any gain or loss on disposal of an investment property is recognised in Statement of Profit and Loss, unless any other standard specifically requires otherwise.
Company depreciates the investment property using the straight-line method over the useful lives of assets as prescribed under Part C of Schedule II of the Act
Though, the Company measures investment property using cost - based measurement, the fair value of investment property is disclosed in Notes. The fair value is determined by an independent valuer who holds a recognised and relevant professional qualification and has recent experience in the location and category of the investment property being valued.
Investment properties are de-recognised either when they have been disposed off or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the Statement of Profit and Loss in the period of de-recognition.
Intangible assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any. Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised as income or expense in the Statement of Profit and Loss.
i. Depreciation is provided under the straight line method over the useful lives of assets as prescribed under Part C of Schedule II of the Act except on Vehicles and Wind Turbine Generators (part of Plant and equipment).
Vehicles and Wind Turbine Generators are depreciated over a period of nine years and nineteen years respectively, based on internal assessment and independent technical evaluation carried out by external valuer; the Management believes that the useful life, as mentioned, represents the period over which Management expects to use these assets. Therefore, the useful life adopted for these assets are different from the useful life as prescribed under Part C of Schedule II of the Act.
Major inspection costs relating to engine and airframe overhauls and other heavy maintenance expenditure are identified as separate components for aircrafts and are depreciated over the expected life between major overhauls and remaining useful life of the aircraft, whichever is lower.
ii. Cost of leasehold improvements is amortized over the period of the lease or its useful life, whichever is lower.
iii. Computer Software is amortized over a period of five years.
An assetâs carrying amount is written down to its recoverable amount immediately, if the assetâs carrying amount is greater than its estimated recoverable amount.
The residual value of an asset is not more than 5% of the original cost of that asset. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
e) Measurement and recognition of leases
The Company considers whether contract is, or contains a lease. A lease is defined as âa contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for considerationâ.
To apply this definition, the Company assesses whether the contract meets three key evaluations which are whether:
i. the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Company.
ii. the Company has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract.
iii. the Company has the right to direct the use of the identified asset throughout the period of use. The Company assesses whether it has the right to direct âhow and for what purposeâ the asset is used throughout the period of use.
At lease commencement date, the Company recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Company and any lease payments made in advance of the lease commencement date.
The Company depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Company also assesses the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Company measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Companyâs incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance, fixed), and payments arising from options reasonably certain to be exercised. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest expenses. It is remeasured to reflect any reassessment or modification.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset or Statement of Profit and Loss, as the case may be.
The Company has elected to account for short-term leases and leases of low-value assets using the exemption given under Ind AS 116, Leases. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term or on another systematic basis if that basis is more representative of the pattern of the Companyâs benefit.
Company as a lessor
Lease income from operating leases where the Company is a lessor is recognised as income on straight line basis over the lease term.
f) Impairment of non-financial assets
At the end of each reporting period, the Company assesses whether there is any indication that a nonfinancial asset may be impaired. . If any such indication exists, the recoverable amounts are estimated in order to determine the extent of the impairment loss (if any). An impairment loss is recognised whenever the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount. The impairment loss, if any, is recognised in the Statement of Profit and Loss in the period in which impairment takes place.
Recoverable amount is higher of an assetâs or cash generating unitâs net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.
g) Foreign currency transactionsForeign currency transactions and balances
i. Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the date of the transaction.
ii. Monetary assets and liabilities denominated in foreign currencies at the year-end are restated at the rate of exchange prevailing on the date of the Balance Sheet.
iii. Any exchange difference on account of settlement of foreign currency transactions and restatement of monetary assets and liabilities denominated in foreign currency is recognized in the Statement of Profit and Loss.
iv. Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.
A financial instrument is any contract that gives rise to a financial asset in one entity and a financial liability or equity instrument in another entity.
Financial AssetsInitial recognition
In the case of financial assets, not recorded at fair value through profit or loss (FVTPL), financial assets are recognised initially at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
For purposes of subsequent measurement, financial assets are classified in following categories:
i. Financial Assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model with an objective 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. Interest income from these financial assets is included in finance income using the effective interest rate ("EIR") method. Impairment gains or losses arising on these assets are recognised in the Statement of Profit and Loss.
ii. Financial Assets measured at fair value
Financial assets are measured at fair value through other comprehensive income (FVOCI) if these financial assets are held within a business model with an objective to hold these assets in order to collect contractual cash flows or to sell these 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. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in the Statement of Profit and Loss.
Financial assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss.
Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies the expected credit loss ("ECL") model for measurement and recognition of impairment loss on financial assets and credit risk exposures.
The Company follows âsimplified approachâ for recognition of impairment loss allowance on trade receivables. Simplified approach does not require the Company to track changes in credit risk.
Rather, it recognises impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines 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 risk has 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.
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. 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 impairment loss allowance (or reversal) recognised during the period is recorded as expense/ income in the Statement of Profit and Loss.
De-recognition of Financial Assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the financial asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the assets and an associated liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
All equity investments in the scope of Ind AS 109, Financial Instruments, are measured at fair value. For equity instruments, the Company may make an irrevocable selection to present the subsequent fair value changes in Other Comprehensive Income (OCI). The Company makes such election on an instrument-byinstrument basis. The classification is made on initial recognition and is irrevocable.
There is no recycling of the amounts from OCI to profit or loss, even on sale of investment.
Equity instruments included within the FVTPL (fair value through profit and loss) category are measured at fair value with all changes in fair value recognized in the profit or loss.
Financial LiabilitiesInitial Recognition
Financial liabilities are classified, at initial recognition, as financial liabilities at FVTPL, loans and borrowings and payables as appropriate. 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.
Subsequent measurement Financial liabilities at FVPL
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are 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. Amortisation is recognised as finance income in the Statement of Profit and Loss.
Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the Statement of Profit and Loss.
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.
Where the terms of a financial liability are re-negotiated and the Company issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in the Statement of Profit and Loss; measured as a difference between the carrying amount of the financial liability and the fair value of equity instrument issued.
De-recognition of Financial Liabilities
Financial liabilities are de-recognised when the obligation specified in the contract is discharged, cancelled or expired. 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 de-recognition of the original liability and recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the 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. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business.
The Company measures financial assets and financial liability at fair value at each balance sheet date.
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:
⢠In the principal market for the asset or liability, or
⢠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 participantâs 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 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 financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-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.
The Companyâs Valuation team determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement.
Consumables, stores and spares are valued at lower of cost and net realisable value; cost is computed on first-in-first out basis. The cost of inventories comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Stores and spares which do not meet the definition of property, plant and equipment are accounted as inventories. Obsolete, defective, unserviceable and slow/nonmoving stocks are duly provided for. Net realisable value is estimated selling price in ordinary course of business less the estimated cost necessary to make the sale.
k) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments maturing within 90 days from the date of acquisition. Cash and cash equivalents are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.
Revenue is recognized on satisfaction of performance obligation upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.
Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or
receivable excluding taxes or duties collected on behalf of the government and reduced by any rebates and trade discount allowed.
Contract assets includes costs incurred to fulfill a contract with a customer. Where the amount of consideration received from a customer exceeds the amount of revenue recognized, this gives rise to a contract liability.
The specific recognition criteria described below must also be met before income is recognised.
i. Revenue from Goods transport and Courier service is recognised as and when goods and documents are delivered.
ii. Revenue from Bus operations and Transport of passengers by air is recognised as and when transportation is provided.
iii. Revenue from sale of power is recognised upon deposit of units of generated power at the grid of the purchasing electricity company.
iv. Revenue from sale of eligible carbon credit units such as Verified / Certified Emission Reductions units (VERs)/ (CERs) is recognised on completion of the validation process for units generated and entering of a definitive binding agreement for the sale of such units.
v. Revenue from hotel operations is recognized upon rendering of service.
vi. Interest income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
vii. Dividend income is recognised when the right to receive the dividend is established.
viii. Rent income is recognised on a straight-line basis over the period of the lease.
ix. Advertisement income is recognised when the related advertisement or commercial appears before the public.
m) Employee benefits Short term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employeesâ services upto the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
The Company''s contribution to Provident Fund and Employees State Insurance Scheme is determined based on a fixed percentage of the eligible employees'' salary and charged to the Statement of Profit and Loss on accrual basis. The Company has categorised its Provident Fund, labour welfare fund and the Employees State Insurance Scheme as a defined contribution plan since it has no further obligations beyond these contributions.
The Companyâs liability towards gratuity, being a defined benefit plan is accounted for on the basis of an independent actuarial valuation based on Projected Unit Credit Method. The liability or asset recognised in the balance sheet is the present value of the defined benefit obligation at the end of the reporting period less
the fair value of plan assets. Gratuity liability is funded by payments to the trust established for the purpose.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on the government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. Service cost and the net interest cost is included in employee benefit expense in the Statement of Profit and Loss. Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognised immediately in âother comprehensive incomeâ as income or expense.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in the Statement of Profit and Loss as past service cost.
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. Accumulated compensated absences which are expected to be availed or encashed subsequent to 12 months are treated as long term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end. The Companyâs liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Remeasurement as a result of experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss.
General and specific borrowing costs directly attributable to the acquisition/ construction of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets, until such time the assets are substantially ready for their intended use. All other borrowing costs are recognised as an expense in Statement of Profit and Loss in the period in which they are incurred.
