Mar 31, 2023
1 Corporate information
The financial statements comprise financial statements of Adani Ports and Special Economic Zone Limited ("the Company" or "APSEZL'') (CIN : L63090GJ1998PLC034182) for the year ended March 31,2023. The Company is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its shares are listed on two recognized stock exchanges in India. The registered office of the Company is located at Adani Corporate House, Shantigram, Near Vaishno Devi Circle, S.G.Highway, Khodiyar, Ahmedabad-382421.
The Company is in the business of development, operations and maintenance of port infrastructure (port services and related infrastructure development) and has linked multi product Special Economic Zone (SEZ) and related infrastructure contiguous to Port at Mundra. The initial port infrastructure facilities at Mundra including expansion thereof through development of additional port terminals and south port terminal infrastructure facilities which are developed pursuant to the concession agreement with Government of Gujarat (GoG) and Gujarat Maritime Board (GMB) for 30 years period effective from February 17, 2001. At Mundra, the Company has expanded port infrastructure facilities at West Basin through GoG approval for which the concession period will be effective till the year 2040, primarily to handle coal cargo. The said supplementary concession agreement is in the process of getting signed with GoG and GMB although Coal terminal at Wandh is recognized as commercially operational w.e.f. February 01, 2011.
The first Container Terminal facility (CT-1) developed at Mundra, was transferred under a Sub-Concession Agreement entered on January 7, 2003 between Mundra International Container Terminal Limited (MICTL) and the Company in line with the Concession Agreement, wherein the ownership of the asset (CT 1) was transferred by the Company to the MICTL. MICTL was given rights to handle container cargo at the CT 1 Terminal for a period that was co-terminus with the Concession Agreement of Mundra Port, i.e. till February 16, 2031. The container terminal facilities developed at South Port location include CT-3, for development of which the Company had entered into an agreement with the Adani International Container Terminal Private Limited (AICTPL), a 50:50 Joint Venture between the Company and Mundi Limited (subsidiary of (Mediterranean Shipping Company) MSC shipping line). AICTPL is
a sub-concessionaire as per the arrangement and the ownership of the CT 3 Terminal is transferred to AICTPL in line with the Sub-Concession Agreement dated October 17, 2011. The period of the said Sub-Concession Agreement is also co-terminus with the Concession Agreement of Mundra Port, and during the said period AICTPL can handle container cargo at CT 3 terminal. In the financial year 2017-18, Sub-Concession Agreement was entered into for the extension of CT 3 Terminal. This terminal, an extension of CT 3 was developed and ownership of the same was also transferred to AICTPL in line with the above. Operations commenced at CT 3 Extension w.e.f. November 01, 2017.
As part of South Port, the third Container Terminal is CT 4, the ownership of this terminal
is also transferred after development to a sub-concessionaire in line with the Mundra Concession Agreement; who in this case is Adani CMA Mundra Terminal Private Limited (ACMTPL), a 50:50 Joint Venture between the Company and CMA Terminals, France (joint venture agreement dated July 30, 2014). The company has already obtained sub-concessionaire approval from GMB/ GoG for container terminals that are developed and operated under sub-concession route. However, the Sub-Concession Agreements for Terminals of CT 3, CT 3 Extension and CT 4 are to be approved by GOG for the final signing between parties and GMB as confirming party.
The Multi Product Special Economic Zone
developed at Mundra by the Company along with port infrastructure facilities is approved by the Government of India vide their letter no. F-2/11/2003/EPZ dated April 12, 2006 and subsequently amended from time to time till date. The Company has also set up Free Trade and Warehousing Zone at Mundra based on approval of Ministry of Commerce and Industry vide letter no.F.1/16/2011-SEZ dated January 04, 2012. The Company has also set up additional Multi Product Special Economic Zone at Mundra Taluka over an area of 1,856 hectares as per approval from Ministry of Commerce and Industry vide approval letter dated April 24, 2015. The Company has received single notification consolidating all three notified SEZ in Mundra vide letter dated March 15, 2016 of Ministry of Commerce and Industry, Department of Commerce (SEZ Section).
The financial statements were authorised for issue in accordance with a resolution of the
directors on May 30, 2023.
2.1 The financial statements of the Company has been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules,
2015 as amended from time to time.
Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in accounting policy as mentioned in note 2.2 (w) hitherto in use.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured
at fair value or revalued amount:
- Derivative financial instruments,
- Defined Benefit Plans - Plan Assets measured
at fair value; and
- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments).
In addition, the financial statements are presented in Indian Rupees (H) in Crore and all values are rounded off to two decimal (H00,00,000), except
when otherwise indicated.
a) Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ noncurrent classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle; or
- Held primarily for the purpose of trading;
or
- Expected to be realised within twelve months after the reporting period; or
- Cash and cash equivalent unless
restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is classified as current when:
- It is expected to be settled in normal operating cycle; or
- It is held primarily for the purpose of
trading; or
- It is due to be settled within twelve months after the reporting period; or
- There is no unconditional right to defer
the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities respectively.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. The Company has identified twelve months as its operating cycle.
The Company''s financial statements are presented in INR, which is functional currency
of the Company. The Company determines the functional currency and items included in the
financial statements are measured using that functional currency. However, for practical
reasons, the Company uses an average rate if the average approximates the actual rate at the date of transaction.
Transactions and balances
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
c) Fair value measurement
The Company measures financial instruments,
such as, derivatives 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 is 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 â Quoted (unadjusted) market
prices in active markets for identical assets or liabilities
- Level 2 â Valuation techniques for which the lowest level input that is significant
to the fair value measurement is directly or indirectly observable
- Level 3 â 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 Management determines the policies and procedures for both recurring fair value measurement, such as derivative financial instruments and unquoted financial assets measured at fair value and for non recurring fair value measurement, such as an assets under the scheme of business undertaking.
External valuers are involved for valuation of significant assets, such as business undertaking for transfer under the scheme and unquoted financial assets and financial liabilities, Involvement of external valuers is decided upon annually by the Management and in specific cases after discussion with and approval by the Company''s Audit Committee. Selection criteria includes market knowledge, reputation, independence and whether professional standards are maintained. The Management decides, after discussions with the Company''s external valuers, which valuation techniques and inputs to use for each case.
At each reporting date, the Management analyses the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Company''s accounting policies. For this analysis, the Management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The Management, in conjunction with the
Company''s external valuers, also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.
For the purpose of fair value disclosures,
the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures
are given in the relevant notes.
- Disclosures for valuation methods,
significant estimates and assumptions (refer note 34.2 and 2.3)
- Quantitative disclosures of fair value measurement hierarchy (refer note 34.2)
- Investment in unquoted equity shares (refer note 4)
- Financial instruments (including those carried at amortised cost) (refer note
34.1)
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to
which the Company expects to be entitled in exchange for those goods or services.
The specific recognition criteria described below must also be met before revenue is recognized.
Port Operation Services
Revenue from port operation services including cargo handling, storage, rail infrastructure and other ancillary port
services are recognized in the accounting period in which the services are transferred to
the customer at an amount that reflects the consideration to which the company expects to be entitled in exchange for those services.
In cases, where the contracts include multiple contract obligations, the transaction price will be allocated to each performance obligation
based on the standalone selling prices. Where these prices are not directly observable, they are estimated based on expected cost plus
margin. Revenue recorded by the company is net of variable consideration on account of various discounts offered by the Company as part of the contract.
Revenue on take-or-pay charges are recognized for the quantity that is the difference between annual agreed tonnage and actual quantity of cargo handled. The amount recognized as revenue is exclusive of goods & service tax where applicable.
Income in the nature of license fees / waterfront royalty and revenue share is recognized in accordance with terms and conditions of relevant service agreement with customers/ sub concessionaire.
Income towards infrastructure premium is
recognized as revenue in the year in which the Company provides access to its common infrastructure.
The Company''s business operations includes
in construction and development of infrastructure assets. Where the outcome of the project cannot be estimated reasonably, Revenue from contracts for such construction and development activities is recognized on completion of relevant activities under the contract and the transfer of control of the infrastructure when all significant risks and rewards of ownership in the infrastructure assets are transferred to the customer .
For all financial assets measured either at amortized cost or at fair value through other
comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in other income in the statement of profit and loss.
Revenue is recognized when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
e) Government Grants
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions
will be complied with. When the grant relates
to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognized either as an income in equal amounts over the expected useful life of the related asset or by deducting grant in arriving at the carrying amount of the assets.
Waterfront royalty on cargo under the concession agreement is paid at concessional rate in terms of rate prescribed by Gujarat Maritime Board (GMB) and notified in official
gazette of Government of Gujarat, wherever applicable.
Tax expense comprises of current income tax and deferred tax.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. Current income tax(including Minimum Alternate Tax (MAT)) is measured at the amount expected to be paid to the tax authorities in accordance with the Income-Tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted, at the reporting date.
Current income tax relating to items recognized outside the statement of profit and loss is recognized outside the statement of profit and loss (either in other comprehensive income (OCI) or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax is provided using the balance
sheet approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
-When the deferred tax liability arises from
the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
In respect of taxable temporary differences associated with investments In subsidiaries,
associates and interests in joint ventures, deferred tax is not recognised when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse In the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:
-When the deferred tax asset relating to the deductible temporary difference arises
from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
In respect of deductible temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient future taxable profit will be
available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognized outside the statement of profit and loss is recognized outside the statement of profit and loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.
The Company recognizes tax credits in the nature of Minimum Alternate Tax (MAT) credit
as an asset only to the extent that there is sufficient taxable temporary difference / convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which tax credit is allowed to be carried forward. In the year in which the Company recognizes tax credits as an asset, the said asset is created by way of tax credit to the statement of profit and loss. The Company reviews the such tax credit asset at each reporting date and writes down the asset to the extent the Company does not have sufficient taxable temporary difference /convincing evidence that it will pay normal tax during the specified period. Deferred tax includes MAT tax credit.
Property, plant and equipment are stated at cost net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises the purchase price, borrowing
costs (if capitalisation criteria are met) and other cost directly attributable to bringing the asset to its working condition for the intended use.
Property, Plant and Equipment and Capital Work in progress are stated at cost. Such cost includes the cost of replacing parts of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of plant and equipment
are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are charged to statement of profit or loss as incurred.
The Company adjusts exchange differences arising on translation difference/settlement of long term foreign currency monetary items outstanding in the Indian GAAP financial
statements for the period ending immediately before the beginning of the first Ind AS financial statements i.e. March 31, 2016 and pertaining to the acquisition of a depreciable asset to the cost of asset and depreciates the same over the remaining useful life of the asset. The depreciation on such foreign exchange difference is recognised from first day of the financial year.
Borrowing cost relating to acquisition / construction of Property, Plant and Equipment
which take substantial period of time to get ready for its intended use are also included to
the extent they relate to the period till such assets are ready to be put to use.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as prescribed under Part C of Schedule
II of the Companies Act, 2013 except for the assets mentioned below for which useful lives estimated by the management and assessment made by expert. The identified component of fixed assets are depreciated over their useful lives and the remaining components are depreciated over the life of the principal assets. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
The Company has estimated the following useful life to provide depreciation on its certain Property, Plant and Equipments based on assessment made by expert and management estimate.
Assets |
Estimated Useful life |
Leasehold Land Development |
Over the balance period of Concession Agreement and approved Supplementary Concession Agreement by Gujarat Maritime board as applicable |
Marine Structure, Dredged Channel, Building RCC Frame Structure |
50 Years as per concession agreement |
Dredging Pipes - Plant and Machinery |
1,5 Years |
Nylon and Steel coated belt on Conveyor - Plant and Equipment |
4 Years and 10 Years respectively |
Inner Floating and outer floating hose, String of Single Point Mooring - Plant and Machinery |
6 Years |
Fender, Buoy installed at Jetty - Marine Structures |
5 - 10 Years |
Drains & Culverts |
25 Years as per concession agreement |
Carpeted Roads -Other than RCC |
10 Years |
Tugs |
20 Years as per concession agreement |
At the end of the sub-concession agreement and supplementary concession agreement, all contracted immovable and movable assets shall be transferred to and shall vest in Gujarat Maritime Board (''GMB'') for consideration equivalent to the Depreciated Replacement Value (the ''DRV''). Currently DRV is not determinable, accordingly, residual value of contract asset is considered to be the carrying value based on depreciation rates as per management estimate/ Schedule II of the Companies Act, 2013 at the end of concession period.
An item of property, plant and equipment covered under Concession agreement, subconcession agreement and supplementary concession agreement, shall be transferred to and shall vest in Grantor (government
authorities) at the end of respective concession agreement. In cases, where the Company is expected to receive consideration of residual value of property from grantor at
the end of concession period, the residual value of contracted property is considered as the carrying value at the end of concession period based on depreciation rates as per management estimate/Schedule II of the Companies Act, 2013 and in other cases it is H Nil.
An item of property, plant and equipment and any significant part initially recognized
is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising
on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognized,
The residual values, useful lives and methods
of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively.
Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the asset will flow to the company and the cost of the asset can be measured reliably. Intangible assets acquired separately are measured on initial recognition at cost, Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are
assessed as either finite or indefinite,
Intangible assets with finite lives are
amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset
with a finite useful life are reviewed at least at the end of each reporting period, Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Intangible assets with indefinite useful
lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset 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 derecognised.
A summary of the policies applied to the Company''s intangible assets is as follows:
Intangible Assets |
Method of Amortisation |
Estimated Useful life |
Software applications |
on straight line basis |
5 Years based on management estimate |
Railway License |
on straight line basis |
35 Years based on validity of license |
Borrowing costs directly attributable to the acquisition, construction or production of
an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent
regarded as an adjustment to the borrowing costs.
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
i) Right-of-Use Assets
The Company recognises right-of-use assets ("RoU Assetsâ) at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and accumulated impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
If ownership of the leased asset transferred to the company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment. Refer to the accounting policies in section (I) Impairment of nonfinancial assets.
ii) Lease Liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives
receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees, The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate, Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs,
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date in case the interest rate implicit in the lease is not readily determinable, After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made, In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e,g,, changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset,
The Company applies the short-term lease recognition exemption to its shortterm leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option), It also applies the lease of low-value assets recognition exemption that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are
recognised as expense on a straight-line basis over the lease term,
Company as a lessor Income from long term leases
As a part of its business activity, the Company leases / sub-leases certain assets on long term basis to its customers, Leases are classified as finance lease whenever the terms of lease transfer substantially all the risks and rewards of ownership to the lessee, All other leases are classified as operating lease, In some cases, the Company enters into cancellable lease / sub-lease transaction agreement, while in other cases, it enters into non-cancellable lease / sub-lease agreement. The Company recognizes the income based on the principles of leases as set out in relevant accounting standard and accordingly in cases where the lease / sub-lease agreement are cancellable in nature, the income in the nature of upfront premium received / receivable is recognized on operating lease basis i.e. on a straight line basis over the period of lease / sub-lease agreement / date of memorandum of understanding takes effect over lease period and annual lease rentals are recognized on an accrual basis,
In cases where long term lease / sublease agreement are non-cancellable in nature, the income is recognized on finance lease basis i.e. at the inception of lease / sub-lease agreement / date of memorandum of understanding takes effect over lease period, the income recognized is equal to the present value of the minimum lease payment over the lease period (including non-refundable upfront premium) which is substantially equal to the fair value of leased / subleased. In respect of land given on finance lease basis, the corresponding cost of the land and development costs incurred are expensed off in the statement of profit and loss,
Inventories are valued at lower of cost and net realisable value.
Stores and Spares: Valued at lower of cost and net realisable value. Cost is determined
on a moving weighted average basis. Cost of stores and spares lying in bonded warehouse includes custom duty payable.
Stores and Spares which do not meet the definition of property, plant and equipment are accounted as inventories.
Costs incurred that relate to future contract
activities are recognised as "Project Work-inProgressâ.
Project work-in-progress comprise specific contract costs and other directly attributable overheads including borrowing costs which can be allocated on specific contract cost is, valued at lower of cost and net realisable value.
Net Realisable Value in respect of stores and
spares is the estimated current procurement price in the ordinary course of the business.
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for
an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair
value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are
corroborated by valuation multiples, quoted share prices for publicly traded companies or
other available fair value indicators.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a longterm growth rate is calculated and applied to project future cash flows after the fifth year.
Impairment losses including impairment on inventories, are recognised in the statement of profit and loss.
For assets excluding goodwill, an assessment
is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit and loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.
Goodwill is tested for impairment annually as
at every year end and when circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by
assessing the recoverable amount of CGU to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
Intangible assets with indefinite useful lives
are tested for impairment annually at year end at the CGU level, as appropriate, and when circumstances indicate that the carrying value may be impaired.
General
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 mad e of the amount of the obligation. The expense relating to a provision is presented in the statement of profit and loss. Contingent liabilities are not recognised but disclosed unless the probability of an outflow of resources is remote. Contingent assets are disclosed where inflow of economic benefits is probable.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Operational Claim provisions
Provisions for operational claims are recognised when the service is provided to the customer. Further recognition is based on historical experience. The initial estimate of operational claim related cost is revised annually.
Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid.
The Company operates a defined benefit gratuity plan in India, which requires
contributions to be made to a separately administered fund. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.
Re-measurements, comprising of actuarial
gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included
in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to statement of profit and loss in subsequent periods.
Net interest is calculated by applying the
discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
- Net interest expense or income
Accumulated leave, which is expected to be utilised within the next twelve months, is treated as short term employee benefits. The Company measures the expected cost of such absence as the additional amount that is expected to pay as a result of the unused estimate that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months as long term compensated absences which are provided for based on actuarial valuation as at the end of the period. The actuarial valuation is done as per projected unit credit method. The Company presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer it''s settlement for twelve months after the reporting date.
o) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
All financial assets are recognised initially
at fair value plus in case of financial asset
not recorded at fair value through profit and
loss, transaction cost that are attributable to the acquisition of the financial assets. Trade receivable that do not contain a significant financing component are initially recognised at transaction price.
Subsequent measurement
For purposes of subsequent measurement,
financial assets are classified in three categories:
- Debt instruments at amortised cost
- Debt instruments, derivative financial instruments and equity instruments at fair value through profit or loss (FVTPL)
- Equity instruments measured at fair value
through other comprehensive income (FVTOCI)
A ''debt instrument'' is measured at the amortised cost if both the following conditions are met:
(a) The asset is held within a business model
whose objective is to hold assets for collecting contractual cash flows, and
(b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount
outstanding.
The category is most relevant to the Company. After initial measurement, such
financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. 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 in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss except where the Company has given temporary waiver of interest not exceeding 12 months period. This category generally applies to trade, loans and other receivables.
FVTPL is a residual category for debt
instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
Debt instruments included within the FVTPL
category are measured at fair value with all changes recognized in the statement of profit and loss.
The Company classifies its debt instruments which are held for trading under FVTPL category. Held for trading assets are recorded and measured in the Balance Sheet at fair value. Gains and losses on changes in fair value of debt instruments are recognised on net basis through profit or loss.
A debt instrument is subsequently measured at fair value through other comprehensive
income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling
financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Equity investments
All equity investments in scope of Ind AS 109 are measured at fair value. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income, subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the
FVTPL category are measured at fair value with all changes recognized in the P&L.
Perpetual debt
The Company invests in a subordinated perpetual debt, redeemable at the issuer''s option, with a fixed coupon that can be deferred indefinitely if the issuer does not pay
a dividend on its equity shares. The Company classifies these instruments as equity under Ind AS 32.
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e.
removed from the Company''s balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying
amount of the asset and the maximum amount of consideration that the Company could be required to repay.
The Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial
assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g. loans, debt securities, deposits, trade receivables and bank balances.
b) Financial assets that are debt instruments and are measured as at other comprehensive income (FVTOCI)
c) Lease receivables under relevant accounting standard
d) Trade receivables or any contractual right
to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115
The Company follows ''simplified approach'' for recognition of impairment loss allowance on:
- Trade receivables or contract revenue receivables; and
- All lease receivables resulting from transactions within the scope of relevant accounting standard
Under the simplified approach the Company does not track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right
from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12 month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used.
ECL is the difference between all contracted cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original EIR. ECL impairment loss allowance (or reversal) recognised during the period is recognised as income / (expense) in the statement of profit and loss (P&L).
The balance sheet presentation for various financial instruments is described below:
ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company
does not reduce impairment allowance from the gross carrying amount.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilitie
Mar 31, 2022
1. Corporate information
The financial statements comprise financial statements of Adani Ports and Special Economic Zone Limited ("the Company " or "APSEZU'') for the year ended March 31, 2022. The Company is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its shares are listed on two recognized stock exchanges in India. The registered office of the Company is located at Adani Corporate House, Shantigram, Near Vaishno Devi Circle, S.G.Highway, Khodiyar, Ahmedabad-382421.
The Company is in the business of development, operations and maintenance of port infrastructure (port services and related infrastructure development) and has linked multi product Special Economic Zone (SEZ) and related infrastructure contiguous to Port at Mundra. The initial port infrastructure facilities at Mundra including expansion thereof through development of additional port terminals and south port terminal infrastructure facilities are developed pursuant to the concession agreement with Government of Gujarat (GoG) and Gujarat Maritime Board (GMB) for 30 years period effective from February 17, 2001. At Mundra, the Company has expanded port infrastructure facilities through approved supplementary concession agreement (pending to be concluded) which will be effective till the year 2040, whereby port infrastructure has been developed at Wandh at Mundra to handle coal cargo. The said agreement is in the process of getting signed with GoG and GMB although Coal terminal at Wandh is recognized as commercially operational w.e.f. February 01, 2011.
The first Container Terminal facility (CT-1)
developed at Mundra, was transferred under a Sub-Concession Agreement entered on January 7, 2003 between Mundra International Container Terminal Limited (MICTL) and the Company in line with the Concession Agreement, wherein the ownership of the asset (CT 1) was transferred by the Company to the MICTL. MICTL was given rights to handle container cargo at the CT 1 Terminal for a period that was co-terminus with the Concession Agreement of Mundra Port, i.e. till February 17, 2031. The container terminal facilities developed at South Port location include CT-3, for development of which the Company had entered into an agreement with the Adani International Container Terminal Private Limited (AICTPL), a 50:50 Joint Venture between the Company and MSC (Mediterranean Shipping Company). AICTPL
is a sub-concessionaire as per the arrangement and the ownership of the CT 3 Terminal is transferred to AICTPL in line with the SubConcession Agreement dated October 17, 2011. The period of the Sub-Concession Agreement is co-terminus with the Concession Agreement of Mundra Port, and during the said period AICTPL can handle container cargo at CT 3 terminal. In the financial year 2017-18, Sub-Concession Agreement was entered into for the extension of CT 3 Terminal. This terminal, an extension of CT 3 was developed and ownership of the same was also transferred to AICTPL in line with the above. Operations commenced at CT 3 Extension w.e.f. November 01, 2017. As part of South Port, the third Container Terminal is CT 4, the ownership of this terminal is also transferred after development to a sub-concessionaire in line with the Mundra Concession Agreement; who in this case is Adani CMA Mundra Terminal Private Limited (ACMTPL), a 50:50 Joint Venture between the Company and CMA Terminals, France (joint venture agreement dated July 30,2014). The Sub-Concession Agreements for Terminals of CT 3, CT 3 Extension and CT 4 are to be approved by GOG for the final signing between parties and GMB as confirming party.
The Multi Product Special Economic Zone developed at Mundra by the Company along with port infrastructure facilities is approved
by the Government of India vide their letter no. F-2/11/2003/EPZ dated April 12, 2006 and subsequently amended from time to time till date. The Company has also set up Free Trade and Warehousing Zone at Mundra based on approval of Ministry of Commerce and Industry vide letter no.F.1/16/2011-SEZ dated January 04, 2012. The Company has also set up additional Multi Product Special Economic Zone at Mundra Taluka over an area of 1,856 hectares as per approval from Ministry of Commerce and Industry vide approval letter dated April 24, 2015. The Company has received single notification consolidating all three notified SEZ in Mundra vide letter dated March 15, 2016 of Ministry of Commerce and Industry, Department of Commerce (SEZ Section).
The financial statements were authorised for issue in accordance with a resolution of the
directors on May 24, 2022.
2. Basis of Preparation
2.1 The financial statements of the Company has been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the
Companies (Indian Accounting Standards) Rules,
2015 as amended from time to time.
Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in accounting policy as mentioned in note 2.2 (u) hitherto in use.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured
at fair value or revalued amount:
- Derivative financial instruments,
- Defined Benefit Plans - Plan Assets measured
at fair value; and
- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments).
In addition, the financial statements are presented in Indian Rupees (H) in Crore and all values are rounded off to two decimal (H00,00,000), except
when otherwise indicated.
2.2 Summary of significant accounting policies
a) Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ noncurrent classification. An asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle; or
- Held primarily for the purpose of trading;
or
- Expected to be realized within twelve months after the reporting period; or
- Cash and cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle; or
- It is held primarily for the purpose of
trading; or
- It is due to be settled within twelve months after the reporting period; or
- There is no unconditional right to defer
the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities respectively.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. The Company has identified twelve months as its operating cycle.
b) Foreign currency transactions :
The Company''s financial statements are presented in INR, which is functional currency
of the Company. The Company determines the functional currency and items included in the
financial statements are measured using that functional currency. However, for practical
reasons, the Company uses an average rate if the average approximates the actual rate at the date of transaction.
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction.
Monetary assets and liabil ities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in profit or loss with the exceptions for which below treatment is given as per the option availed under Ind AS 101:
i. Exchange differences arising on long-term foreign currency monetary items related to acquisition of a property, plant and equipment (including funds used for projects work-in-progress) recognised in the Indian GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period i.e. March 31, 2016 are capitalised / decapitalised to cost of Property, Plant and Equipment and depreciated over the remaining useful life of the asset.
ii. Exchange differences arising on other outstanding long term foreign currency monetary items recognised in the Indian GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period i.e. March 31, 2016 were accumulated in the "Foreign Currency Monetary Item Translation Difference Accountâ (FCMITDA) and were amortized over the remaining life of the concerned monetary item or financial year 2019-20, whichever is earlier.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
c) Fair value measurement
The Company measures financial
instruments, such as, derivatives 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 is 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 â Quoted (unadjusted) market
prices in active markets for identical assets or liabilities
- Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 â 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 Management determines the policies and procedures for both recurring fair value measurement, such as derivative financial instruments and unquoted financial assets measured at fair value and for non recurring fair value measurement, such as an assets under the scheme of business undertaking.
External valuers are involved for valuation of significant assets, such as business undertaking for transfer under the scheme and unquoted financial assets and financial liabilities, Involvement of external valuers is decided upon annually by the Management and in specific cases after discussion with and approval by the Company''s Audit Committee. Selection criteria includes market knowledge, reputation, independence and whether professional standards are maintained. The Management decides, after discussions with the Company''s external valuers, which valuation techniques and inputs to use for each case.
At each reporting date, the Management analyses the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Company''s accounting policies. For this analysis, the Management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The Management, in conjunction with the
Company''s external valuers, also compares the change in the fair value of each asset and liability with relevant external sources to
determine whether the change is reasonable.