Investment 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.
o) Borrowings and other financial liabilities
Borrowings and other financial liabilities are initially recognised at fair value (net of transaction costs incurred). Difference between the fair value and the transaction proceeds on initial recognition is recognised as an asset / liability based on the underlying reason for the difference.
Subsequently all financial liabilities are measured at amortised cost using the effective interest rate method
Borrowings are eliminated from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. The gain / loss is recognised in other equity in case of transactions with shareholders.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.
A receivable is classified as a âtrade receivableâ if it is in respect of the amount due on account of services rendered or sale of goods in the normal course of business. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the EIR method, less provision for impairment.
A payable is classified as a âtrade payableâ if it is in respect of the amount due on account of goods purchased or services received in the normal course of business. These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. These amounts are unsecured and are usually settled as per the payment terms stated in the contract. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the EIR method.
The income tax expense or credit for the period is the tax payable on the current periodâs taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
i. Current income tax liabilities and/or assets comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date.
ii. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to the applicable tax regulations which may be subject to interpretation and creates provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities.
iii. Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
iv. Deferred tax assets are recognised to the extent it is probable that the underlying tax loss or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Companyâs forecast of future operations results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit.
Deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit.
v. Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss, except where they relate to items that are recognised in other comprehensive income or directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or equity, respectively.
vi. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
s) Provisions, Contingent liabilities and Contingent Assets
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a 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 measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows specific to the liability. The unwinding of the discount is recognised as finance cost.
Contingent liabilities are disclosed in respect of possible obligations that arise from past events, whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. Such liabilities are disclosed by way of notes to the financial statements. No disclosure is made if the possibility of an outflow on this account is remote.
A contingent asset is not recognised but disclosed in the financial statements where an inflow of economic benefit is probable.
Provisions, contingent liabilities and contingent assets and commitments are reviewed at each balance sheet date.
Mar 31, 2018
Company Overview
VRL Logistics Limited (the âCompanyâ) is engaged in logistics services dealing mainly in domestic transportation of goods. Other businesses include bus operations, transport of passengers by air, sale of power and sale of certified emission reductions (CER) units generated from operation of wind mills. The operations of the Company are spread all over the country through various branches and transhipment points.
1 Significant Accounting Policies
a) Basis for preparation of financial Statements
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the âInd ASâ), as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (âAct'') read with the Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Act.
The financial statements have been prepared on a historical cost convention and accrual basis, except for certain financial assets and liabilities measured at fair value and plan assets towards defined benefit plans, which are measured at fair value.
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle (twelve months) and other criteria set out in the Schedule III to the Act.
b) Use of estimates and judgements
The estimates and judgements used in the preparation of the financial statements are continuously evaluated by the Company and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances. Differences between actual results and estimates are recognised in the period in which the results are known/ materialised.
The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing as at the reporting date.
c) Property, plant and equipment (including Capital work-in-progress)
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent cost are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance expenses are charged to Statement of profit or loss during the reporting period in which they are incurred.
Assets acquired but not ready for use are classified under Capital work in progress and are stated at cost comprising direct cost and related incidental expenses.
d) Investment Property
Investment property is the property that is not occupied by the Company, and which is held to earn rentals or for capital appreciation, or both. Upon initial recognition, an investment property is measured at cost, including directly attributable overheads, if any. Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation and accumulated impairment loss, if any.
Any gain or loss on disposal of an investment property is recognised in Statement of profit and loss, unless any other standard specifically requires otherwise.
Company depreciates the investment property using the straight line method over the useful lives of assets as prescribed under Part C of Schedule II of the Act
The fair value of investment property is disclosed in the notes. The Fair value is determined by an independent valuer who holds a recognised and relevant professional qualification and has recent experience in the location and category of the investment property being valued.
e) Intangible assets
Intangible assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any. Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised as income or expense in the Statement of Profit and Loss.
f) Depreciation/Amortisation
i. Depreciation is provided under the straight line method over the useful lives of assets as prescribed under Part C of Schedule II of the Act except on Vehicles and Wind Turbine Generators (part of Plant and equipment).
Vehicles and Wind Turbine Generators are depreciated over a period of nine years and nineteen years respectively, based on internal assessment and independent technical evaluation carried out by external valuer; the management believes that the useful life as mentioned represents the period over which management expects to use these assets. Hence, the useful life for these assets are different from the useful life as prescribed under Part C of Schedule II of the Act.
ii. Cost of leasehold improvements is amortised over the period of the lease or its useful life, whichever is lower.
iii. Computer Software is amortized over a period of five years.
An asset''s carrying amount is written down immediately to its recoverable amount if the asset''s carrying amount is greater than its estimated recoverable amount.
g) Leases
Leases where the company is a lessee and has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the leaseâs inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the Statement of profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Leases in which significant portion of the risk and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payment made under operating lease (net of any incentive received from the lessor) are charged to Statement of Profit and Loss on straight-line-basis over the period of the lease unless the payment are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increase.
h) Impairment of non-financial assets
Assessment is done at each Balance Sheet date to evaluate whether there is any indication that a non-financial asset may be impaired. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets, is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the asset/cash generating unit is made. Assets whose carrying value exceeds their recoverable amount are written down to their recoverable amount. Recoverable amount is higher of an asset''s or cash generating unit''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.
i) Foreign currency transactions Functional and presentation currency
The financial statements are presented in currency INR, which is the functional and presentation currency of the Company.
Foreign currency transactions and balances
i. Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the date of the transaction.
ii. Monetary assets and liabilities denominated in foreign currencies at the year-end are restated at the rate of exchange prevailing on the date of the Balance Sheet.
iii. Any exchange difference on account of settlement of foreign currency transactions and restatement of monetary assets and liabilities denominated in foreign currency is recognised in the Statement of Profit and Loss.
iv. Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.
j) Financial instruments
A financial instrument is any contract that gives rise to a financial asset in one entity and a financial liability or equity instrument in another entity.
Financial Assets
Initial recognition
In the case of financial assets, not recorded at fair value through profit or loss (FVPL), financial assets are recognised initially at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in following categories:
(a) Financial Assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model with an objective 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. Interest income from these financial assets is included in finance income using the effective interest rate (âEIRâ) method. Impairment gains or losses arising on these assets are recognised in the Statement of Profit and Loss.
(b) Financial Assets measured at fair value
Financial assets are measured at fair value through other comprehensive income (FVOCI) if these financial assets are held within a business model with an objective to hold these assets in order to collect contractual cash flows or to sell these 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. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in the Statement of Profit and Loss.
Financial assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss.
Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies the expected credit loss (âECLâ) model for measurement and recognition of impairment loss on financial assets and credit risk exposures.
The Company follows âsimplified approachâ for recognition of impairment loss allowance on trade receivables. Simplified approach does not require the Company to track changes in credit risk.
Rather, it recognises impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines 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 risk has 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.
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. 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 impairment loss allowance (or reversal) recognised during the period is recorded as expense/ income in the Statement of Profit and Loss.
De-recognition of Financial Assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the assets and an associated liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Equity investments
All equity investments in the scope of Ind AS 109, Financial Instruments, are measured at fair value. For equity instruments, the Company may make an irrevocable election to present the subsequent fair value changes in Other Comprehensive Income (OCI). The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
There is no recycling of the amounts from OCI to profit or loss, even on sale of investment.
Equity instruments included within the FVTPL (fair value through profit and loss) category are measured at fair value with all changes in fair value recognized in the profit or loss.
Financial Liabilities
Initial Recognition
Financial liabilities are classified, at initial recognition, as financial liabilities at FVPL, loans and borrowings and payables as appropriate. 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.
Subsequent measurement
Financial liabilities at FVPL
Financial liabilities at FVPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as FVPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are 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. Amortisation is recognised as finance income in the Statement of Profit and Loss.
Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the Statement of Profit and Loss.
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.
Where the terms of a financial liability is re-negotiated and the Company issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in the Statement of Profit and Loss; measured as a difference between the carrying amount of the financial liability and the fair value of equity instrument issued.
De-recognition of Financial Liabilities
Financial liabilities are de-recognised when the obligation specified in the contract is discharged, cancelled or expired. 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 de-recognition of the original liability and recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the 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.
k) Fair value measurement
The Company measures financial assets and financial liability at fair value at each balance sheet date.
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:
- In the principal market for the asset or liability, or
- 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 participantâs 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 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 financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-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.
The Company''s Valuation team determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement.
l) Inventories
Consumables, stores and spares are valued at lower of cost and net realisable value; cost is computed on first-in-first out basis. The cost of inventories comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Obsolete, defective, unserviceable and slow/ non-moving stocks are duly provided for. Net realisable value is estimated selling price in ordinary course of business less the estimated cost necessary to make the sale.
m) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments maturing within 90 days from the date of acquisition. Cash and cash equivalents are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.
n) Recognition of Income
Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable excluding taxes or dutie
received or receivable excluding taxes or duties collected on behalf of the government and reduced by any rebates and trade discount allowed.