For the purpose of fair value disclosures, the Company has determined classes of
assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures
are given in the relevant notes.
- Disclosures for valuation methods,
significant estimates and assumptions (refer note 34.2 and 2.3)
- Quantitative disclosures of fair value measurement hierarchy (refer note 34.2)
- Investment in unquoted equity shares (refer note 4)
- Financial instruments (including those
carried at amortised cost) (refer note 34.1)
d) Revenue recognition
Revenue from contracts with customers is
recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
The specific recognition criteria described below must also be met before revenue is recognized.
Revenue from port operation services including cargo handling, storage, rail infrastructure and other ancillary port services are recognized in the accounting
period in which the services are transferred to
the customer at an amount that reflects the consideration to which the company expects to be entitled in exchange for those services.
In cases, where the contracts include multiple contract obligations, the transaction price will
be allocated to each performance obligation based on the standalone selling prices. Where these prices are not directly observable, they are estimated based on expected cost plus
margin.
Revenue on take-or-pay charges are recognized for the quantity that is the difference between annual agreed tonnage and actual quantity of cargo handled. The amount recognized as revenue is exclusive of goods & service tax where applicable.
Income in the nature of license fees / waterfront royalty and revenue share is recognized in accordance with terms and conditions of relevant service agreement with customers/ sub concessionaire.
Income towards infrastructure premium is recognized as revenue in the year in which
the Company provides access to its common infrastructure.
Income from long term leases
As a part of its business activity, the Company leases / sub-leases certain assets on long term basis to its customers. Leases are classified as finance lease whenever the terms of lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating lease. In some cases, the Company enters into cancellable lease / sub-lease transaction agreement, while in other cases, it enters into non-cancellable lease / sub-lease agreement. The Company recognizes the income based on the principles of leases as set out in relevant accounting standard and accordingly in cases where the lease / sub-lease agreement are cancellable in nature, the income in the nature of upfront premium received / receivable is recognized on operating lease basis i.e. on a straight line basis over the period of lease / sublease agreement / date of memorandum of understanding takes effect over lease period and annual lease rentals are recognized on an accrual basis.
In cases where long term lease / sub-lease agreement are non-cancellable in nature, the income is recognized on finance lease basis i.e. at the inception of lease / sublease agreement / date of memorandum of understanding takes effect over lease period, the income recognized is equal to the present value of the minimum lease payment over the lease period (including non-refundable upfront premium) which is substantially equal to the fair value of leased / sub-leased. In respect of land given on finance lease basis, the corresponding cost of the land and development costs incurred are expensed off in the statement of profit and loss.
Development of Infrastructure Assets
The Company''s business operations includes
in construction and development of infrastructure assets. Where the outcome of
the project cannot be estimated reasonably, Revenue from contracts for such construction
and development activities is recognized on completion of relevant activities under the contract and the transfer of control of the infrastructure when all significant risks and
rewards of ownership in the infrastructure assets are transferred to the customer .
Income from Services Exports from India Scheme (''SEIS'') incentives under Government''s Foreign Trade Policy 2015-20
on the port services income is recognised based on effective rate of incentive under the scheme, provided no significant uncertainty exists for the measurability, realisation and utilisation of the credit under the scheme. The receivables related to SEIS licenses are classified as ''Other Non-Financial Assets''.
For all financial assets measured either at amortized cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument
(for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
Revenue is recognized when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
Rental income
Rental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit and loss due to its operating nature.
e) Government Grants
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognized either as an income in equal amounts over the expected useful life of the related asset or by deducting grant in arriving at the carrying amount of the assets.
Waterfront royalty on cargo under the concession agreement is paid at concessional rate in terms of rate prescribed by Gujarat Maritime Board (GMB) and notified in official
gazette of Government of Gujarat, wherever applicable.
f) Taxes
Tax expense comprises of current income tax and deferred tax.
Current income tax
Current income tax assets and liabilities
are measured at the amount expected to be recovered from or paid to the taxation authorities. Current income tax(including Minimum Alternate Tax (MAT)) is measured
at the amount expected to be paid to the tax authorities in accordance with the Income-Tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted, at the reporting date.
Current income tax relating to items recognized outside the statement of profit and loss is recognized outside the statement of profit and loss (either in other comprehensive income (OCI) or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate,
Deferred tax is provided using the balance
sheet approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all
taxable temporary differences, except:
- When the deferred tax liability arises from the initial recognition of goodwill or an
asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
In respect of taxable temporary differences associated with investments In subsidiaries,
associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse In the foreseeable future,
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused
tax losses, Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:
- When the deferred tax asset relating to the deductible temporary difference arises
from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss,
In respect of deductible temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures,
deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised,
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient future taxable profit will be available to allow all or part of the deferred tax asset to be utilized, Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered,
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date,
Deferred tax relating to items recognized outside the statement of profit and loss is recognized outside the statement of profit and loss (either in other comprehensive income or in equity), Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity,
The Company recognizes tax credits in the nature of Minimum Alternate Tax (MAT) credit as an asset only to the extent that there is sufficient taxable temporary difference / convincing evidence that the Company will pay normal income tax during the specified period, i,e,, the period for which tax credit is allowed to be carried forward, In the year in which the Company recognizes tax credits as an asset, the said asset is created by way of tax credit to the statement of profit and loss, The Company reviews the such tax credit asset at each reporting date and writes down the asset to the extent the Company does not have sufficient taxable temporary difference /convincing evidence that it will pay normal tax during the specified period, Deferred tax includes MAT tax credit,
g) Property, Plant and Equipment (PPE)
Property, plant and equipment are stated at cost net of accumulated depreciation and accumulated impairment losses, if any, The cost comprises the purchase price, borrowing
costs (if capitalisation criteria are met) and other cost directly attributable to bringing
the asset to its working condition for the intended use. The Company has elected to regard previous GAAP carrying values of property, plant and equipment as deemed cost at the date of transition to Ind AS i.e April 01, 2015.
Property, Plant and Equipment and Capital work in progress are stated at cost. Such cost includes the cost of replacing parts of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in statement of profit or loss as incurred.
The Company adjusts exchange differences arising on translation difference/settlement of long term foreign currency monetary items outstanding in the Indian GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial statements i.e. March 31, 2016 and pertaining to the acquisition of a depreciable asset to the cost of asset and depreciates the same over the remaining useful life of the asset. The depreciation on such foreign exchange difference is recognised from first day of the financial year.
Borrowing cost relating to acquisition / construction of Property, Plant and Equipment
which take substantial period of time to get ready for its intended use are also included to
the extent they relate to the period till such assets are ready to be put to use.
Depreciation is calculated on a straight-line
basis over the estimated useful lives of the assets as prescribed under Part C of Schedule
II of the Companies Act 2013 except for the assets mentioned below for which useful lives estimated by the management. The Identified component of Property, Plant and Equipment are depreciated over their useful lives and the remaining components are depreciated over the life of the principal assets. The management believes that these
estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
The Company has estimated the following useful life to provide depreciation on its certain Property, Plant and Equipment assets based on assessment made by expert and
management estimate.
Assets |
Estimated Useful life |
Leasehold Land Development |
Over the balance period of Concession Agreement and approved Supplementary Concession Agreement by Gujarat Maritime board as applicable |
Marine Structure, Dredged Channel, Building RCC Frame Structure |
50 Years as per concession agreement |
Dredging Pipes - Plant and Machinery |
1.5 Years |
Nylon and Steel coated belt on Conveyor - Plant and Equipment |
4 Years and 10 Years respectively |
Inner Floating and outer floating hose, String of Single Point Mooring - Plant and Machinery |
6 Years |
Fender, Buoy installed at Jetty -Marine Structures |
5 - 10 Years |
Bridges, Drains & Culverts |
25 Years as per concession agreement |
Carpeted Roads -Other than RCC |
10 Years |
Tugs |
20 Years as per concession agreement |
At the end of the sub-concession agreement and supplementary concession agreement, all contracted immovable and movable assets shall be transferred to and shall vest in Gujarat Maritime Board (''GMB'') for consideration equivalent to the Depreciated
Replacement Value (the ''DRV''). Currently DRV is not determinable, accordingly, residual
value of contract asset is considered to be the carrying value based on depreciation rates as per management estimate/ Schedule II of the Companies Act, 2013 at the end of concession period.
An item of property, plant and equipment covered under Concession agreement, subconcession agreement and supplementary concession agreement, shall be transferred to and shall vest in Grantor (government authorities) at the end of respective concession agreement. In cases, where the Company is expected to receive consideration of residual value of property from grantor at the end of concession period, the residual value of contracted property is considered as the carrying value at the end of concession period based on depreciation rates as per management estimate/Schedule II of the Companies Act, 2013 and in other cases it is H Nil.
An item of property, plant and equipment and any significant part initially recognized
is derecognized u pon d isposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising
on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognized.
The residual values, useful lives and methods
of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively.
h) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets
are carried at cost less any accumulated amortization and accumulated impairment losses. Internally generated intangibles are not capitalised and the related expenditure is reflected in statement of profit and loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are
assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and
assessed for impairment whenever there is
an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Intangible assets with indefinite useful
lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset 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 derecognised.
A summary of the policies applied to the Company''s intangible assets is as follows:
Intangible Assets |
Method of Amortisation |
Estimated Useful life |
Software applications |
on straight line basis |
5 Years based on management estimate |
Railway License |
on straight line basis |
35 Years based on validity of license |
Borrowing costs directly attributable to the
acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds, Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs,
j) Leases
The Company assesses at contract inception whether a contract is, or contains, a lease, That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration,
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets, The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets,
i) Right-of-Use Assets
The Company recognises right-of-use assets ("RoU Assetsâ) at the commencement date of the lease (i,e,, the date the underlying asset is available for use), Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received, Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets,
If ownership of the leased asset transferred to the company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset, The right-of-use assets are also subject to impairment, Refer to the accounting policies in section (I) Impairment of nonfinancial assets,
ii) Lease Liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease
term, The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees, The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate, Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs,
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date in case the interest rate implicit in the lease is not readily determinable, After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made, In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e,g,, changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset,
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its shortterm leases (i,e,, those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option), It also applies the lease of low-value assets recognition exemption that are considered to be low value, Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term,
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straightline basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under
finance leases are recorded as receivables at the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
k) Inventories
Inventories are valued at lower of cost and net realisable value.
Stores and Spares: Valued at lower of cost and net realizable value. Cost is determined
on a moving weighted average basis. Cost of stores and spares lying in bonded warehouse includes custom duty payable.
Stores and Spares which do not meet the definition of property, plant and equipment are accounted as inventories.
Costs incurred that relate to future contract
activities are recognised as "Project Work-inProgress.â
Project work-in-progress comprise specific contract costs and other directly attributable overheads including borrowing costs which can be allocated on specific contract cost is, valued at lower of cost and net realisable value.
Net Realizable Value in respect of stores and spares is the estimated current procurement
price in the ordinary course of the business.
l) Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that
an asset may be impaired. If any indication exists, or when annual impairment testing for
an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a longterm growth rate is calculated and applied to project future cash flows after the fifth year.
Impairment losses including impairment on inventories, are recognised in the statement
of profit and loss.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously
recognised impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying
amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit and loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.
Goodwill is tested for impairment annually as
at every year end and when circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by
assessing the recoverable amount of CGU to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
Intangible assets with indefinite useful lives
are tested for impairment annually as at year end at the CGU level, as appropriate, and when circumstances indicate that the carrying value may be impaired.
m) 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. The expense relating to a provision is presented in the statement of profit and loss. Contingent liabilities are not recognised but disclosed unless the probability of an outflow of resources is remote. Contingent assets are disclosed where inflow of economic benefits is probable.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Operational Claim provisions
Provisions for operational claims are recognised when the service is provided to the customer. Further recognition is based
on historical experience. The initial estimate of operational claim related cost is revised annually.
n) Retirement and other employee benefits
Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid.
The Company operates a defined benefit gratuity plan in India, which requires contributions to be made to a separately administered fund. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to statement of profit and loss in subsequent periods.
Net interest is calculated by applying the
discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
- Net interest expense or income
Accumulated leave, which is expected to be utilised within the next twelve months, is treated as short term employee benefits. The Company measures the expected cost of such absence as the additional amount
that is expected to pay as a result of the unused estimate that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months as long term compensated absences which are provided for based on actuarial valuation as at the end of the period. The actuarial valuation is done as per projected unit credit method. The Company presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer it''s settlement for twelve months after the reporting date.
o) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument
of another entity.
Financial assetsInitial recognition and measurement
All financial assets are recognised initially at fair value plus in case of financial asset not recorded at fair value through profit and loss,
transaction cost that are attributable to the acquisition of the financial assets.
For purposes of subsequent measurement,
financial assets are classified in three categories:
- Debt instruments at amortised cost
- Debt instruments, derivative financial
instruments and equity instruments at fair value through profit or loss (FVTPL)
- Equity instruments measured at fair value
through other comprehensive income (FVTOCI)
Debt instruments at amortised cost
A ''debt instrument'' is measured at the amortised cost if both the following conditions are met:
(a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
(b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount
outstanding.
The category is most relevant to the Company. After initial measurement, such
financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. 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 in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss except where the Company has given temporary waiver of interest not exceeding 12 months period. This category generally applies to trade, loans and other receivables.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
Debt instruments included within the FVTPL
category are measured at fair value with all changes recognized in the statement of profit and loss.
All equity investments in scope of Ind AS 109 are measured at fair value. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the
FVTPL category are measured at fair value with all changes recognized in the P&L.
Perpetual debt
The Company invests in a subordinated perpetual debt, redeemable at the issuer''s option, with a fixed coupon that can be
deferred indefinitely if the issuer does not pay
a dividend on its equity shares. The Company classifies these instruments as equity under
Ind AS 32.
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e.
removed from the Company''s balance sheet) when:
The rights to receive cash flows from the asset have expired, or
The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying
amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
The Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial
assets and credit risk exposure ;
a) Financial assets that are debt instruments, and are measured at amortised cost e.g. loans, debt securities, deposits, trade receivables and bank balances.
b) Financial assets that are debt instruments and are measured as at other comprehensive income (FVTOCI)
c) Lease receivables under relevant accounting standard
d) Trade receivables or any contractual right
to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115
The Company follows ''simplified approach''
for recognition of impairment loss allowance on:
- Trade receivables or contract revenue receivables; and
- All lease receivables resulting from
transactions within the scope of relevant accounting standard
Under the simplified approach the Company does not track changes in credit risk. Rather,
it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12 month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used
Mar 31, 2019
1.1 Summary of significant accounting policies
a) Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle; or
- Held primarily for the purpose of trading; or
- Expected to be realised within twelve months after the reporting period; or
- Cash and cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle; or
- It is held primarily for the purpose of trading; or
- It is due to be settled within twelve months after the reporting period; or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities respectively.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
b) Foreign currency transactions :
The Companyâs financial statements are presented in INR, which is functional currency of the Company. The Company determines the functional currency and items included in the financial statements are measured using that functional currency. However, for practical reasons, the Company uses an average rate if the average approximates the actual rate at the date of transaction.
Transactions and balances
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss with the exceptions for which below treatment is given as per the option availed under Ind AS 101:
i. Exchange differences arising on long-term foreign currency monetary items related to acquisition of a property, plant and equipment (including funds used for projects work-in-progress) recognised in the Indian GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period i.e. March 31, 2016 are capitalised / decapitalised to cost of Property, Plant and Equipment and depreciated over the remaining useful life of the asset.
ii. Exchange differences arising on other outstanding long term foreign currency monetary items recognised in the Indian GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period i.e. March 31, 2016 are accumulated in the âForeign Currency Monetary Item Translation Difference Accountâ (FCMITDA) and amortised over the remaining life of the concerned monetary item or financial year 2019-20 whichever is earlier.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
c) Fair value measurement
The Company measures financial instruments, such as, derivatives 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 is 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 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 â 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 Management determines the policies and procedures for both recurring fair value measurement, such as derivative financial instruments and unquoted financial assets measured at fair value and for non recurring fair value measurement, such as an assets under the scheme of business undertaking.
External valuers are involved for valuation of significant assets, such as business undertaking for transfer under the scheme and unquoted financial assets and financial liabilities, Involvement of external valuers is decided upon annually by the Management and in specific cases after discussion with and approval by the Companyâs Audit Committee. Selection criteria includes market knowledge, reputation, independence and whether professional standards are maintained. The Management decides, after discussions with the Companyâs external valuers, which valuation techniques and inputs to use for each case.
At each reporting date, the Management analyses the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Companyâs accounting policies. For this analysis, the Management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The Management, in conjunction with the Companyâs external valuers, also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value.
Other fair value related disclosures are given in the relevant notes.
- Disclosures for valuation methods, significant estimates and assumptions (refer note 32.2 and 2.3)
- Quantitative disclosures of fair value measurement hierarchy (refer note 32.2)
- Investment in unquoted equity shares (refer note 4)
- Financial instruments (including those carried at amortised cost) (refer note 32.1)
d) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
The specific recognition criteria described below must also be met before revenue is recognised.
Port Operation Services
Revenue from port operation services including cargo handling, storage, rail infrastructure and other ancillary port services are recognised in the accounting period in which the services are rendered on proportionate completion method basis based on services completed till reporting date. Revenue is recognised based on the actual service provided to the end of reporting period as a proportion of total services to be provided.
In cases, where the contracts include multiple contract obligations, the transaction price will be allocated to each performance obligation based on the standalone selling prices. Where these prices are not directly observable, they are estimated based on expected cost plus margin.
Revenue on take-or-pay charges are recognised for the quantity that is the difference between annual agreed tonnage and actual quantity of cargo handled. The amount recognised as revenue is exclusive of goods & services tax where applicable.
Income in the nature of license fees / waterfront royalty and revenue share is recognised in accordance with terms and conditions of relevant service agreement with customers/ sub concessionaire.
Income towards infrastructure premium is recognized as revenue in the year in which the Company provides access to its common infrastructure.
Income from long term leases
As a part of its business activity, the Company leases / sub-leases land on long term basis to its customers. Leases are classified as finance lease whenever the terms of lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating lease. In some cases, the Company enters into cancellable lease / sub-lease transaction agreement, while in other cases, it enters into non-cancellable lease / sub-lease agreement. The Company recognises the income based on the principles of leases as set out in Ind AS 17 âLeasesâ and accordingly in cases where the land lease / sub-lease agreement are cancellable in nature, the income in the nature of upfront premium received / receivable is recognised on operating lease basis i.e. on a straight line basis over the period of lease / sub-lease agreement / date of memorandum of understanding takes effect over lease period and annual lease rentals are recognised on an accrual basis.
In cases where long term land lease / sub-lease agreement are non-cancellable in nature, the income is recognised on finance lease basis i.e. at the inception of lease / sub-lease agreement / date of memorandum of understanding takes effect over lease period, the income recognised is equal to the present value of the minimum lease payment over the lease period (including non-refundable upfront premium) which is substantially equal to the fair value of land leased / sub-leased. In respect of land given on finance lease basis, the corresponding cost of the land and development costs incurred are expensed off in the statement of profit and loss.
Development of Infrastructure Assets
The Companyâs business operations includes construction and development of infrastructure assets. where the outcome of the project cannot be estimated reasonably, Revenue from contracts for such construction and development activities is recognised on completion of relevant activities under the contract and the transfer of control of the infrastructure when all significant risks and rewards of ownership in the infrastructure assets are transferred to the customer .
Income from SEIS
Income from Services Exports from India Scheme (âSEISâ) incentives under Governmentâs Foreign Trade Policy 2015-20 on the port services income is recognised based on effective rate of incentive under the scheme, provided no significant uncertainty exists for the measurability, realisation and utilisation of the credit under the scheme. The receivables related to SEIS licenses are classified as âOther Non-Financial Assetsâ.
Interest income
For all financial assets measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
Dividends
Revenue is recognised when the Companyâs right to receive the payment is established, which is generally when shareholders approve the dividend.
Rental income
Rental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit and loss due to its operating nature.
e) Government Grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset.
Waterfront royalty on cargo under the concession agreement is paid at concessional rate in terms of rate prescribed by Gujarat Maritime Board (GMB) and notified in official gazette of Government of Gujarat, wherever applicable.
f) Taxes
Tax expense comprises of current income tax and deferred tax.
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. Current income tax(including Minimum Alternate Tax (MAT)) is measured at the amount expected to be paid to the tax authorities in accordance with the Income-Tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted, at the reporting date.
Current income tax relating to items recognised outside the statement of profit and loss is recognised outside the statement of profit and loss (either in other comprehensive income (OCI) or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the balance sheet approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
- When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
In respect of taxable temporary differences associated with investments In subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse In the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
- When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient future taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit and loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
The Company recognises tax credits in the nature of Minimum Alternate Tax (MAT) credit as an asset only to the extent that there is sufficient taxable temporary difference /convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which tax credit is allowed to be carried forward. In the year in which the Company recognises tax credits as an asset, the said asset is created by way of tax credit to the statement of profit and loss. The Company reviews the such tax credit asset at each reporting date and writes down the asset to the extent the Company does not have sufficient taxable temporary difference /convincing evidence that it will pay normal tax during the specified period. Deferred tax includes MAT tax credit.
g) Property, Plant and Equipment (PPE)
Under the previous GAAP (Indian GAAP), fixed assets are stated at cost net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises the purchase price, borrowing costs (if capitalisation criteria are met) and other cost directly attributable to bringing the asset to its working condition for the intended use. The Company has elected to regard previous GAAP carrying values of property, plant and equipment as deemed cost at the date of transition to Ind AS.
Property, Plant and Equipment and Capital work in progress are stated at cost. Such cost includes the cost of replacing parts of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
The Company adjusts exchange differences arising on translation difference/settlement of long term foreign currency monetary items outstanding in the Indian GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial statements i.e. March 31, 2016 and pertaining to the acquisition of a depreciable asset to the cost of asset and depreciates the same over the remaining useful life of the asset. The depreciation on such foreign exchange difference is recognised from first day of the financial year.
Borrowing cost relating to acquisition / construction of Property, Plant and Equipment which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as prescribed under Part C of Schedule II of the Companies Act 2013 except for the assets mentioned below for which useful lives is estimated by the management. The Identified component of Property, Plant and Equipment are depreciated over their useful lives and the remaining components are depreciated over the life of the principal assets. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
The Company has estimated the following useful life to provide depreciation on its certain Property, Plant and Equipment assets based on assessment made by expert and management estimate.
An item of property, plant and equipment covered under Concession agreement, sub-concession agreement and supplementary concession agreement, shall be transferred to and shall vest in Grantor (government authorities) at the end of respective concession agreement. In cases, where the Company is expected to receive consideration of residual value of property from grantor at the end of concession period, the residual value of contracted property is considered as the carrying value at the end of concession period based on depreciation rates as per management estimate/ Schedule II of the Companies Act, 2013 and in other cases it is Nil.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
h) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles are not capitalised and the related expenditure is reflected in statement of profit and loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset 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 derecognised.
A summary of the policies applied to the Companyâs intangible assets is as follows:
i) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
j) Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
For arrangements entered into prior to April 01, 2015, the Company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.
Company as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Companyâs general policy on the borrowing costs . Contingent rentals are recognised as expenses in the periods in which they are incurred.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Companyâs net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
k) Inventories
Inventories are valued at lower of cost and net realisable value.
Stores and Spares: Valued at lower of cost and net realisable value. Cost is determined on a moving weighted average basis. Cost of stores and spares lying in bonded warehouse includes custom duty payable.
Stores and Spares which do not meet the definition of property, plant and equipment are accounted as inventories.
Costs incurred that relate to future contract activities are recognised as âProject Work-in-Progressâ.
Project work-in-progress comprise specific contract costs and other directly attributable overheads including borrowing costs which can be allocated on specific contract cost is, valued at lower of cost and net realisable value.
Net Realisable Value in respect of stores and spares is the estimated current procurement price in the ordinary course of the business.
l) Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash-generating unitâs (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Companyâs CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.
Impairment losses including impairment on inventories, are recognised in the statement of profit and loss.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the assetâs or CGUâs recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the assetâs recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit and loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.
Goodwill is tested for impairment annually as at every year end and when circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of CGU to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
Intangible assets with indefinite useful lives are tested for impairment annually as at year end at the CGU level, as appropriate, and when circumstances indicate that the carrying value may be impaired.
m) Provisions, Contingent Liabilities and Contingent Assets General
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. The expense relating to a provision is presented in the statement of profit and loss. Contingent liabilities are not recognised but disclosed unless the probability of an outflow of resources is remote. Contingent assets are disclosed where inflow of economic benefits is probable.
I f the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Operational Claim provisions
Provisions for operational claims are recognised when the service is provided to the customer. Further recognition is based on historical experience. The initial estimate of operational claim related cost is revised annually.
n) Retirement and other employee benefits
Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognises contribution payable to the provident fund scheme as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognised as a liability after deducting the contribution already paid.
The Company operates a defined benefit gratuity plan in India, which requires contributions to be made to a separately administered fund. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
- Net interest expense or income
Accumulated leave, which is expected to be utilised within the next twelve months, is treated as short term employee benefits. The Company measures the expected cost of such absence as the additional amount that is expected to pay as a result of the unused estimate that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months as long term compensated absences which are provided for based on actuarial valuation as at the end of the period. The actuarial valuation is done as per projected unit credit method. The Company presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer itâs settlement for twelve months after the reporting date.
o) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus in case of financial asset not recorded at fair value through profit and loss, transaction cost that are attributable to the acquisition of the financial assets.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in three categories:
- Debt instruments at amortised cost
- Debt instruments, derivative financial instruments and equity instruments at fair value through profit or loss (FVTPL)
- Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt instruments at amortised cost
A âdebt instrumentâ is measured at the amortised cost if both the following conditions are met:
(a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
(b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
The category is most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. 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 in finance income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss except where the Company has given temporary waiver of interest not exceeding 12 months period. This category generally applies to trade, loans and other receivables.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorisation as at amortised cost or as FVTOCI, is classified as at FVTPL.
Debt instruments included within the FVTPL category are measured at fair value with all changes recognised in the statement of profit and loss.
Equity investments
All equity investments in scope of Ind AS 109 are measured at fair value. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, The Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the statement of profit and loss.
Perpetual debt
The Company invests in a subordinated perpetual debt, redeemable at the issuerâs option, with a fixed coupon that can be deferred indefinitely if the issuer does not pay a dividend on its equity shares. The Company classifies these instruments as equity under Ind AS 32.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Companyâs balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
The Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure;
a) Financial assets that are debt instruments, and are measured at amortised cost e.g. loans, debt securities, deposits, trade receivables and bank balances.
b) Financial assets that are debt instruments and are measured as at other comprehensive income (FVTOCI)
c) Lease receivables under Ind AS 17
d) Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115
The Company follows âsimplified approachâ for recognition of impairment loss allowance on:
- Trade receivables or contract revenue receivables; and
- All lease receivables resulting from transactions within the scope of Ind AS 17
Under the simplified approach the Company does not track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12 month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used.