The specific recognition criteria described below must also be met before income is recognised.
i. Income is recognised on accrual basis and provision is made for all known losses and liabilities.
ii. Revenue from Goods transport and Courier service is recognised when goods / documents are delivered to the customers/nearest destination branches/nearest transhipment points.
iii. Revenue from Bus operation and transportation of passengers by air is recognised as and when transportation is provided i.e. when the service is rendered.
iv. Revenue from sale of power is recognised upon deposit of units of generated power at the grid of the purchasing electricity company.
v. Revenue from sale of eligible carbon credit units such as Verified / Certified Emission Reductions units (VERs)/ (CERs) is recognised on completion of the validation process for units generated and entering of a definitive binding agreement for the sale of such units.
vi. Revenue from hotel operations is recognized upon rendering of service.
vii. Interest income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
viii. Dividend income is recognised when the right to receive the dividend is established.
ix. Rent income is recognised on a straight-line basis over the period of the lease.
x. Advertisement income is recognised when the related advertisement or commercial appears before the public.
o) Employee benefits
Defined contribution plan
The Company''s contribution to Provident Fund and Employees State Insurance Scheme is determined based on a fixed percentage of the eligible employeesâ salary and charged to the Statement of Profit and Loss on accrual basis. The Company has categorised its Provident Fund, labour welfare fund and the Employees State Insurance Scheme as a defined contribution plan since it has no further obligations beyond these contributions.
Defined benefit plan
The Companyâs liability towards gratuity, being a defined benefit plan are accounted for on the basis of an independent actuarial valuation based on Projected Unit Credit Method. Gratuity liability is funded by payments to the trust established for the purpose.
Service cost and the net interest cost is included in employee benefit expense in the Statement of profit and loss. Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognised immediately in âother comprehensive income'' as income or expense.
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 accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Remeasurement as a result of experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss.
p) Borrowing costs
General and specific borrowing costs directly attributable to the acquisition/ construction of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets, until such time the assets are substantially ready for their intended use. All other borrowing costs are recognised as an expense in Statement of Profit and Loss in the period in which they are incurred.
q) Borrowings and other financial liabilities
Borrowings and other financial liabilities are initially recognised at fair value (net of transaction costs incurred). Difference between the fair value and the transaction proceeds on initial recognition is recognised as an asset / liability based on the underlying reason for the difference.
Subsequently all financial liabilities are measured at amortised cost using the effective interest rate method
Borrowings are eliminated from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. The gain / loss is recognised in other equity in case of transactions with shareholders.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.
r) Trade receivables
A receivable is classified as a âtrade receivableâ if it is in respect of the amount due on account of services rendered in the normal course of business. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the EIR method, less provision for impairment.
s) Trade payables
A payable is classified as a âtrade payableâ if it is in respect of the amount due on account of goods purchased or services received in the normal course of business. These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. These amounts are unsecured and are usually settled as per the payment terms stated in the contract. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the EIR method.
t) Taxation
i. Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity.
ii. Current income tax liabilities and/or assets comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases.
iii. Deferred tax assets are recognised to the extent it is probable that the underlying tax loss or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Companyâs forecast of future operations results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. Deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit.
iv. Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss, except where they relate to items that are recognised in other comprehensive income or directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or equity, respectively.
v. Tax credit is recognised in respect of Minimum Alternate Tax (MAT) as per the provisions of Section 115JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within the statutory time frame and is reviewed at each Balance Sheet date.
u) Provisions and Contingent liabilities
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a 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.
Contingent liabilities are disclosed in respect of possible obligations that arise from past events, whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. Such liabilities are disclosed by way of notes to the financial statements. No disclosure is made if the possibility of an outflow on this account is remote.
v) Significant management judgements in applying accounting policies and estimation uncertainty
When preparing the financial statements, management makes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Impairment of non-financial assets
In assessing impairment, management estimates the recoverable amount of each asset or cash-generating unit based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.
Depreciation and useful lives of property, plant and equipment
Property, plant and equipment are depreciated over the estimated useful lives of the assets, after taking into account their estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation to be recorded during any reporting period. The useful lives and residual values are based on the Company''s historical experience with similar assets and take into account anticipated technological changes. The depreciation for future periods is adjusted if there are significant changes from previous estimates.
Recoverability of trade receivable
Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.
Provisions
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. Since the cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.
Defined benefit obligation (DBO)
Management''s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses
Fair value measurement
Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
w) Recent accounting pronouncements
Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.
The amendment will come into force from 1 April 2018. The Company is evaluating the requirement of the amendment and the impact on the financial statements. The effect on adoption of Ind AS 21 is expected to be insignificant.
Ind AS 115:
In March 2018, the Ministry of Corporate Affairs has notified the Companies (Indian Accounting Standards) Amended Rules, 2018 (âamended rulesâ). As per the amended rules, Ind AS 115 âRevenue from contracts with customersâ supersedes Ind AS 11, âConstruction contractsâ and Ind AS 18, âRevenueâ and is applicable for all accounting periods commencing on or after 1 April 2018.
Ind AS 115 introduces a new framework of five step model for the analysis of revenue transactions. The model specifies that revenue should be recognised when (or as) an entity transfer control of goods or services to a customer at the amount to which the entity expects to be entitled. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity''s contracts with customers. The new revenue standard is applicable to the Company from 1 April 2018.
The standard permits two possible methods of transition:
- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach)
The Company is evaluating the requirement of the amendment and the impact on the financial statements. The effect on adoption of Ind AS 115 is expected to be insignificant
Mar 31, 2017
Company Overview
VRL Logistics Limited (the âCompanyâ) is engaged in logistics services dealing mainly in domestic transportation of goods. Other businesses include bus operations, air chartering service, sale of power and sale of certified emission reductions (CER) units generated from operation of wind mills. The operations of the Company are spread all over the country through various branches and transshipment points.
1 Significant Accounting Policies
a) Basis for preparation of financial Statements
The separate financial statements have been prepared to comply in all material aspects with the Accounting Standards notified under Section 133 of Companies Act, 2013 (the âActâ) as per Companies (Indian Accounting Standards (Ind AS)) Rules, 2015 and other relevant provisions of the Act and rules framed there under.
The financial statements up to year ended 31 March 2016 were prepared in accordance with the Accounting Standards as prescribed under Section 133 of the Act read with the Rule 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).
These are the first Ind AS financial statements of the Company. Refer note 44 for understanding the transition from previous GAAP to Ind AS and its effect on the Companyâs balance sheet, financial performance and cash flows.
The financial statements have been prepared on a historical cost convention and accrual basis, except for certain financial assets and liabilities measured at fair value and plan assets towards defined benefit plans, which are measured at fair value
b) Property, plant and equipment (including Capital work-in-progress)
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent cost are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance expenses are charged to profit or loss during the reporting period in which they are incurred.
Assets acquired but not ready for use are classified under Capital work in progress and are stated at cost comprising direct cost and related incidental expenses.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as at 01 April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
c) Investment Property
Investment property is the property that is not occupied by the Company, and which is held to earn rentals or for capital appreciation, or both. Upon initial recognition, an investment property is measured at cost, including directly attributable overheads, if any. Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation and accumulated impairment loss, if any.
Any gain or loss on disposal of an investment property is recognized in profit or loss, unless any other standard specifically requires otherwise.
Company depreciates the investment property using the straight line method over the useful lives of assets as prescribed under Part C of Schedule II of the Act
The fair value of investment property is disclosed in the notes. The Fair value is determined by an independent valuer who holds a recognized and relevant professional qualification and has recent experience in the location and category of the investment property being valued.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its investment properties recognized as at 01 April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of investment properties.
d) Other intangible assets
Intangible Assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any. Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognized as income or expense in the Statement of Profit and Loss.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognized as at 1 April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the intangible assets.
e) Depreciation/Amortization
i. Depreciation is provided under the straight line method over the useful lives of assets as prescribed under Part C of Schedule II of the Act except on Vehicles and Wind Turbine Generators (part of Plant and equipment).
Vehicles and Wind Turbine Generators are depreciated over a period of nine years and nineteen years respectively, based on internal assessment and independent technical evaluation carried out by external valuer; the management believes that the useful life as mentioned represents the period over which management expects to use these assets. Hence, the useful life for these assets are different from the useful life as prescribed under Part C of Schedule II of the Act.
ii. Cost of leasehold improvements is amortized over the period of the lease or its useful life, whichever is lower.
iii. Software is amortized over a period of five years.
An asset''s carrying amount is written down immediately to its recoverable amount if the asset''s carrying amount is greater than its estimated recoverable amount.
f) Leases
Leases where the company is a lessee and has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lease''s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Leases in which significant portion of the risk and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payment made under operating lease (net of any incentive received from the lessor) are charged to Statement of Profit and Loss on straight-line-basis over the period of the lease unless the payment are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increase.
g) Impairment of non-financial assets
Assessment is done at each Balance Sheet date to evaluate whether there is any indication that a non-financial asset may be impaired. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets, is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the asset/ cash generating unit is made. Assets whose carrying value exceeds their recoverable amount are written down to their recoverable amount. Recoverable amount is higher of an asset''s or cash generating unit''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.
h) Foreign currency transactions Functional and presentation currency
The financial statements are presented in currency INR, which is the functional and presentation currency of the Company.
Foreign currency transactions and balances
i. Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the date of the transaction.
ii. Monetary assets and liabilities denominated in foreign currencies at the year-end are restated at the rate of exchange prevailing on the date of the Balance Sheet.
iii. Any exchange difference on account of settlement of foreign currency transactions and restatement of monetary assets and liabilities denominated in foreign currency is recognized in the Statement of Profit and Loss.
iv. Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.
i) Financial instruments
A financial instrument is any contract that gives rise to a financial asset in one entity and a financial liability or equity instrument in another entity.
Financial Assets
Initial recognition
In the case of financial assets, not recorded at fair value through profit or loss (FVPL), financial assets are recognized initially at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in following categories:
(a) Financial Assets at amortized cost
Financial assets are subsequently measured at amortized cost if these financial assets are held within a business model with an objective 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. Interest income from these financial assets is included in finance income using the effective interest rate (âEIRâ) method. Impairment gains or losses arising on these assets are recognized in the Statement of Profit and Loss.