ECL is the difference between all contracted cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original EIR. ECL impairment loss allowance (or reversal) recognised during the period is recognised as income / (expense) in the statement of profit and loss (P&L). This amount is reflected under the head â Other Expensesâ in the P&L.
The balance sheet presentation for various financial instruments is described below:
Financial assets measured at amortised cost, contractual revenue receivables and lease receivables:
ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives, 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.
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109.
Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains / losses attributable to changes in own credit risk are recognised in OCI. These gains/ loss are not subsequently transferred to P&L. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit and loss. The Company has not designated any financial liability as at FVTPL.
Loans and borrowings
This is the category most relevant to the Company. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit and loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
This category generally applies to borrowings.
Financial guarantee contracts
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 through profit or loss (FVTPL), 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.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Companyâs senior management determines change in the business model as a result of external or internal changes which are significant to the Companyâs operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
Offsetting of 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.
p) Derivative financial instruments
Initial recognition and subsequent measurement The Company uses derivative financial instruments, such as forward currency contracts, cross currency swaps, options, interest rate futures and interest rate swaps to hedge its foreign currency risks and interest rate risks, respectively. Such derivative financial instruments are initially recognised at fair value through profit or loss (FVTPL) on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivative financial instrument or on settlement of such derivative financial instruments are recognized in statement of profit and loss and are classified as Foreign Exchange (Gain) / Loss except those relating to borrowings, which are separately classified under Finance Cost.
q) Redeemable preference shares
Redeemable preference shares are separated into liability and equity component based on the terms of the contract.
On issuance of the redeemable preference shares, the fair value of the liability component is determined using a market rate for an equivalent non-convertible instrument. This amount is classified as a financial liability measured at amortised cost (net of transaction costs) until it is extinguished on redemption.
Transaction costs are apportioned between the liability and equity component of the redeemable preference shares based on the allocation of proceeds to the liability and equity components when the instruments are initially recognised.
r) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Companyâs cash management.
s) Cash dividend to equity holders of the company
The Company recognises a liability to make cash to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
t) Earnings per share
Basic earnings per share are calculated by dividing the profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the profit the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
u) New and amended standards adopted by the Company
The Company has applied the following standards and amendments for the first time for annual reporting period commencing from April 01, 2018
Ind AS 115 Revenue from Contracts with Customers
The core principle of the standard is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further, the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers.
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 recognised at the date of initial application (Cumulative catch - up approach).
The Company adopted Ind AS 115 using the modified retrospective method of adoption. The adoption of the standard did not have any material impact on the financial statements of the Company.
Amendment to Ind AS 20, Accounting for Government Grants and Disclosure of Government Assistance
The amendment clarifies that where the government grant related to assets, including non-monetary grant at fair value, shall be presented in balance sheet either by setting up the grant as deferred income or deducting grant in arriving at the carrying amount of the asset. Prior to the amendment, Ind AS 20 did not allow the option to present asset related grant by deducting the grant from the carrying amount of the assets. This amendment do not have any impact on the financial statements.
Appendix B, Foreign Currency Transactions and Advance Consideration to Ind AS 21, The Effects of Changes in Foreign Exchange Rates
The Appendix B to Ind AS 21 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. If there are multiple payments or receipts in advance, then the entity must determine the transaction date for each payment or receipt of advance consideration. Entities may apply the Appendix requirements on a fully retrospective basis. Alternatively, an entity may apply these requirements prospectively to all assets, expenses and income in its scope that are initially recognised on or after:
- The beginning of the reporting period in which the entity first applies the Appendix, or
- The beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in which the entity first applies the Appendix.
The interpretation does not have any impact on the Companyâs financial statements.
Amendment to Ind AS 12, Income Taxes
The amendment clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount. Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity of the earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. Entities applying this relief must disclose that fact. These amendments do not have any impact on the financial statement of the Company as the Company has no deductible temporary differences or assets that are in the scope of the amendments.
Amendment to Ind AS 40, Investment Property
The amendment clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in managementâs intentions for the use of a property does not provide evidence of a change in use. Entities should apply the amendments prospectively to changes in use that occur on or after the beginning of the annual reporting period in which the entity first applies the amendments. An entity should reassess the classification of property held at that date and, if applicable, reclassify property to reflect the conditions that exist at that date. Retrospective application in accordance with Ind AS 8 is only permitted if it is possible without the use of hindsight. These amendments do not have any impact on the Companyâs financial statements.
Amendment to Ind AS 28, Investment in Associates and Joint Ventures
The amendment clarify that a venture capital organisation or a mutual fund, unit trust and similar entities may elect, at initial recognition, to measure investments in an associate or joint venture at fair value through profit or loss separately for each associate or joint venture. Further, Ind AS 28 permits an entity that is not an investment entity to retain the fair value measurement applied by its associates and joint venture (that are investment entities) when applying the equity method. Therefore, this choice is available, at initial recognition, for each investment entity associate or joint venture.
Ind AS 112, Disclosure of Interest in Other Entities
The amendment clarify that the disclosure requirements in Ind AS 112, other than those in paragraphs B10-B16, apply to an entityâs interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) that is classified (or included in a disposal Company that is classified) as held for sale.
2.3 Significant accounting judgments, estimates and assumptions
The preparation of the Companyâs Ind AS Financial Statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. 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.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the assetâs performance being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill with indefinite useful lives recognised by the Company.
Impairment of financial assets
The impairment provisions for Financial Assets are based on assumptions about risk of default and expected cash loss. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Companyâs past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Refer note 4 (b).
Taxes
Deferred tax (including MAT Credits) assets are recognised for unused tax credits to the extent that it is probable that taxable profit will be available against which the credits can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. Further details on taxes are disclosed in note 26.
Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assu
Mar 31, 2018
1 Corporate information
The financial statements comprise financial statements of Adani Ports and Special Economic Zone Limited ("the Company " or "APSEZL") for the year ended March 31, 2018. The Company is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its shares are listed on two recognized stock exchanges in India. The registered office of the Company is located at "Adani Houseâ, Mithakhali Six Roads, Navrangpura, Ahmedabad-380009
The Company is in the business of development, operations and maintenance of port infrastructure (port services and related infrastructure development) and has linked multi product Special Economic Zone (SEZ) and related infrastructure contiguous to Port at Mundra. The initial port infrastructure facilities at Mundra including expansion thereof through development of additional port terminals and south port terminal infrastructure facilities are developed pursuant to the concession agreement with Government of Gujarat (GoG) and Gujarat Maritime Board (GMB) for 30 years period effective from February 17, 2001. At Mundra, the Company has expanded port infrastructure facilities through approved supplementary concession agreement (pending to be concluded) which will be effective till the year 2040, whereby port infrastructure has been developed at Wandh at Mundra to handle coal cargo. The said agreement is in the process of getting signed with GoG and GMB although Coal terminal at Wandh is recognized as commercially operational w.e.f. February 1, 2011.
The first Container terminal facilities (CT-1) developed at Mundra, was transferred under sub-concession agreement entered into on January 7, 2003 between Mundra International Container Terminal Limited (MICTL) and the Company wherein the Company has given rights to MICTL to handle the container cargo for a period of 28 years i.e. up to February 17, 2031. The container terminal facilities developed at South Port location (CT-3) has been leased under approved sub concession agreement dated October 17, 2011 to (50:50) joint venture company, Adani International Container Terminal Private Limited (AICTPL), co-terminate with main concession agreement with GMB. During the year the Company has entered into an arrangement with the Adani International Container Terminal Private Limited (AICTPL), a Joint Venture, to sub lease new terminal CT-3 Extension besides CT-3. The said terminal commenced operations w.e.f. November 1, 2017. The said sub-concession agreement is pending to be concluded with GoG and GMB. Another container terminal facilities developed at South Port location (CT-4) has been leased to (50:50) joint venture company, Adani CMA Mundra Terminal Private Limited (ACMTPL) ( joint venture arrangement with CMA Terminals, France since July 30, 2014).The execution of sub-concession agreement between the Company, ACMTPL and GMB is pending as on date.
The Multi Product Special Economic Zone developed at Mundra by the Company along with port infrastructure facilities is approved by the Government of India vide their letter no. F-2/11/2003/EPZ dated April 12, 2006 and subsequently amended from time to time till date. The Company has also set up Free Trade and Warehousing Zone at Mundra based on approval of Ministry of Commerce and Industry vide letter no.F.1/16/2011-SEZ dated January 04, 2012. The Company has also set up additional Multi Product Special Economic Zone at Mundra Taluka over an area of 1,856 hectares as per approval from Ministry of Commerce and Industry vide approval letter dated April 24, 2015. The Company has received single notification consolidating all three notified SEZ in Mundra vide letter dated March 15, 2016 of Ministry of Commerce and Industry, Department of Commerce (SEZ Section).
The financial statements were authorized for issue in accordance with a resolution of the directors on May 03, 2018.
2 Basis of Preparation
2.1 The financial statements of the Company has been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended).
Effective April 1, 2016, the Company has adopted all the Ind AS standards and the adoption was carried out in accordance with Ind As 101, First-time Adoption of Indian Accounting Standards, with April 1, 2015 as the transition date. The transition was carried out from Indian Accounting Principles generally accepted in India as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP.
Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in accounting policy hitherto in use.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value or revalued amount:
-Derivative financial instruments,
-Defined Benefit Plans - Plan Assets measured at fair value; and
- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial
instruments).
In addition, the financial statements are presented in INR and all values are rounded to the nearest Crore (INR 00,00,000), except when otherwise indicated.
The Standalone Financial Statements for the year ended March 31, 2017 were audited by predecessor auditor.
2.2 Summary of significant accounting policies
a) Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle; or
- Held primarily for the purpose of trading; or
- Expected to be realized within twelve months after the reporting period; or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle; or
- It is held primarily for the purpose of trading; or
- I t is due to be settled within twelve months after the reporting period; or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as noncurrent.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities respectively.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
b) Foreign currency transactions :
The Company''s financial statements are presented in INR, which is functional currency of the Company. The Company determines the functional currency and items included in the financial statements are measured using that functional currency. However, for practical reasons, the Company uses an average rate if the average approximates the actual rate at the date of transaction.
Transactions and balances
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in profit or loss with the exceptions for which below treatment is given as per the option availed under Ind AS 101:
i. Exchange differences arising on long-term foreign currency monetary items related to acquisition of a property, plant and equipment (including funds used for projects Work-in-Progress) recognized in the Indian GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period i.e. March 31, 2016 are capitalized / recapitalized to cost of Property, Plant and Equipment and depreciated over the remaining useful life of the asset.
ii. Exchange differences arising on other outstanding long term foreign currency monetary items recognized in the Indian GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period i.e. March 31, 2016 are accumulated in the "Foreign Currency Monetary Item Translation Difference Account" (FCMITDA) and amortized over the remaining life of the concerned monetary item.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
c) Fair value measurement
The Company measures financial instruments, such as, derivatives 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 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 â 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 Management determines the policies and procedures for both recurring fair value measurement, such as derivative financial instruments and unquoted financial assets measured at fair value and for non recurring fair value measurement, such as an asset under the scheme of business undertaking.
External valuers are involved for valuation of significant assets, such as business undertaking for transfer under the scheme and unquoted financial assets and financial liabilities, Involvement of external valuers is decided upon annually by the Management and in specific cases after discussion with and approval by the Company''s Audit Committee. Selection criteria includes market knowledge, reputation, independence and whether professional standards are maintained. The Management decides, after discussions with the Company''s external valuers, which valuation techniques and inputs to use for each case.
At each reporting date, the Management analyses the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Company''s accounting policies. For this analysis, the Management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The Management, in conjunction with the Company''s external valuers, also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarizes accounting policy for fair value.
Other fair value related disclosures are given in the relevant notes.
- Disclosures for valuation methods, significant estimates and assumptions (refer note 33.2 and 2.3)
- Quantitative disclosures of fair value measurement hierarchy (refer note 33.2)
- Investment in unquoted equity shares (refer note 4)
- Financial instruments (including those carried at
amortized cost) (refer note 33.1)
d) Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
The specific recognition criteria described below must also be met before revenue is recognized.
Port Operation Services
Revenue from port operation services including cargo handling, storage and rail infrastructure are recognized on proportionate completion method basis based on services completed till reporting date. Revenue on take- or-pay charges are recognized for the quantity that is the difference between annual agreed tonnage and actual quantity of cargo handled. The amount recognized as a revenue is exclusive of service tax, education cess and goods & service tax where applicable.
Income in the nature of license fees / royalty is recognized as and when the right to receive such income is established as per terms and conditions of relevant service agreement.
Income from long term leases
As a part of its business activity, the Company leases / sub-leases land on long term basis to its customers. Leases are classified as finance lease whenever the terms of lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating lease. In some cases, the Company enters into cancellable lease / sub-lease transaction, while in other cases, it enters into non-cancellable lease / sub-lease transaction. The Company recognizes the income based on the principles of leases as set out in Ind AS 17 "Leasesâ and accordingly in cases where the land lease / sublease transaction are cancellable in nature, the income in the nature of upfront premium received / receivable is recognized on operating lease basis i.e. on a straight line basis over the period of lease / sub-lease agreement / date of memorandum of understanding takes effect over lease period and annual lease rentals are recognized on an accrual basis.
In cases where land lease / sub-lease transaction are non-cancellable in nature, the income is recognized on finance lease basis i.e. at the inception of lease / sublease agreement / date of memorandum of understanding takes effect over lease period, the income recognized is equal to the present value of the minimum lease payment over the lease period (including non-refundable upfront premium) which is substantially equal to the fair value of land leased / sub-leased. In respect of land given on finance lease basis, the corresponding cost of the land and development costs incurred are expensed off in the statement of profit and loss.
Deferred Infrastructure Usage
Income from infrastructure usage fee collected upfront basis from the customers is recognized over the balance contractual period on straight line basis.
Development of Infrastructure Assets
In case the Company is involved in development and construction of infrastructure assets where the outcome of the project cannot be estimated reasonably, revenue is recognized when all significant risks and rewards of ownership in the infrastructure assets are transferred to the customer and all critical approvals necessary for transfer of the project are received / obtained.
Contract Revenue
Revenue from construction contracts is recognized on a percentage completion method, in proportion that the contract costs incurred for work performed up to the reporting date stand to the estimated total contract costs indicating the stage of completion of the project. Contract revenue earned in excess of billing has been reflected under the head "Other Current Assetsâ and billing in excess of contract revenue has been reflected under the head "Other Current Liabilitiesâ in the balance sheet. Full provision is made for any loss in the year in which it is first foreseen and cost incurred towards future contract activity is classified as Project Work-in-Progress.
Income from fixed price contract - Revenue from infrastructure development project / services under fixed price contract, where there is no uncertainty as to measurement or collectability of consideration is recognized based on milestones reached under the contract.
Income from SEIS
Income from Services Exports from India Scheme (''SEIS'') incentivesâ under Government''s Foreign Trade Policy 2015-20 on the port services income are classified as
''Other Operating Income'' and is recognized based on effective rate of incentive under the scheme, provided no significant uncertainty exists for the measurability, realization and utilization of the credit under the scheme. The receivables related to SEIS licenses are classified as ''Other Non-Financial Assets''.
Interest income
For all financial assets measured either at amortized cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
Dividends
Revenue is recognized when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
Rental income
Rental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit and loss due to its operating nature.
e) Government Grants
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset.
Waterfront royalty on cargo under the concession agreement is paid at concessional rate in terms of rate prescribed by Gujarat Maritime Board (GMB) and notified in official gazette of Government of Gujarat, wherever applicable.
f) Taxes
Tax expense comprise ses of current in come tax an d deferred tax.
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. Current income tax (including Minimum Alternate Tax (MAT)) is measured at the amount expected to be paid to the tax authorities in accordance with the Income-Tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted, at the reporting date.
Current income tax relating to items recognized outside the statement of profit and loss is recognized outside the statement of profit and loss (either in other comprehensive income (OCI) or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the balance sheet approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
-When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
I n respect of taxable temporary differences associated with investments In subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse In the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:
-When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient future taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.
The Company recognizes tax credits in the nature of Minimum Alternate Tax (MAT) credit as an asset only to the extent that there is sufficient taxable temporary difference /convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which tax credit is allowed to be carried forward. In the year in which the Company recognizes tax credits as an asset, the said asset is created by way of tax credit to the statement of profit and loss. The Company reviews such tax credit asset at each reporting date and writes down the asset to the extent the Company does not have sufficient taxable temporary difference / convincing evidence that it will pay normal tax during the specified period. Deferred tax includes MAT tax credit.
g) Property, Plant and Equipment (PPE)
Under the previous GAAP (Indian GAAP), Fixed Assets are stated at cost net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises the purchase price, borrowing costs (if capitalization criteria are met) and other cost directly attributable to bringing the asset to its working condition for the intended use. The Group has elected to regard previous GAAP carrying values of property as deemed cost at the date of transition to Ind AS.
Capital Work-in-Progress included in PPE is stated at cost. Such cost includes the cost of replacing parts of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit and loss as incurred.
The Company adjusts exchange differences arising on translation difference/settlement of long term foreign currency monetary items outstanding in the Indian GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial statements i.e. March 31, 2016 and pertaining to the acquisition of a depreciable asset to the cost of asset and depreciates the same over the remaining useful life of the asset. The depreciation on such foreign exchange difference is recognized from first day of the financial year.
Borrowing cost relating to acquisition / construction of Property, plant and equipment which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as prescribed under Part C of Schedule II of the Companies Act, 2013 except for the assets mentioned below for which useful lives estimated by the management. The Identified component of property, plant and equipment are depreciated over their useful lives and the remaining components are depreciated over the life of the principal assets. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
The Company has estimated the following useful life to provide depreciation on its certain property, plant and equipment based on assessment made by expert and management estimate.
An item of property, plant and equipment covered under Concession agreement, sub-concession agreement and supplementary concession agreement, shall be transferred to and shall vest in Grantor (government authorities) at the end of respective concession agreement. In cases, where the Company is expected to receive consideration of residual value of property from grantor at the end of concession period, the residual value of contracted property is considered as the carrying value at the end of concession period based on depreciation rates as per management estimate/Schedule II of the Companies Act, 2013 and in other cases it is Nil.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
h) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. Internally generated intangibles are not capitalized and the related expenditure is reflected in profit and loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
i) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur except where expenses are adjusted to securities premium account in compliance with section 52 of the Companies Act, 2013. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
j) Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
For arrangements entered into prior to April 1, 2015, the Company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.
Company as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
Finance leases are capitalized at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company''s general policy on the borrowing costs. Contingent rentals are recognized as expenses in the periods in which they are incurred.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
Company as a less or
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
k) Inventories
Inventories are valued at lower of cost and net realizable value.
Stores and Spares: Valued at lower of cost and net realizable value. Cost is determined on a moving weighted average basis. Cost of stores and spares lying in bonded warehouse includes custom duty payable.
Stores and Spares which do not meet the definition of property, plant and equipment are accounted as inventories.
Costs incurred that relate to future contract activities are recognized as "Project Work-in-Progressâ.
Project Work-in-Progress comprise of specific contract costs and other directly attributable overheads including borrowing costs which can be allocated on specific contract cost is, valued at lower of cost and net realizable value.
Net Realizable Value in respect of stores and spares is the estimated current procurement price in the ordinary course of the business.
l) Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating units (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to projected future cash flows after the fifth year.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognized impairment
loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit and loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.
Goodwill is tested for impairment annually as at every year end and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of CGU to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.
Intangible assets with indefinite useful lives are tested for impairment annually as at year end at the CGU level, as appropriate, and when circumstances indicate that the carrying value may be impaired.
m) Provisions, Contingent Liabilities and Contingent Assets
General
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. The expense relating to a provision is presented in the statement of profit and loss. Contingent liabilities are not recognized but disclosed unless the probability of an outflow of resources is remote. Contingent assets are disclosed where inflow of economic benefits is probable.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Operational Claim provisions
Provisions for operational claims are recognized when the service is provided to the customer. Further recognition is based on historical experience. The initial estimate of operational claim related cost is revised annually.
n) Retirement and other employee benefits
Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid.
The Company operates a defined benefit gratuity plan in India, which requires contributions to be made to a separately administered fund. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and nonroutine settlements; and
- Net interest expense or income
Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short term employee benefits. The Company measures the expected cost of such absence as the additional amount that is expected to pay as a result of the unused estimate that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months as long term compensated absences which are provided for based on actuarial valuation as at the end of the period. The actuarial valuation is done as per projected unit credit method. The Company presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer it''s settlement for twelve months after the reporting date.
o) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
All financial assets are recognized initially at fair value plus in case of financial asset not recorded at fair value through profit and loss, transaction cost that are attributable to the acquisition of the financial assets.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in three categories:
- Debt instruments at amortized cost
- Debt instruments, derivative financial instruments and equity instruments at fair value through profit or loss (FVTPL)
- Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt instruments at amortized cost A ''debt instrument'' is measured at the amortized cost if both the following conditions are met:
(a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
(b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
This category is most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. 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 in finance income in the profit and loss. The losses arising from impairment are recognized in the profit and loss except where the Company has given temporary waiver of interest not exceeding 12 months period. This category generally applies to trade, loans and other receivables.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments.
Any debt instrument, which does not meet the criteria for categorization as amortized cost or as FVTOCI, is classified as FVTPL.
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
Equity investments
All equity investments in scope of Ind AS 109 are measured at fair value. For all other equity instruments, the Company may make an irrevocable election to present
in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
I f the Company decides to classify an equity instrument as FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
Perpetual debt
The Company invests in a subordinated perpetual debt, redeemable at the issuer''s option, with a fixed coupon that can be deferred indefinitely if the issuer does not pay a dividend on its equity shares. The Company classifies these instrument as equity under Ind AS 32.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e. removed from the Company''s balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
The Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure;
a) Financial assets that are debt instruments, and are measured at amortized cost e.g. loans, debt securities, deposits, trade receivables and bank balances.
b) Financial assets that are debt instruments and are measured as at other comprehensive income (FVTOCI)
c) Lease receivables under Ind AS 17
d) Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18
The Company follows ''simplified approach'' for recognition of impairment loss allowance on:
- Trade receivables or contract revenue receivables; and
- All lease receivables resulting from transactions within the scope of Ind AS 17
Under the simplified approach the Company does not track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12 month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used.
ECL is the difference between all contracted cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original EIR. ECL impairment loss allowance ( or reversal) recognized during the period is recognized as income / (expense) in the statement of profit and loss (P&L). This amount is reflected under the head " Other Expensesâ in the P&L.
The balance sheet presentation for various financial instruments is described below:
Financial assets measured as amortized cost, contractual revenue receivables and lease receivables:
ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the group does not reduce impairment allowance from the gross carrying amount.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives, 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.
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109.
Gains or losses on liabilities held for trading are recognized in the profit and loss.
Financial liabilities designated upon initial recognition at
fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently transferred to P&L. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognized in the statement of profit or loss. The Company has not designated any financial liability as FVTPL.
Loans and borrowings
This is the category most relevant to the Company. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.
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.
This category generally applies to borrowings.
Financial guarantee contracts
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 through profit or loss (FVTPL), 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.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit and loss.
Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company''s senior management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognized gains, losses (including impairment gains or losses) or interest.
Offsetting of 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.
p) Derivative financial instruments
Initial recognition and subsequent measurement The Company uses derivative financial instruments, such as forward currency contracts, cross currency swaps, options, interest rate futures and interest rate swaps to hedge its foreign currency risks and interest rate risks, respectively. Such derivative financial instruments are initially recognized at fair value through profit or loss (FVTPL) on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivative financial instrument or on settlement of such derivative financial instruments are recognized in statement of profit and loss and are classified as Foreign Exchange (Gain) / Loss except those relating to borrowings, which are separately classified under Finance Cost.
q) Redeemable preference shares
Redeemable preference shares are separated into liability and equity components based on the terms of the contract.
On issuance of the redeemable preference shares, the fair value of the liability component is determined using a market rate for an equivalent non-convertible instrument.
This amount is classified as a financial liability measured at amortized cost (net of transaction costs) until it is extinguished on redemption.
Transaction costs are apportioned between the liability and equity components of the redeemable preference shares based on the allocation of proceeds to the liability and equity components when the instruments are initially recognized.
r) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
s) Cash dividend to equity holders of the company
The Company recognizes a liability to make cash to equity holders of the parent when the distribution is authorized and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in equity.
t) Earnings per share
Basic earnings per share are calculated by dividing the profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2017
a) Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle; or
- Held primarily for the purpose of trading; or
- Expected to be realized within twelve months after the reporting period; or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period â
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle; or
- It is held primarily for the purpose of trading; or
- It is due to be settled within twelve months after the reporting period; or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities respectively.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
b) Foreign currency transactions :
The Companyâs financial statements are presented in INR, which is functional currency of the Company. The Company determines the functional currency and items included in the financial statements are measured using that functional currency. However, for practical reasons, the Company uses an average rate if the average approximates the actual rate at the date of transaction.
Transactions and balances
Transactions in foreign currencies are initially recorded by the Company at their respective functional currency spot rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in profit or loss with the exception stated under Note No. 44.1(c), for which the treatment is as below :
i. Exchange differences arising on long-term foreign currency monetary items related to acquisition of a property, plant and equipment (including funds used for projects work in progress) recognised in the Indian GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period i.e. March 31, 2016 are capitalised / decapitalised to cost of Property, Plant and Equipment and depreciated over the remaining useful life of the asset.
ii. Exchange differences arising on other outstanding long term foreign currency monetary items recognised in the Indian GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period i.e. March 31, 2016 are accumulated in the âForeign Currency Monetary Item Translation Difference Accountâ (FCMITDA) and amortized over the remaining life of the concerned monetary item.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
c) Fair value measurement
The Company measures financial instruments, such as, derivatives 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, 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 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 â 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 Companyâs Management determines the policies and procedures for both recurring fair value measurement, such as derivative financial instruments and unquoted financial assets measured at fair value and for non recurring fair value measurement, such as an assets under the scheme of business undertaking.
External valuers are involved for valuation of significant assets, such as business undertaking for transfer under the scheme and unquoted financial assets and financial liabilities, Involvement of external valuers is decided upon annually by the Management and in specific cases after discussion with and approval by the Companyâs Audit Committee.
Selection criteria includes market knowledge, reputation, independence and whether professional standards are maintained. The Management decides, after discussions with the Companyâs external valuers, which valuation techniques and inputs to use for each case.
At each reporting date, the Management analyses the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Companyâs accounting policies. For this analysis, the Management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The Management , in conjunction with the Companyâs external valuers, also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
- Disclosures for valuation methods, significant estimates and assumptions (refer note 33.2 and 2.3)
- Quantitative disclosures of fair value measurement hierarchy (refer note 33.2)
- Property, plant and equipment under Scheme of Business Undertaking (refer note 42 (a) and 2.3)
- Investment in unquoted equity shares (refer note 4)
- Financial instruments (including those carried at amortised cost) (refer note 33.1)
d) Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
The specific recognition criteria described below must also be met before revenue is recognized.