(b) Financial Assets measured at fair value
Financial assets are measured at fair value through other comprehensive income (FVOCI) if these financial assets are held within a business model with an objective to hold these assets in order to collect contractual cash flows or to sell these 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. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in the Statement of Profit and Loss.
Financial assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss.
Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies the expected credit loss (âECL'') model for measurement and recognition of impairment loss on financial assets and credit risk exposures.
The Company follows âsimplified approachâ for recognition of impairment loss allowance on trade receivables. Simplified approach does not require the Company to track changes in credit risk.
Rather, it recognizes impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines 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 risk has 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 recognizing impairment loss allowance based on 12-month ECL.
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. 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 impairment loss allowance (or reversal) recognized during the period is recorded as expense/ income in the Statement of Profit and Loss.
De-recognition of Financial Assets
The Company de-recognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the assets and an associated liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.
Equity investments
All equity investments in the scope of Ind AS 109, Financial Instruments, are measured at fair value. For equity instruments, the Company may make an irrevocable election to present the subsequent fair value changes in Other Comprehensive Income (OCI). The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
There is no recycling of the amounts from OCI to profit or loss, even on sale of investment.
Equity instruments included within the FVTPL (fair value through profit and loss) category are measured at fair value with all changes in fair value recognized in the profit or loss.
Financial Liabilities
Initial Recognition
Financial liabilities are classified, at initial recognition, as financial liabilities at FVPL, loans and borrowings and payables as appropriate. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
Subsequent measurement
Financial liabilities at FVPL
Financial liabilities at FVPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as FVPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognized 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 recognized 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 recognized less cumulative amortization. Amortization is recognized as finance income in the Statement of Profit and Loss.
Financial liabilities at amortized cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognized over the term of the borrowings in the Statement of Profit and Loss.
Amortized 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 amortization is included as finance costs in the Statement of Profit and Loss.
Where the terms of a financial liability is re-negotiated and the Company issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognized in the Statement of Profit and Loss; measured as a difference between the carrying amount of the financial liability and the fair value of equity instrument issued.
De-recognition of Financial Liabilities
Financial liabilities are de-recognized when the obligation specified in the contract is discharged, cancelled or expired. 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 de-recognition of the original liability and recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
j) Fair value measurement
The Company measures financial assets and financial liability at fair value at each balance sheet date.
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:
- In the principal market for the asset or liability, or
- 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, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized 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 recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The Company''s Valuation team determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement.
k) Inventories
Consumables, stores and spares are valued at lower of cost and net realizable value; cost is computed on first-in-first out basis. The cost of inventories comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Obsolete, defective, unserviceable and slow/nonmoving stocks are duly provided for. Net realizable value is estimated selling price in ordinary course of business less the estimated cost necessary to make the sale.
l) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments maturing within 90 days from the date of acquisition. Cash and cash equivalents are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.
m) Recognition of Income
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. Revenue is measured at the fair value of the consideration received or receivable excluding taxes or duties collected on behalf of the government and reduced by any rebates and trade discount allowed.
The specific recognition criteria described below must also be met before income is recognized.
i. Income is recognized on accrual basis and provision is made for all known losses and liabilities.
ii. Revenue from Goods transport and Courier service is recognized when goods / documents are delivered to the customers/nearest destination branches/nearest transshipment points.
iii. Revenue from Bus operation and passenger air charter is recognized as and when transportation is provided i.e. when the service is rendered.
iv. Revenue from sale of power is recognized upon deposit of units of generated power at the grid of the purchasing electricity company.
v. Revenue from sale of eligible carbon credit units such as Verified / Certified Emission Reductions units (VERs)/ (CERs) is recognized on completion of the validation process for units generated and entering of a definitive binding agreement for the sale of such units.
vi. Revenue from hotel operations is recognized upon rendering of service.
vii. Interest income from debt instruments is recognized using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
viii. Dividend income is recognized when the right to receive the dividend is established.
ix. Rent income is recognized on a straight-line basis over the period of the lease.
x. Advertisement income is recognized when the related advertisement or commercial appears before the public.
n) Employee benefits
Defined contribution plan
The Companyâs contribution to Provident Fund and Employees State Insurance Scheme is determined based on a fixed percentage of the eligible employeesâ salary and charged to the Statement of Profit and Loss on accrual basis. The Company has categorized its Provident Fund, labour welfare fund and the Employees State Insurance Scheme as a defined contribution plan since it has no further obligations beyond these contributions.
Defined benefit plan
The Companyâs liability towards gratuity, being a defined benefit plan are accounted for on the basis of an independent actuarial valuation based on Projected Unit Credit Method. Gratuity liability is funded by payments to the trust established for the purpose.
Service cost and the net interest cost is included in employee benefit expense in the Statement of profit and loss. Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognized immediately in âother comprehensive income'' as income or expense.
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 accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Re-measurement as a result of experience adjustments and changes in actuarial assumptions are recognized in the Statement of Profit and Loss.
o) Borrowing costs
General and specific borrowing costs directly attributable to the acquisition/ construction of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets, until such time the assets are substantially ready for their intended use. All other borrowing costs are recognized as an expense in Statement of Profit and Loss in the period in which they are incurred.
p) Borrowings and other financial liabilities
Borrowings and other financial liabilities are initially recognized at fair value (net of transaction costs incurred). Difference between the fair value and the transaction proceeds on initial recognition is recognized as an asset / liability based on the underlying reason for the difference.
Subsequently all financial liabilities are measured at amortized cost using the effective interest rate method
Borrowings are eliminated from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss. The gain / loss is recognized in other equity in case of transactions with shareholders.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.
q) Trade receivables
A receivable is classified as a âtrade receivable'' if it is in respect of the amount due on account of services rendered in the normal course of business. Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the EIR method, less provision for impairment.
r) Trade payables
A payable is classified as a âtrade payable'' if it is in respect of the amount due on account of goods purchased or services received in the normal course of business. These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. These amounts are unsecured and are usually settled as per the payment terms stated in the contract. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the EIR method.
s) Taxation
i. Tax expense recognized in profit or loss comprises the sum of deferred tax and current tax not recognized in other comprehensive income or directly in equity.
ii. Current income tax liabilities and/or assets comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases.
iii. Deferred tax assets are recognized to the extent it is probable that the underlying tax loss or deductible temporary difference will be utilized against future taxable income. This is assessed based on the Company''s forecast of future operations results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit.
Deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit.
iv. Changes in deferred tax assets or liabilities are recognized as a component of tax income or expense in profit or loss, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.
v. Tax credit is recognized in respect of Minimum Alternate Tax (MAT) as per the provisions of Section 115JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within the statutory time frame and is reviewed at each Balance Sheet date.
t) Provisions and Contingent liabilities
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a 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.
Contingent liabilities are disclosed in respect of possible obligations that arise from past events, whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. Such liabilities are disclosed by way of notes to the financial statements. No disclosure is made if the possibility of an outflow on this account is remote.
u) Significant management judgments in applying accounting policies and estimation uncertainty
When preparing the financial statements, management makes a number of judgments, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Impairment of non-financial assets
In assessing impairment, management estimates the recoverable amount of each asset or cash-generating unit based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.
Depreciation and useful lives of property, plant and equipment
Property, plant and equipment are depreciated over the estimated useful lives of the assets, after taking into account their estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation to be recorded during any reporting period. The useful lives and residual values are based on the Company''s historical experience with similar assets and take into account anticipated technological changes. The depreciation for future periods is adjusted if there are significant changes from previous estimates.
Recoverability of trade receivable
Judgments are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.
Provisions
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. Since the cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.
Defined benefit obligation (DBO)
Management''s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses
Fair value measurement
Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
Mar 31, 2016
Company Overview
VRL Logistics Limited (the ACI-Company ACI-) is engaged in logistics services
dealing mainly in domestic transportation of goods. Other businesses
include bus operations, air chartering service, sale of power and sale
of certified emission reductions (CER) units generated from operation
of wind mills. The operations of the Company are spread all over the
country through various branches and transshipment points.
a) Basis for Preparation of Financial Statements
The financial statements, which have been prepared under the historical
cost convention on the accrual basis of accounting, are in accordance
with the applicable requirements of the Companies Act, 2013 (the ''Act'')
(to the extent notified) and comply in all material aspects with the
Accounting Standards as prescribed under Section 133 of the Actread
with the Rule 7 of the Companies (Accounts) Rules, 2014 (as amended).
The accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year.
b) Use of Estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent liabilities on the date
of financial statements and reported amounts of revenue and expenses
for the year. Actual results could differ from these estimates. The
impact of any revision to accounting estimates is recognised
prospectively in current and future periods.
All assets and liabilities have been classified as current and
non-current as per normal operating cycle of the Company and other
criteria set out in Schedule III of the Act. Based on nature of
products/services, the Company has ascertained its operating cycle as
12 months for the purpose of current and non-current classification of
assets and liabilities.
c) Fixed Assets and Capital Work in progress
i. Fixed Assets are stated at cost of acquisition or construction less
accumulated depreciation/amortisation. Cost includes inward freight,
taxes and expenses incidental to acquisition and installation, up to
the point the asset is ready for its intended use.
ii. Assets acquired but not ready for use are classified under Capital
work in progress and are stated at cost comprising direct cost and
related incidental expenses.
d) Depreciation
i. Depreciation on fixed assets is provided under the straight line
method over the useful lives of assets as prescribed under Part C of
Schedule II of the Act except on Vehicles and Wind Turbine Generators
(part of Plant and equipments).