Port Operation Services
Revenue from port operation services including cargo handling, storage and rail infrastructure are recognized on proportionate completion method basis based on services completed till reporting date. Revenue on take-or-pay charges are recognized for the quantity that is the difference between annual agreed tonnage and actual quantity of cargo handled. The amount recognized as a revenue is exclusive of service tax and education cess where applicable. Income in the nature of license fees / royalty is recognized as and when the right to receive such income is established as per terms and conditions of relevant service agreement
Income from long term leases
As a part of its business activity, the Company leases/ sub-leases land on long term basis to its customers. In some cases, the Company enters into cancellable lease / sub-lease transaction, while in other cases, it enters into non-cancellable lease / sub-lease transaction apart from other criteria to classify the transaction between the operating lease or finance lease. The Company recognizes the income based on the principles of leases as set out in Ind AS 17 âLeasesâ and accordingly in cases where the land lease / sub-lease transaction are cancellable in nature, the income in the nature of upfront premium received / receivable is recognized on operating lease basis i.e. on a straight line basis over the period of lease / sub-lease agreement / date of memorandum of understanding takes effect over lease period and annual lease rentals are recognized on an accrual basis.
In cases where land lease / sub-lease transaction are non-cancellable in nature, the income is recognized on finance lease basis i.e. at the inception of lease / sub-lease agreement / date of memorandum of understanding takes effect over lease period, the income recognized is equal to the present value of the minimum lease payment over the lease period (including non-refundable upfront premium) which is substantially equal to the fair value of land leased / subleased. In respect of land given on finance lease basis, the corresponding cost of the land and development costs incurred are expensed off in the statement of profit and loss.
Deferred Infrastructure Usage
Income from infrastructure usage fee collected upfront basis from the customers is recognized over the balance contractual period on straight line basis.
Development of Infrastructure Assets
In case the Company is involved in development and construction of infrastructure assets where the outcome of the project cannot be estimated reasonably, revenue is recognized when all significant risks and rewards of ownership in the infrastructure assets are transferred to the customer and all critical approvals necessary for transfer of the project are received / obtained.
Contract Revenue
Revenue from construction contracts is recognized on a percentage completion method, in proportion that the contract costs incurred for work performed up to the reporting date stand to the estimated total contract costs indicating the stage of completion of the project. Contract revenue earned in excess of billing has been reflected under the head âOther Current Assetsâ and billing in excess of contract revenue has been reflected under the head âOther Current Liabilitiesâ in the balance sheet. Full provision is made for any loss in the year in which it is first foreseen and cost incurred towards future contract activity is classified as project work in progress.
Income from fixed price contract - Revenue from infrastructure development project / services under fixed price contract, where there is no uncertainty as to measurement or collectability of consideration is recognized based on milestones reached under the contract.
Income from SEIS/SFIS
Income from Services Exports from India Scheme (âSEISâ) incentives under Governmentâs Foreign Trade Policy 201520 and Served from India Scheme (âSFISâ) under Governmentâs Foreign Trade Policy 2009-14 on the port services income are classified as âIncome from Port Operationsâ and is recognised based on effective rate of incentive under the scheme, provided no significant uncertainty exists for the measurability, realisation and utilisation of the credit under the scheme. The receivables related to SEIS licenses are classified as âOther Non Financial Assetsâ.
Interest income
For all debt instruments measured either at amortized cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
Dividends
Revenue is recognized when the Companyâs right to receive the payment is established, which is generally when shareholders approve the dividend.
Rental income
Rental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature.
e) Government Grants
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset.
Waterfront royalty on cargo under the concession agreement is paid at concessional rate in terms of rate prescribed by Gujarat Maritime Board (GMB) and notified in official gazette of Government of Gujarat, wherever applicable.
f) Taxes
Tax expense comprises of current income tax and deferred tax.
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. Current income tax(including Minimum Alternate Tax (MAT)) is measured at the amount expected to be paid to the tax authorities in accordance with the Income-Tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted, at the reporting date.
Current income tax relating to items recognized outside the statement of profit and loss is recognized outside the statement of profit and loss (either in other comprehensive income (OCI) or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the liability approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences, except when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
In respect of taxable temporary differences associated with investments In subsidiaries, associates and interests In jointly controlled entities, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse In the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:
When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in jointly controlled entities, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The Company is eligible and claiming tax deductions available under section 80IAB of the Income Tax Act, 1961 for a period of 10 years w.e.f FY 2007-08. In view of Company availing tax deduction under Section 80IAB of the Income Tax Act, 1961, deferred tax has been recognized in respect of temporary difference, which reverse after the tax holiday period in the year in which the temporary difference originate and no deferred tax (assets or liabilities) is recognized in respect of temporary difference which reverse during tax holiday period, to the extent such gross total income is subject to the deduction during the tax holiday period. For recognition of deferred tax, the temporary difference which originate first are considered to reverse first.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient future taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.
The Company recognizes tax credits in the nature of Minimum Alternate Tax (MAT) credit as an asset only to the extent that there is sufficient taxable temporary difference /convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which tax credit is allowed to be carried forward. In the year in which the Company recognizes tax credits as an asset, the said asset is created by way of tax credit to the statement of profit and loss. The Company reviews the such tax credit asset at each reporting date and writes down the asset to the extent The Company does not have sufficient taxable temporary difference /convincing evidence that it will pay normal tax during the specified period. Deferred tax includes MAT tax credit.
g) Property, plant and equipment (PPE)
Under the previous GAAP (Indian GAAP), Fixed assets (including Capital work in progress) are stated at cost net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises the purchase price, borrowing costs if capitalization criteria are met directly attributable cost of bringing the asset to its working condition for the intended use. The Company has elected to regard previous GAAP carrying values of property as deemed cost at the date of transition to Ind AS.
Capital work in progress included in PPE is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.
The Company adjusts exchange differences arising on translation difference/settlement of long term foreign currency monetary items outstanding in the Indian GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial statements i.e. March 31, 2016 and pertaining to the acquisition of a depreciable asset to the cost of asset and depreciates the same over the remaining life of the asset. The depreciation on such foreign exchange difference is recognised from first day of the financial year.
Borrowing cost relating to acquisition / construction of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as prescribed under Part C of Schedule II of the Companies Act 2013 except for the assets mentioned below for which useful lives estimated by the management. The Identified component of fixed assets are depreciated over their useful lives and the remaining components are depreciated over the life of the principal assets. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
The Company has estimated the following useful life to provide depreciation on its certain fixed assets based on assessment made by expert and management estimate.
An item of property, plant and equipment covered under Concession agreement, sub-concession agreement and supplementary concession agreement, shall be transferred to and shall vest in Grantor (government authorities) at the end of respective concession agreement. In cases, where the Company is expected to receive consideration of residual value of property from grantor at the end of concession period, the residual value of contracted property is considered as the carrying value at the end of concession period based on depreciation rates as per management estimate/Schedule II of the Companies Act, 2013 and in other cases it is NIL.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
h) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. Internally generated intangibles are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset 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 or loss when the asset is derecognised.
A summary of the policies applied to the Companyâs intangible assets is as follows:
i) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur except where expenses are adjusted to securities premium account in compliance with section 52 of the Companies Act, 2013. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
j) Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
For arrangements entered into prior to April 01, 2015, the Company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.
Company as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Companyâs general policy on the borrowing costs . Contingent rentals are recognised as expenses in the periods in which they are incurred.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Companyâs net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
k) Inventories
Inventories are valued at lower of cost and net realisable value.
Stores and Spares: Valued at lower of cost and net realizable value. Cost is determined on a moving weighted average basis. Cost of stores and spares lying in bonded warehouse includes custom duty payable.
Stores and Spares which do not meet the definition of property, plant and equipment are accounted as inventories. Costs incurred that relate to future contract activities are recognised as âProject Work in Progressâ.
Project work in progress comprise specific contract costs and other directly attributable overheads including borrowing costs which can be allocated on specific contract cost is, valued at lower of cost and net realisable value.
Net Realizable Value in respect of store and spares is the estimated current procurement price in the ordinary course of the business.
l) Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash-generating unitâs (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Companyâs CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.
Impairment losses including impairment on inventories, are recognised in the statement of profit and loss.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the assetâs or CGUâs recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the assetâs recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase. Goodwill is tested for impairment annually as at every year end and when circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of CGU to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
Intangible assets with indefinite useful lives are tested for impairment annually as at year end at the CGU level, as appropriate, and when circumstances indicate that the carrying value may be impaired.
m) Provisions General
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. The expense relating to a provision is presented in the statement of profit and loss.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Operational Claim provisions
Provisions for operational claims are recognised when the service is provided to the customer. Further recognition is based on historical experience. The initial estimate of operational claim related cost is revised annually.
n) Retirement and other employee benefits
Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid.
The Company operates a defined benefit gratuity plan in India, which requires contributions to be made to a separately administered fund. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non routine settlements; and
- Net interest expense or income
Accumulated leave, which is expected to be utilised within the next twelve months, is treated as short term employee benefits. The Company measures the expected cost of such absence as the additional amount that is expected to pay as a result of the unused estimate that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months as long term compensated absences which are provided for based on actuarial valuation as at the end of the period. The actuarial valuation is done as per projected unit credit method. The Company presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer itâs settlement for twelve month after the reporting date.
o) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus in case of financial asset not recorded at fair value through profit and loss, transaction cost that are attributable to the acquisition of the financial assets.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in three categories:
- Debt instruments at amortised cost
- Debt instruments, derivative financial instruments and equity instruments at fair value through profit or loss (FVTPL)
- Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt instruments at amortised cost
A âdebt instrumentâ is measured at the amortised cost if both the following conditions are met:
(a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
(b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
The category is most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. 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 in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss except where the Company has given temporary waiver of interest not exceeding 12 months period. This category generally applies to trade, loans and other receivables.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
Equity investments
All equity investments in scope of Ind AS 109 are measured at fair value. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, The Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
Perpetual debt
The Company invests in a subordinated perpetual debt, redeemable at the issuerâs option, with a fixed coupon that can be deferred indefinitely if the issuer does not pay a dividend on its equity shares. The Company classifies these instrument as equity under Ind AS 32.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Companyâs balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
The Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure ;
a) Financial assets that are debt instruments, and are measured at amortised cost e.g. loans, debt securities, deposits, trade receivables and bank balances.
b) Financial assets that are debt instruments and are measured as at other comprehensive income (FVTOCI)
c) Lease receivables under Ind AS 17
d) Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18
The Company follows âsimplified approachâ for recognition of impairment loss allowance on:
- Trade receivables or contract revenue receivables; and
- All lease receivables resulting from transactions within the scope of Ind AS 17
Under the simplified approach the Company does not track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12 month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used.
ECL is the difference between all contracted cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original EIR. ECL impairment loss allowance (or reversal) recognised during the period is recognised as income / (expense) in the statement of profit and loss (P&L). This amount is reflected under the head â Other Expenseâ in the P&L.
The balance sheet presentation for various financial instruments is described below:
Financial assets measured as at amortised cost, contractual revenue receivables and lease receivables:
ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the group does not reduce impairment allowance from the gross carrying amount.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives, 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.
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently transferred to P&L. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit or loss. The Company has not designated any financial liability as at FVTPL.
Loans and borrowings
This is the category most relevant to the Company. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
This category generally applies to borrowings.
Financial guarantee contracts
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 through profit or loss (FVTPL), 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.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Companyâs senior management determines change in the business model as a result of external or internal changes which are significant to the Companyâs operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
Offsetting of 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.
p) Derivative financial instruments
Initial recognition and subsequent measurement
The Company uses derivative financial instruments, such as forward currency contracts, cross currency swaps, options, interest rate futures and interest rate swaps to hedge its foreign currency risks and interest rate risks, respectively Such derivative financial instruments are initially recognised at fair value through profit or loss (FVTPL) on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivative financial instrument or on settlement of such derivative financial instruments are recognised in statement of profit and loss and are classified as Foreign Exchange (Gain) / Loss except those relating to borrowings, which are separately classified under Finance Cost.
q) Redeemable preference shares
Redeemable preference shares are separated into liability and equity components based on the terms of the contract. On issuance of the redeemable preference shares, the fair value of the liability component is determined using a market rate for an equivalent non-convertible instrument. This amount is classified as a financial liability measured at amortised cost (net of transaction costs) until it is extinguished on redemption.
Transaction costs are apportioned between the liability and equity components of the redeemable preference shares based on the allocation of proceeds to the liability and equity components when the instruments are initially recognised.
r) Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Companyâs cash management.
s) Cash dividend to equity holders of the company
The Company recognises a liability to make cash to equity holders of the parent when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
t) Earnings per share
Basic earnings per share are calculated by dividing the profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period, adjusted for scheme of demerger whereby new equity shares were issued and existing share cancelled during the previous year.