Vehicles and Wind Turbine Generators are depreciated over a period of
nine years and nineteen years respectively, based on internal
assessment and independent technical evaluation carried out by external
valuer ADs- the management believes that the useful life as mentioned
represents the period over which management expects to use these
assets. Hence, the useful life for these assets are different from the
useful life as prescribed under Part C of Schedule II of the Act.
ii. Cost of leasehold land and leasehold improvements is amortised
over the period of the lease or its useful life, whichever is lower.
iii. Goodwill is amortized over a period of five years.
iv. Software is amortized over a period of five years.
e) Leases
Operating Leases are those leases where the lessor retains substantial
risks and benefits of ownership of leased assets. Rentals in such cases
are expensed with reference to lease terms and other considerations on
a straight line basis.
f) Impairment of Assets
Management evaluates at regular intervals, using external and internal
sources, the need for impairment of any asset. Impairment occurs where
the carrying value of the asset exceeds the present value of future
cash flows expected to arise from the continuing use of the asset and
its net realisable value on eventual disposal. Any loss on account of
impairment is expensed as the excess of the carrying amount over the
higher of the asset''s net sales price or present value, as determined.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However, the carrying value
after reversal is not increased beyond the carrying value that would
have prevailed by charging usual depreciation, if there was no
impairment.
g) Foreign Currency Transactions
i. Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing at the date of the transaction.
ii. Monetary assets and liabilities denominated in foreign currencies
at the year end are restated at the rate of exchange prevailing on the
date of the Balance Sheet.
iii. Any exchange difference on account of settlement of foreign
currency transactions and restatement of monetary assets and
liabilities denominated in foreign currency is recognised in the
Statement of Profit and Loss.
h) Investments
Investments are classified into current investments and non-current
investments. Current investments, i.e. investments that are readily
realisable and intended to be held for not more than a year are valued
at lower of cost and net realisable value. Any reduction in the
carrying amount or any reversal of such reductions are charged or
credited to the Statement of Profit and Loss.
Non-current investments are stated at cost. Provision for diminution
in the value of these investments is made only if such decline is other
than temporary, in the opinion of the Management.
i) Valuation of Inventories
Consumables, stores and spares are valued at cost computed on
first-in-first out basis. Stock of tyres is valued based on specific
identification method. Obsolete, defective, unserviceable and slow/non
moving stocks are duly provided for.
j) Recognition of Income and Expenditure
i. Income and Expenditure is recognised on accrual basis and provision
is made for all known losses and liabilities.
ii. Revenue from Goods transport and Courier service is recognised
when goods / documents are delivered to the customers/ nearest
destination branches.
iii. Revenue from Bus operation and passenger air charter is recognised
as and when transportation is provided i.e. when the service is
rendered.
iv. Revenue from sale of power is recognised upon deposit of units of
generated power at the grid of the purchasing electricity company.
v. Revenue from sale of eligible carbon credit units such as Verified
/ Certified Emission Reductions units (VERs)/ (CERs) is recognised on
completion of the validation process for units generated and entering
of a definitive binding agreement for the sale of such units.
vi. Revenue from hotel operations is recognized upon rendering of
service.
vii. Interest on deposits is recognised on time proportion basis.
viii. Dividend income is recognised when the right to receive the
dividend is established.
ix. Rent income is recognised on time proportion basis.
x. Advertisement income is recognised when the related advertisement
or commercial appears before the public.
xi. Provision for expenses against trip advance is made on an
estimated basis.
k) Employee Benefits
i. All short term employee benefits are accounted on undiscounted
basis during the accounting period based on services rendered by
employees.
ii. The Company''s contribution to Provident Fund and Employees State
Insurance Scheme is determined based on a fixed percentage of the
eligible employees'' salary and charged to the Statement of Profit and
Loss on accrual basis. The Company has categorised its Provident Fund
and the Employees State Insurance Scheme as a defined contribution plan
since it has no further obligations beyond these contributions.
iii. The Company''s liability towards gratuity and compensated absences,
being defined benefit plans are accounted for on the basis of an
independent actuarial valuation and actuarial gains/losses are charged
to the Statement of Profit and Loss. Gratuity liability is funded by
payments to the trust established for the purpose.
l) Borrowing Costs
Borrowing costs attributable to the acquisition and construction of
qualifying assets are capitalised as part of the cost of such assets up
to the date such assets are ready for their intended use. Other
borrowing costs are treated as revenue expenditure.
m) Taxation
i. Tax expenses comprise current tax (amount of tax for the period
determined in accordance with the Income Tax Regulations in India) and
deferred tax charge or credit (reflecting the tax effects of timing
differences between accounting income and taxable income for the
period).
ii. The deferred tax charge or credit and the corresponding deferred
tax liabilities or assets are recognised using the tax rates that have
been enacted or substantively enacted by the Balance Sheet date,
Deferred tax assets are recognised only to the extent there is
reasonable certainty that the assets can be realised in future ADs-
however, when there is unabsorbed depreciation or carry forward losses
under taxation laws, deferred tax assets are recognised only if there
is a virtual certainty of realisation of such assets. Deferred tax
assets are reviewed at each Balance Sheet date and written down or
written up to reflect the amount that is reasonably / virtually
certain, as the case may be, to be realised.
iii. Tax credit is recognised in respect of Minimum Alternate Tax (MAT)
as per the provisions of Section 115JAA of the Income Tax Act, 1961
based on convincing evidence that the Company will pay normal income
tax within the statutory time frame and is reviewed at each Balance
Sheet date.
n) Provisions and Contingent Liabilities
Provisions are recognised in the financial statements in respect of
present probable obligations, for amounts which can be reliably
estimated.
Contingent liabilities are disclosed in respect of possible obligations
that arise from past events, whose existence would be confirmed by the
occurrence or non occurrence of one or more uncertain future events not
wholly within the control of the Company. Such liabilities are
disclosed by way of notes to the financial statements. No disclosure is
made if the possibility of an outflow on this account is remote.
Notes:-
a. The Company is in appeal against demands on Income Tax, Customs
duty and ESIC dues.
b. Customs duty liability is in respect of alleged violation of terms
and conditions of Non Scheduled Air Transport Service, as claimed by
the Customs Department to the extent it can be quantified. The said
department has issued a Show cause cum demand notice alleging violation
of terms and conditions of Non Scheduled Air Transport Service and
demanded, amongst others, customs duty on the import of aircraft,
interest and penalty/fine thereon. The Company had earlier availed of
the exemption available under the Customs Act, 1962 (the ''Act'') and was
accordingly assessed to Nil duty under the Act. The Company has
deposited the Customs duty, including interest thereon, without
prejudice to further rights. These payments have been disclosed as
deposits in the books of account. The Company has already filed the
necessary response to the demand notice and expects a favourable order
in this regard.
c. The above figures for contingent liabilities do not include amounts
towards certain additional penalties/interest that may devolve on the
Company in the event of an adverse outcome as the same is subjective
and not capable of being presently quantified.
d. Future cash outflows in respect of (A) above can be determined only
on receipt of judgments/decisions pending with various
forums/authorities.
e. The amount disclosed in respect of (B) above represents the
estimated liability based on independent legal opinion obtained by the
management in relation to the various cases of Motor Vehicle Accidents,
Consumer disputes, Workmen compensation, etc. filed against the
Company.
Mar 31, 2015
A) Basis for Preparation of Financial Statements
The financial statements, which have been prepared under the historical
cost convention on the accrual basis of accounting, are in accordance
with the applicable requirements of the Companies Act, 2013 (the
'Act') (to the extent notified) and comply in all material aspects
with the Accounting Standards as prescribed under Section 133 of the
Act read with the Rule 7 of the Companies (Accounts) Rules, 2014. The
accounting policies have been consistently applied by the Company and
are consistent with those used in the previous year
b) Use of Estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent liabilities on the date
of financial statements and reported amounts of revenue and expenses
for that year. Actual results could differ from these estimates. Any
revision to accounting estimates is recognised prospectively in current
and future periods.
All assets and liabilities have been classified as current and
non-current as per normal operating cycle of the Company and other
criteria set out in Schedule III to the Companies Act, 2013. Based on
nature of products / services, the Company has ascertained its
operating cycle as 12 months for the purpose of current and non-current
classification of assets and liabilities.
c) Fixed Assets and Capital Work in progress
i. Fixed Assets are stated at cost of acquisition or construction less
accumulated depreciation/amortisation. Cost includes inward freight,
taxes and expenses incidental to acquisition and installation, up to
the point the asset is ready for its intended use.
ii. Direct expenses as well as clearly identifiable indirect expenses,
incurred during the period of construction of building and body
building of vehicles are capitalised with the respective assets in
accordance with the ratio determined and certified by Company's
Management.
iii. Assets acquired but not ready for use and stock of body building
materials are classified under Capital work in progress and are stated
at cost comprising direct cost and related incidental expenses.
d) Depreciation
i. Depreciation on fixed assets is provided under the straight line
method over the useful lives of assets as prescribed under Part C of
Schedule II of the Companies Act, 2013 except on Vehicles and Wind
Turbine Generators (part of Plant and equipments).
Vehicles and Wind Turbine Generators are depreciated over a period of
nine years and nineteen years respectively, based on internal
assessment and independent technical evaluation carried out by external
valuer; the management believes that the useful life as mentioned
represents the period over which management expects to use these
assets. Hence, the useful life for these assets are different from the
useful life as prescribed under Part C of Schedule II of the Companies
Act, 2013.
ii. Cost of leasehold land and leasehold improvements is amortised over
the period of the lease or its useful life, whichever is lower.
iii. Goodwill is amortized over a period of five years.
iv. Software is amortized over a period of five years.
v. Depreciation on replaced vehicle bodies is restricted to the period
that is co-terminus with balance working life of such vehicles.
e) Leases
Operating Leases are those leases where the lessor retains substantial
risks and benefits of ownership of leased assets. Rentals in such cases
are expensed with reference to lease terms and other considerations on
a straight line basis.
f) Impairment of Assets
Management evaluates at regular intervals, using external and internal
sources, the need for impairment of any asset. Impairment occurs where
the carrying value of the asset exceeds the present value of future
cash flows expected to arise from the continuing use of the asset and
its net realisable value on eventual disposal. Any loss on account of
impairment is expensed as the excess of the carrying amount over the
higher of the asset's net sales price or present value, as
determined.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However, the carrying value
after reversal is not increased beyond the carrying value that would
have prevailed by charging usual depreciation, if there was no
impairment.
g) Foreign Currency Transactions
i. Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing at the date of the transaction.
ii. Monetary assets and liabilities denominated in foreign currencies
at the year end are restated at the rate of exchange prevailing on the
date of the Balance Sheet.
iii. Any exchange difference on account of settlement of foreign
currency transactions and restatement of monetary assets and
liabilities denominated in foreign currency is recognised in the
Statement of Profit and Loss.
h) Investments
Investments are classified into current investments and non-current
investments. Current investments, i.e. investments that are readily
realisable and intended to be held for not more than a year are valued
at lower of cost and net realisable value. Any reduction in the
carrying amount or any reversal of such reductions are charged or
credited to the Statement of Profit and Loss.
Non-current investments are stated at cost. Provision for diminution in
the value of these investments is made only if such decline is other
than temporary, in the opinion of the Management.
i) Valuation of Inventories
Consumables and stores and spares are valued at lower of cost computed
on first-in-first out basis or net realisable value. Stock of tyres is
valued based on specific identification method. Obsolete, defective,
unserviceable and slow/ non moving stocks are duly provided for.
j) Recognition of Income and Expenditure
i. Income and Expenditure is recognised on accrual basis and provision
is made for all known losses and liabilities.
ii. Revenue from Goods transport and Courier service is recognised when
goods / documents are delivered to the customers/nearest destination
branches.
iii. Revenue from Bus operation is recognised upon commencement of
journey of passengers.
iv. Revenue from sale of power is recognised upon deposit of units of
generated power at the grid of the purchasing electricity company.
v. Revenue from sale of eligible carbon credit units such as Verified /
Certified Emission Reductions units (VERs)/ (CERs) is recognised on
completion of the validation process for units generated and entering
of a definitive binding agreement for the sale of such units.
vi. Revenue from passenger air charter is recognised upon commencement
of flight journey.
vii. Revenue from hotel operations is recognized upon rendering of
service.
viii. Freight income related to unclaimed parcels is recognised on
realisation basis.
ix. Interest on deposits is recognised on time proportion basis.
x. Dividend income is recognised when the right to receive the dividend
is established.
xi. Rent income is recognised on time proportion basis.
xii. Advertisement income is recognised when the related advertisement
or commercial appears before the public.
xiii. Provision for expenses against trip advance is made on an
estimated basis.
k) Employee Benefits
i. All short term employee benefits are accounted on undiscounted basis
during the accounting period based on services rendered by employees.
ii. The Company's contribution to Provident Fund and Employees State
Insurance Scheme is determined based on a fixed percentage of the
eligible employees' salary and charged to the Statement of Profit and
Loss. The Company has categorised its Provident Fund and the Employees
State Insurance Scheme as a defined contribution plan since it has no
further obligations beyond these contributions.
iii. The Company's liability towards gratuity and compensated
absences, being defined benefit plans are accounted for on the basis of
an independent actuarial valuation and actuarial gains/losses are
charged to the Statement of Profit and Loss. Gratuity liability is
funded by payments to the trust established for the purpose.
l) Borrowing Costs
Borrowing costs attributable to the acquisition and construction of
qualifying assets are capitalised as part of the cost of such assets up
to the date such assets are ready for their intended use. Other
borrowing costs are treated as revenue expenditure.
m) Taxation
i. Tax expenses comprise current tax (amount of tax for the period
determined in accordance with the Income Tax Regulations in India) and
deferred tax charge or credit (reflecting the tax effects of timing
differences between accounting income and taxable income for the
period).
ii. The deferred tax charge or credit and the corresponding deferred
tax liabilities or assets are recognised using the tax rates that have
been enacted or substantively enacted by the Balance Sheet date.
Deferred tax assets are recognised only to the extent there is
reasonable certainty that the assets can be realised in future;
however, where there is unabsorbed depreciation or carry forward losses
under taxation laws, deferred tax assets are recognised only if there
is a virtual certainty of realisation of such assets. Deferred tax
assets are reviewed at each Balance Sheet date and written down or
written up to reflect the amount that is reasonably / virtually
certain, as the case may be, to be realised.
iii. Tax credit is recognised in respect of Minimum Alternate Tax (MAT)
as per the provisions of Section 115JAA of the Income Tax Act, 1961
based on convincing evidence that the Company will pay normal income
tax within the statutory time frame and is reviewed at each Balance
Sheet date.
n) Provisions and Contingent Liabilities
Provisions are recognised in the financial statements in respect of
present probable obligations, for amounts which can be reliably
estimated.Contingent liabilities are disclosed in respect of possible
obligations that arise from past events, whose existence would be
confirmed by the occurrence or non occurrence of one or more uncertain
future events not wholly within the control of the Company. Such
liabilities are disclosed by way of notes to the financial statements.
No disclosure is made if the possibility of an outflow on this account
is remote.
Mar 31, 2014
A) Basis for Preparation of Financial Statements
The financial statements, which have been prepared under the historical
cost convention on the accrual basis of accounting, are in accordance
with the applicable requirements of the Companies Act, 1956 (the
''Act''), read with the General Circular 15/2013 dated 13 September 2013
of the Ministry of Corporate Affairs in respect of section 133 of the
Companies Act, 2013 and comply in all material aspects with the
Accounting Standards prescribed by the Central Government, in
accordance with the Companies (Accounting Standards) Rules, 2006, to
the extent applicable. The accounting policies have been consistently
applied by the Company and are consistent with those used in the
previous year.
b) Use of Estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent liabilities on the date
of financial statements and reported amounts of revenue and expenses
for that year. Actual results could differ from these estimates. Any
revision to accounting estimates is recognised prospectively in current
and future periods.
All assets and liabilities have been classified as current and
non-current as per normal operating cycle of the Company and other
criteria set out in the Revised Schedule VI to the Companies Act, 1956.
Based on nature of products / services, the Company has ascertained its
operating cycle as 12 months for the purpose of current and non-current
classification of assets and liabilities.
c) Fixed Assets and Capital Work in progress
i. Fixed Assets are stated at cost of acquisition or construction less
accumulated depreciation / amortisation. Cost includes inward freight,
taxes and expenses incidental to acquisition and installation, up to
the point the asset is ready for its intended use.
ii. Direct expenses as well as clearly identifiable indirect expenses,
incurred during the period of construction of building and body
building of vehicles are capitalised with the respective assets in
accordance with the ratio determined and certified by Company''s
Management.
iii. Assets acquired but not ready for use and stock of body building
materials are classified under Capital work in progress and are stated
at cost comprising direct cost and related incidental expenses.
d) Depreciation
i. Depreciation on fixed assets is provided under the straight line
method at the rates and in the manner specified under Schedule XIV to
the Companies Act, 1956, which also represents the useful life of the
fixed assets.
ii. Cost of leasehold land and leasehold improvements is amortised over
the period of the lease or its useful life, whichever is lower.
iii. Goodwill is amortised over a period of five years.
iv. Software is amortised over a period of five years.
v. Furniture, Fixtures and Office Equipment is depreciated over a
period of fifteen years.
vi. Depreciation on replaced vehicle bodies is restricted to the
period that is co-terminus with balance working life of such vehicles.
vii. Assets costing less than Rs.5000 are fully depreciated on the date
of purchase.
e) Leases
Operating Leases are those leases where the lessor retains substantial
risks and benefits of ownership of leased assets. Rentals in such cases
are expensed with reference to lease terms and other considerations on
a straight line basis.
f) Impairment of Assets
Management evaluates at regular intervals, using external and internal
sources, the need for impairment of any asset. Impairment occurs where
the carrying value of the asset exceeds the present value of future
cash flows expected to arise from the continuing use of the asset and
its net realisable value on eventual disposal. Any loss on account of
impairment is expensed as the excess of the carrying amount over the
higher of the asset''s net sales price or present value, as determined.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However, the carrying value
after reversal is not increased beyond the carrying value that would
have prevailed by charging usual depreciation if there was no
impairment.
g) Foreign Currency Transactions
i. Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing at the date of the transaction.
ii. Monetary assets and liabilities denominated in foreign currencies
at the year end are restated at the rate of exchange prevailing on the
date of the Balance Sheet.
iii. Any exchange difference on account of settlement of foreign
currency transactions and restatement of monetary assets and
liabilities denominated in foreign currency is recognised in the
Statement of Profit and Loss.
h) Investments
Investments are classified into current investments and non-current
investments. Current investments, i.e. investments that are readily
realisable and intended to be held for not more than a year are valued
at lower of cost and net realisable value. Any reduction in the
carrying amount or any reversal of such reductions are charged or
credited to the Statement of Profit and Loss.
Non-current investments are stated at cost. Provision for diminution in
the value of these investments is made only if such decline is other
than temporary, in the opinion of the Management.
i) Valuation of Inventories
Consumables and stores and spares are valued at lower of cost computed
on first-in-first out basis or net realisable value. Stock of tyres is
valued based on specific identification method. Obsolete, defective,
unserviceable and slow / non moving stocks are duly provided for.
j) Recognition of Income and Expenditure
i. Income and Expenditure is recognised on accrual basis and provision
is made for all known losses and liabilities.
ii. Revenue from Goods transport and Courier service is recognised when
goods / documents are delivered to the customers.
iii. Revenue from Bus operation is recognised upon commencement of
journey of passengers.
iv. Revenue from sale of power is recognised upon deposit of units of
generated power at the grid of the purchasing electricity company.
v. Revenue from sale of eligible carbon credit units such as Verified
/ Certified Emission Reductions units (VERs)/ (CERs) is recognised on
completion of the validation process for units generated and entering
of a definitive binding agreement for the sale of such units.
vi. Revenue from passenger air charter is recognised upon commencement
of flight journey.
vii. Revenue from hotel operations is recognized upon rendering of
service.
viii. Freight income related to unclaimed parcels is recognised on
realisation basis.
ix. Interest on deposits is recognised on time proportion basis.
x. Dividend income is recognised when the right to receive the
dividend is established.
xi. Rent income is recognised on time proportion basis.
xii. Advertisement income is recognised when the related advertisement
or commercial appears before the public.
xiii. Provision for expenses against trip advance is made on an
estimated basis.
k) Employee Benefits
i. All short term employee benefits are accounted on undiscounted
basis during the accounting period based on services rendered by
employees.
ii. The Company''s contribution to Provident Fund and Employees State
Insurance Scheme is determined based on a fixed percentage of the
eligible employees'' salary and charged to the Statement of Profit and
Loss. The Company has categorised its Provident Fund and the Employees
State Insurance Scheme as a defined contribution plan since it has no
further obligations beyond these contributions.
iii. The Company''s liability towards gratuity and compensated absences,
being defined benefit plans is accounted for on the basis of an
independent actuarial valuation done as at the year end and actuarial
gains / losses are charged to the Statement of Profit and Loss.
Gratuity liability is funded by payments to the trust established for
the purpose.
l) Borrowing Costs
Borrowing costs attributable to the acquisition and construction of
qualifying assets are capitalised as part of the cost of such assets up
to the date such assets are ready for their intended use. Other
borrowing costs are treated as revenue expenditure.
m) Taxation
i. Tax expenses comprise current tax (amount of tax for the period
determined in accordance with the Income Tax Regulations in India) and
deferred tax charge or credit (reflecting the tax effects of timing
differences between accounting income and taxable income for the
period).
ii. The deferred tax charge or credit and the corresponding deferred
tax liabilities or assets are recognised using the tax rates that have
been enacted or substantively enacted by the Balance Sheet date.
Deferred tax assets are recognised only to the extent there is
reasonable certainty that the assets can be realised in future;
however, where there is unabsorbed depreciation or carry forward losses
under taxation laws, deferred tax assets are recognised only if there
is a virtual certainty of realisation of such assets. Deferred tax
assets are reviewed at each Balance Sheet date and written down or
written up to reflect the amount that is reasonably / virtually
certain, as the case may be, to be realised.
iii. Tax credit is recognised in respect of Minimum Alternate Tax (MAT)
as per the provisions of Section 115JAA of the Income Tax Act, 1961
based on convincing evidence that the Company will pay normal income
tax within the statutory time frame and is reviewed at each Balance
Sheet date.
n) Provisions and Contingent Liabilities
Provisions are recognised in the financial statements in respect of
present probable obligations, for amounts which can be reliably
estimated.
Contingent liabilities are disclosed in respect of possible obligations
that arise from past events, whose existence would be confirmed by the
occurrence or non occurrence of one or more uncertain future events not
wholly within the control of the Company. Such liabilities are
disclosed by way of notes to the financial statements. No disclosure is
made if the possibility of an outflow on this account is remote.
Mar 31, 2013
A) Basis for Preparation of Financial Statements
The financial statements have been prepared under the historical cost
convention on accrual basis using accounting principles generally
accepted in India and comply with the Accounting Standards notified by
Companies (Accounting Standards) Rules, 2006, to the extent applicable
and the provisions of the Companies Act, 1956, as applied consistently
by the Company.
b) Use of Estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent liabilities on the date
of financial statements and reported amounts of revenue and expenses
for that year. Actual results could differ from these estimates. Any
revision to accounting estimates is recognised prospectively in current
and future periods.
All assets and liabilities have been classified as current and
non-current as per normal operating cycle of the Company and other
criteria set out in the Revised Schedule VI to the Companies Act, 1956.
Based on nature of products / services, the Company has ascertained its
operating cycle as 12 months for the purpose of current and non-current
classification of assets and liabilities.
c) Fixed Assets and Capital Work in progress
i. Fixed Assets are stated at cost of acquisition or construction less
accumulated depreciation / amortisation. Cost includes inward freight,
taxes and expenses incidental to acquisition and installation, up to
the point the asset is ready for its intended use.
ii. Direct expenses as well as clearly identifiable indirect expenses,
incurred during the period of construction of building and body
building of vehicles are capitalised with the respective assets in
accordance with the ratio determined and certified by Company''s
Management.
iii. Assets acquired but not ready for use and stock of body building
materials are classified under Capital work in progress and are stated
at cost comprising direct cost and related incidental expenses.
d) Depreciation
I. Depreciation on fixed assets is provided under the straight line
method at the rates and in the manner specified under Schedule XIV to
the Companies Act,
1956, which also represents the useful life of the fixed assets.
ii. Cost of leasehold land and leasehold improvements is amortised over
the period of the lease or its useful life, whichever is lower.
iii. Goodwill is amortised over a period of five years.
iv. Software is amortised over a period of five years.
v. Furniture, Fixtures and Office Equipment is depreciated over a
period of fifteen years.
vi. Depreciation on replaced vehicle bodies is restricted to the period
that is co-terminus with balance working life of such vehicles.
vii. Assets costing less than Rs.5,000 are fully depreciated on the
date of purchase.
e) Leases
Operating Leases are those leases where the lessor retains substantial
risks and benefits of ownership of leased assets. Rentals in such cases
are expensed with reference to lease terms and other considerations on
a straight line basis.
f) Impairment of Assets
Management evaluates at regular intervals, using external and internal
sources, the need for impairment of any asset. Impairment occurs where
the carrying value of the asset exceeds the present value of future
cash flows expected to arise from the continuing use of the asset and
its net realisable value on eventual disposal. Any loss on account of
impairment is expensed as the excess of the carrying amount over the
higher of the asset''s net sales price or present value, as determined.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However, the carrying value
after reversal is not increased beyond the carrying value that would
have prevailed by charging usual depreciation if there was no
impairment.
g) Foreign Currency Transactions
i. Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing at the date of the transaction.
ii. Monetary assets and liabilities denominated in foreign currencies
at the year end are restated at the rate of exchange prevailing on the
date of the Balance Sheet.
iii. Any exchange difference on account of settlement of foreign
currency transactions and restatement of monetary assets and
liabilities denominated in foreign currency is recognised in the
Statement of Profit and Loss.
h) Investments
Investments are classified into current investments and non-current
investments. Current investments, i.e. investments that are readily
realisable and intended to be held for not more than a year are valued
at lower of cost and net realisable value. Any reduction in the
carrying amount or any reversal of such reductions are charged or
credited to the Statement of Profit and Loss.
Non-current investments are stated at cost. Provision for diminution in
the value of these investments is made only if such decline is other
than temporary, in the opinion of the Management.
i) Valuation of Inventories
Consumables and stores and spares are valued at lower of cost computed
on first-in-first out basis or net realisable value. Stock of tyres is
valued based on specific identification method. Obsolete, defective,
unserviceable and slow/non moving stocks are duly provided for.
j) Recognition of Income and Expenditure
i. Income and Expenditure is recognised on accrual basis and provision
is made for all known losses and liabilities.
ii. Revenue from Goods transport and Courier service is recognised when
goods / documents are delivered to the customers.
iii. Revenue from Bus operation is recognised upon commencement of
journey of passengers.
iv. Revenue from sale of power is recognised upon deposit of units of
generated power at the grid of the purchasing electricity company.
v. Revenue from sale of eligible carbon credit units such as Verified
/ Certified Emission Reductions units (VERs) / (CERs) is recognised on
completion of the validation process for units generated and entering
of a definitive binding agreement for the sale of such units.
vi. Revenue from passenger air charter is recognised upon commencement
of flight journey.
vii. Freight income related to unclaimed parcels is recognised on
realisation basis.
viii. Interest on deposits is recognised on time proportion basis.
ix. Dividend income is recognised when the right to receive the
dividend is established.
x. Rent income is recognised on time proportion basis.
xi. Provision for expenses against trip advance is made on an
estimated basis.
k) Employee Benefits
i. All short term employee benefits are accounted on undiscounted
basis during the accounting period based on services rendered by
employees.
ii. The Company''s contribution to Provident Fund and Employees State
Insurance Scheme is determined based on a fixed percentage of the
eligible employees'' salary and charged to the Statement of Profit and
Loss. The Company has categorised its Provident Fund and the
Employees State Insurance Scheme asa defined contribution plan since it
has no further obligations beyond these contributions.
iii. The Company''s liability towards gratuity and compensated absences,
being defined benefit plans is accounted for on the basis of an
independent actuarial valuation done as at the year end and actuarial
gains / losses are charged to the Statement of Profit and Loss.
Gratuity liability is funded by payments to the trust established for
the purpose.
l) Borrowing Costs
Borrowing costs attributable to the acquisition and construction of
qualifying assets are capitalised as part of the cost of such assets up
to the date such assets are ready for their intended use. Other
borrowing costs are treated as revenue expenditure.
m) Taxation
i. Tax expenses comprise current tax (amount of tax for the period
determined in accordance with the Income Tax Regulations in India) and
deferred tax charge or credit (reflecting the tax effects of timing
differences between accounting income and taxable income for the
period).
ii. The deferred tax charge or credit and the corresponding deferred
tax liabilities or assets are recognised using the tax rates that have
been enacted or substantively enacted by the Balance Sheet date.
Deferred tax assets are recognised only to the extent there is
reasonable certainty that the assets can be realised in future;
however, where there is unabsorbed depreciation or carry forward losses
under taxation laws, deferred tax assets are recognised only if there
is a virtual certainty of realisation of such assets. Deferred tax
assets are reviewed at each Balance Sheet date and written down or
written up to reflect the amount that is reasonably / virtually
certain, as the case may be, to be realised.
iii. Tax credit is recognised in respect of Minimum Alternate Tax (MAT)
as per the provisions of Section 115JAA of the Income Tax Act, 1961
based on convincing evidence that the Company will pay normal income
tax within the statutory time frame and is reviewed at each Balance
Sheet date.
n) Provisions and Contingent Liabilities
Provisions are recognised in the financial statements in respect of
present probable obligations, for amounts which can be reliably
estimated.
Contingent liabilities are disclosed in respect of possible obligations
that arise from past events, whose existence would be confirmed by the
occurrence or non occurrence of one or more uncertain future events not
wholly within the control of the Company. Such liabilities are
disclosed by way of notes to the financial statements. No disclosure is
made if the possibility of an outflow on this account is remote.
Mar 31, 2012
A) Basis for Preparation of Financial Statements
The financial statements have been prepared under the historical cost
convention on accrual basis using accounting principles generally
accepted in India and comply with the Accounting Standards notified by
Companies (Accounting Standards) Rules, 2006, to the extent applicable
and the provisions of the Companies Act, 1956, as applied consistently
by the Company.
b) Use of Estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent liabilities on the date
of financial statements and reported amounts of revenue and expenses
for that year. Actual results could differ from these estimates. Any
revision to accounting estimates is recognized prospectively in current
and future periods.
c) Fixed Assets and Capital Work in progress
i. Fixed Assets are stated at cost of acquisition or construction less
accumulated depreciation / amortization. Cost includes inward freight,
taxes and expenses incidental to acquisition and installation, up to
the point the asset is ready for its intended use.
ii. Direct expenses as well as clearly identifiable indirect expenses,
incurred during the period of construction of building and body
building of vehicles are capitalized with the respective assets in
accordance with the ratio determined and certified by Company''s
Management.
iii. Assets acquired but not ready for use and stock of body building
materials are classified under Capital work in progress and are stated
at cost comprising direct cost and related incidental expenses.
d) Depreciation
i. Depreciation on fixed assets is provided under the straight line
method at the rates and in the manner specified under Schedule
XIV to the Companies Act, 1956, which also represents the useful life
of the fixed assets.
ii. Cost of leasehold land and leasehold improvements is amortized
over the period of the lease or its useful life, whichever is lower.
iii. Goodwill is amortized over a period of five years.
iv. Software is amortized over a period of five years.
v. Office Equipment forming part of Furniture, Fixtures and Office
Equipment is depreciated over a period of fifteen years.
vi. Depreciation on replaced vehicle bodies is restricted to the
period that is co-terminus with balance working life of such vehicles.
vii. Assets costing less than Rs.5,000 are fully depreciated on the
date of purchase.
e) Leases
Operating Leases are those leases where the less or retains substantial
risks and benefits of ownership of leased assets. Rentals in such cases
are expensed with reference to lease terms and other considerations on
a straight line basis.
f) Impairment of Assets
Management evaluates at regular intervals, using external and internal
sources, the need for impairment of any asset. Impairment occurs where
the carrying value of the asset exceeds the present value of future
cash flows expected to arise from the continuing use of the asset and
its net realizable value on eventual disposal. Any loss on account of
impairment is expensed as the excess of the carrying amount over the
higher of the asset''s net sales price or present value, as determined.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However, the carrying value
after reversal is not increased beyond the carrying value that would
have prevailed by charging usual depreciation if there was no
impairment.
g) Foreign Currency Transactions
i. Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing at the date of the transaction.
ii. Monetary assets and liabilities denominated in foreign currencies
at the year end are restated at the rate of exchange prevailing on the
date of the Balance Sheet.
iii. Any exchange difference on account of settlement of foreign
currency transactions and restatement of monetary assets and
liabilities denominated in foreign currency is recognized in the
Statement of Profit and Loss.
h) Investments
Investments are classified into current investments and non-current
investments. Current investments, i.e. investments that are readily
realizable and intended to be held for not more than a year are valued
at lower of cost and net realizable value. Any reduction in the
carrying amount or any reversal of such reductions are charged or
credited to the Statement of Profit and Loss.
Non-current investments are stated at cost. Provision for diminution in
the value of these investments is made only if such decline is other
than temporary, in the opinion of the Management.
i) Valuation of Inventories
Consumables and stores and spares are valued at lower of cost computed
on First-in-First out basis or net realizable value. Obsolete,
defective, unserviceable and slow / non moving stocks are duly provided
for.
j) Recognition of Income and Expenditure
i. Income and Expenditure is recognized on accrual basis and provision
is made for all known losses and liabilities.
ii. Revenue from Goods transport and Courier service is recognized
when goods / documents are delivered to the customers.
iii. Revenue from Bus operation is recognized upon commencement of
journey of passengers.
iv. Revenue from sale of power is recognized upon deposit of units of
generated power at the grid of the purchasing electricity company.
v. Revenue from sale of eligible carbon credit units such as Verified
/ Certified Emission Reductions units (VERs) / (CERs) is recognized on
completion of the validation process for units generated and entering
of a definitive binding agreement for the sale of such units.
vi. Revenue from passenger air charter is recognized upon commencement
of flight journey.
vii. Freight income related to unclaimed parcels is recognised on
realization basis.
viii. Interest on deposits is recognized on time proportion basis.
ix. Dividend income is recognized when the right to receive the
dividend is established.
x. Rent income is recognized on time proportion basis.
xi. Provision for expenses against trip advance is made on an
estimated basis.
k) Employee Benefits
i. All short term employee benefits are accounted on undiscounted
basis during the accounting period based on services rendered by
employees.
ii. The Company''s contribution to Provident Fund is remitted to the
office of the Regional Provident Fund Commissioner based on a fixed
percentage of the eligible employees'' salary and is charged to
Statement of Profit and Loss. The Company has categorized its Provident
Fund as a defined contribution plan since it has no further obligations
beyond these contributions.
iii. The Company''s liability towards gratuity and compensated absences,
being defined benefit plans is accounted for on the basis of an
independent actuarial valuation done as at the year end and actuarial
gains / losses are charged to the Statement of Profit and Loss.
Gratuity liability is funded by payments to the trust established for
the purpose.
l) Borrowing Costs
Borrowing costs attributable to the acquisition and construction of
qualifying assets are capitalized as part of the cost of such assets
up to the date such assets are ready for their intended use. Other
borrowing costs are treated as revenue expenditure.
m) Taxation
i. Tax expenses comprise current tax (amount of tax for the period
determined in accordance with the Income Tax Regulations in India) and
deferred tax charge or credit (reflecting the tax effects of timing
differences between accounting income and taxable income for the
period).
ii. The deferred tax charge or credit and the corresponding deferred
tax liabilities or assets are recognized using the tax rates that have
been enacted or substantively enacted by the Balance Sheet date.
Deferred tax assets are recognized only to the extent there is
reasonable certainty that the assets can be realized in future;
however, where there is unabsorbed depreciation or carry forward losses
under taxation laws, deferred tax assets are recognized only if there
is a virtual certainty of realization of such assets. Deferred tax
assets are reviewed at each Balance Sheet date and written down or
written up to reflect the amount that is reasonably / virtually
certain, as the case may be, to be realized.
iii. Tax credit is recognized in respect of Minimum Alternate Tax (MAT)
as per the provisions of Section 115JAA of the Income Tax Act, 1961
based on convincing evidence that the Company will pay normal income
tax within the statutory time frame and is reviewed at each Balance
Sheet date.
n) Provisions and Contingent Liabilities
Provisions are recognized in the financial statements in respect of
present probable obligations, for amounts which can be reliably
estimated.
Contingent liabilities are disclosed in respect of possible obligations
that arise from past events, whose existence would be confirmed by the
occurrence or non occurrence of one or more uncertain future events not
wholly within the control of the Company. Such liabilities are
disclosed by way of notes to the financial statements. No disclosure is
made if the possibility of an outflow on this account is remote.