For the purpose of calculating diluted earnings per share, the profit the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2016
1 CORPORATE INFORMATION
Adani Ports and Special Economic Zone Limited (''the Company'', ''APSEZL)
is in the business of development, operations and maintenance of port
infrastructure has linked multi product Special Economic Zone (SEZ) and
related infrastructure contiguous to Mundra Port. The initial port
infrastructure facilities at Mundra including expansion thereof through
development of additional terminals and south port terminal
infrastructure facilities are developed pursuant to the concession
agreement with Government of Gujarat (GoG) and Gujarat Maritime Board
(G/\AB) for 30 years period effective from February 17, 2001. The
Company has expanded port infrastructure facilities through approved
supplementary concession agreement (pending to be concluded) which will
be effective till the year 2040, whereby port infrastructure has been
developed at Wandh, Mundra to handle coal cargo. The said agreement is
in the process of getting signed with GoG and G/\AB although the part
of the Coal terminal at Wandh is recognised as commercially operational
w.e.f. February 01,2011
The Container terminal facilities (CT-1) initially developed was
transferred under sub-concession agreement between Mundra International
Container Terminal Limited (MICTL) (erstwhile Adani Container (Mundra)
Terminals Limited) and the Company entered into, on January 7, 2003
wherein APSEZL has given rights to MICTL to handle the container cargo
for a period of 28 years i.e. up to February 17, 2031. Similarly
container terminal facilities developed at South Port location (CT- 3)
has been leased under approved sub concession agreement dated October
17, 2011 to (50:50) joint venture company Adani International Container
Terminal Private Limited (AICTPL) co-terminate with main concession
agreement with G/\AB. The said sub-concession agreement is pending to
be concluded with GOG and GMB
The Multi Product Special Economic Zone at Mundra is developed by the
Company as per approval of Government of ndia vide their letter no.
F-2/11/2003/EPZ dated April 12, 2006 as amended from time to time till
date. The Company has also taken approval of Ministry of Commerce and
Industry to set up Free Trade and Warehousing Zone vide letter no
F.1/16/201TSEZ dated January 04, 2012. The Company has received
approval from Ministry of Commerce and Industry on April 24, 2015 for
setting up of additional Multi Product Special Economic Zone at Mundra
Taluka over an area of 1,856 hectares. During the year the Company has
received approval for clubbing of three notified SEZ in Mundra vide
letter dated March 15, 2016 of Ministry of Commerce and Industry,
Department of Commerce (SEZ Section)
2 BASIS OF PREPARATION
The financial statements of the company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under section 133 of the Companies Act 2013 read with paragraph 7 of
the Companies (Accounts) Rules, 2014. The financial statements have
been prepared on an accrual basis under the historical cost convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year except for the
change in accounting policy explained below,
a) Change in Accounting Policy
i) Component Accounting
The company has adopted Schedule II to the Companies Act, 2013, for
depreciation purposes, from April 01, 2015 The company was previously
not identifying components of tangible assets separately for
depreciation purposes; rather, a single useful life/ depreciation rate
was used to depreciate each item of tangible asset.
Due to application of Schedule II to the Companies Act, 2013, the
company has changed the manner of depreciation for its tangible assets.
Now, the company identifies and determines separate useful life for
each major component of the tangible asset, if they have useful life
that is materially different from that of the remaining asset. These
component are depreciated separately over their useful lives, the
remaining components are depreciated over the life of the principal
assets. The company has used transitional provisions of Schedule II to
adjust the impact of component accounting arising on its first
application. If a component has zero remaining useful life on the date
of Schedule II becoming effective, i.e. April 01, 2015, its carrying
amount, after retaining any residual value, is charged to the opening
balance of retained earnings. The carrying amount of other components,
i.e..components whose remaining useful life is not nil on April 01,
2015, is depreciated over their remaining useful life.
Had the company continued to use the earlier policy of depreciating
tangible asset, the profit for the current period would have been lower
by Rs. 29.06 crore (net of tax impact of Rs. 7.89 crore) and the
tangible asset would correspondingly have been lower by Rs.36.95 crore
On the date of component accounting becoming applicable i.e. April 01,
2015, there was no component having zero remaining useful life. Hence,
no amount has been directly adjusted against retained earning
ii) Derivative Accounting
From the current financial year, the Company has early adopted the
"Guidance Note on Accounting for Derivative Contracts" issued by the
Institute of Chartered Accountants of India, except the guidance
related to hedge accounting which requires recognition of all
derivative contracts on the balance sheet and measured at fair value.
Had the Company followed the same accounting policy as in the previous
year, net profit for year ended March 31, 2016 have been lower byRs.
43.50 crores. The cumulative impact of all derivative contracts
outstanding as at that date of the Guidance Note becoming effective,
amounting to Rs. 0.40 crores is recognised in reserves as at April 01,
2015 as a transition adjustment in accordance with the transitional
provision of the Guidance Note,
iii) Stores and Spares (Insurance Spares) Accounting
During the current year, the Company capitalise spare parts, stand-by
and servicing equipment which the company intends to use the same
during more than a period of 12 months and whose use is expected to be
irregular. The spare parts capitalized in this manner are depreciated
prospectively over the remaining useful lives of the respective mother
assets.
Had the company continued to use the earlier policy of classifying
stores and spares as inventories, its financial statements for the
period would have been impacted as below
Inventories would have been higher by Rs. 39.51 crores, Fixed Assets
would have been lower by Rs. 39.51 crores, depreciation would have been
lower by Rs.4.81 crores, and profit for the current period would have
been higher by Rs. 4.81 crores
b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods,
c) Tangible Fixed Assets
i) Fixed assets (including Capital work in progress) are stated at cost
net of accumulated depreciation and accumulated impairment losses, if
any. The cost comprises the purchase price, borrowing costs if
capitalisation criteria are met directly attributable cost of bringing
the asset to its working condition for the intended use, terns of
Stores and Spares that meet the definition of Fixed Assets are
capitalised at cost and depreciated over their useful life. Otherwise
such items are classified as inventories. Borrowing cost relating to
acquisition / construction of fixed assets which take substantial
period of time to get ready for its intended use are also included to
the extent they relate to the period till such assets are ready to be
put to use,
ii) Subsequent expenditure related to an item of fixed asset is added
to its book value only if it increases the future economic benefits
from the existing asset beyond its previously assessed standard of
performance. All other expenses on existing fixed assets, including
day-to-day repair and maintenance expenditure and cost of replacing
parts, are charged to the statement of profit and loss for the period
during which such expenses are incurred
iii) The company adjusts exchange differences arising on
translation/settlement of long-term foreign currency monetary items
pertaining to the acquisition of a depreciable asset to the cost of the
asset and depreciates the same over the remaining useful life of the
asset. In accordance with MCA circular dated August 09, 2012, exchange
differences adjusted to the cost of fixed assets are total differences,
arising on long term foreign currency monetary items pertaining to
acquisition of a depreciable asset, for a period. In other words, the
Company does not differentiate between exchange differences arising
from foreign currency borrowings to the extent they are regarded as an
adjustment to the interest cost and other exchange difference. The
depreciation on such foreign exchange difference is recognised from
first day of the financial year,
iv) Gains or losses arising from derecognition/ sale proceeds of fixed
assets are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognized in the
statement of profit and loss when the asset is derecognized
v) The Company identifies and determine cost of each component / part
has cost which is significant to the total cost of the assets has
useful life that is materially different from that of the remaining
asset
d) Expenditure on new projects and substantial expansion
Expenditure directly relating to construction / development activity
(net of income, if any) is capitalized. Indirect expenditures incurred
during construction period which are specifically attributable to
construction of a project, is capitalized as part of Project cost Other
indirect expenditures (including borrowing costs) incurred during the
construction period which are not specifically attributable to
construction of a project, is charged to the statement of profit and
loss,
e) Depreciation on tangible fixed assets
i) Depreciation on fixed asset is calculated on Straight Line Method
(SLM) based on the useful lives as prescribed under Part C of Schedule
II of the Companies Act 2013 except for the assets mentioned in para
(ii) below for which useful lives estimated by the management. The
Identified component of fixed assets are depreciated over their useful
lives and the remaining components are depreciated over the life of the
principal assets.
iii) At the end of the sub-concession agreement and supplementary
concession agreement, all contracted immovable and movable assets shall
be transferred to and shall vest in Gujarat Maritime Board (''GMB'') for
consideration equivalent to the Depreciated Replacement Value (the
''DRV''). Currently DRV is not determinable, accordingly, residual value
of contract asset is considered to be the carrying value based on
depreciation rates as per management estimate/ Schedule II of the
Companies Act, 2013 at the end of concession period
iv) The residual value, useful life and method of depreciation of fixed
assets are reviewed at each year end and adjusted prospectively, if
appropriate,
f) Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in an
amalgamation in the nature of purchase is their fair value as at the
date of amalgamation. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any
The amortisation period and the amortisation method are reviewed at
least at each financial year end. If the expected useful life of asset
is significantly different from previous estimates, the amortisation
period is changed accordingly. If there is a significant change in the
expected pattern of economic benefits from the asset, the amortisation
method is changed to reflect the change pattern. Such changes are
accounted for in accordance with AS 5- Net Profit or Loss for the
Period, Prior Period Items and Changes in Accounting Policies,
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized
g) Impairment of tangible and intangible assets
i) The company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, the
company estimates the asset''s recoverable amount. The asset''s
recoverable amount is the higher of the asset''s or cash generating
unit''s (C6U), net selling price and value in use. The recoverable
amount is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other
asset or groups of assets. Where the carrying amount of an asset or C6U
exceeds its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount In assessing value in use, the
estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessment of the
time value of money and risks specific to the asset In determining net
selling price, relevant market transactions are taken in to account, if
available. If no such transactions can be identified, an appropriate
valuation model is used
ii) After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life,
h) Borrowing Costs
Borrowing cost includes interest and amortization of ancillary costs
incurred in connection with the arrangement of borrowings.
Borrowing costs directly attributable to the acquisition or
construction of an assets (including inventories of specific projects)
that necessarily takes substantial period of time to get ready for its
intended use or sale are capitalised as part of the cost of the
respective assets. All other borrowing costs are expensed in the period
they occur except where expenses are adjusted to securities premium
account in compliance with section 52 of the Companies Act, 2013
i) Leases
Where the Company is the lessee
Finance leases including rights of use in leased land, which
effectively transfer to the Company substantially all the risks and
benefits incidental to ownership of the leased item, are capitalised at
inception of the lease term at the lower of the fair value of land and
present value of the minimum lease payments and disclosed as leased
assets. Lease payments are apportioned between the finance charges and
reduction of the lease liability so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance charges are
recognised as finance cost in the statement of profit and loss,
A leased asset is depreciated/amortised on a straight line basis over
the useful life of the asset. However, If there is no reasonable
certainty that the Company will obtain the ownership by the end of the
lease term, the capitalized leased assets is depreciated/amortised on a
straight line basis over the shorter of the estimated useful life of
the asset or the lease term
Leases, wherein the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight line basis over the
lease term
Where the Company is the lessor
Leases, including rights to use in leased / sub leased land, in which
the company transfers substantially all the risks and benefits of
ownership of the asset are classified as finance leases. Assets given
under a finance lease are recognized as a receivable at an amount equal
to the net investment in the lease. After initial recognition, lease
rentals are apportioned between principal repayment and interest income
so as to achieve a constant periodic rate of return on the net
investment outstanding in respect of the finance lease. The interest
income is recognized in statement of profit and loss. Initial direct
costs such as legal costs, brokerage costs, etc. are recognized
immediately in the statement of profit and loss.
Leases in which the company does not transfer substantially all the
risks and benefits of ownership of the asset are classified as
operating leases. Assets subject to operating leases are included in
fixed assets. Lease income is recognized in the statement of profit and
loss on a straight-line basis over the lease term. Costs, including
depreciation are recognized as an expense in the statement of profit
and loss. Initial direct costs such as legal costs, brokerage costs,
etc. are recognized immediately in the statement of profit and loss,
j) Investments
Investments, which are readily realizable and intended to be held for
not more than a year from the date on which such investments are made,
are classified as current investments. All other investments are
classified as long - term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined onanindi vidua investment basis. Long -
term investments are carried at cost. However, provision for diminution
in value is made to recognize a decline other than temporary in the
value of investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss,
k) Inventories
Stores and Spares: Valued at lower of cost and net realizable value.
Cost is determined on a moving weighted average basis. Cost of stores
and spares lying in bonded warehouse includes custom duty accounted for
on an accrual basis. Stores and Spares which do not meet the
definition of fixed assets are accounted as inventories.
Costs incurred that relate to future contract activities are recognised
as "Project Work in Progress"
Project work in progress comprise specific contract costs and other
directly attributable overheads including borrowing costs which can be
be allocated on specific contract cost is, valued at lower of cost and
net realisable value.
Net Realizable Value in respect of store and spares is the estimated
current procurement price in the ordinary course of the business.
I) Royalty on Cargo
Watyerfront royalty is paid at concessional rate in terms of rate
prescribed by Gujarat Maritime Board (6MB) and notified in official
gazette of Government of Gujarat, wherever applicable,
m) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognised
i) Port Operation Services
Revenue from port operation services including cargo handling, storage
and rail infrastructure are recognized on proportionate completion
method basis based on service performed. Revenue on take-or-pay charges
are recognized for the quantity that is the difference between annual
agreed tonnage and actual quantity of cargo handled. The amount
recognised as a revenue is exclusive of service tax and education cess
where applicable
Income in the nature of license fees / royalty is recognised as and
when the right to receive such income is established as per terms and
conditions of relevant agreement,
ii) Income from Long Term Leases
As a part of its business activity, the Company leases/ sub-leases land
on long term basis to its customers. In some cases, the Company enters
into cancellable lease / sub-lease transaction, while in other cases,
it enters into non-cancellable lease / sub-lease transaction apart from
other criteria to classify the transaction between the operating lease
or finance lease. The Company recognises the income based on the
principles of leases as per Accounting Standard - 19, Leases and
accordingly in cases where the land lease / sub-lease transaction are
cancellable in nature, the income in the nature of upfront premium
received/receivable is recognised on operating ease basis i.e. on a
straight line basis over the period of lease / sub-lease agreement /
date of Memorandum of understanding takes effect over lease period and
annual lease rentals are recognised on an accrual basis. In cases
where land lease / sub-lease transaction are non-cancellable in nature,
the income is recognised on finance lease basis i.e. at the inception
of lease / sub-lease agreement / date of Memorandum of understanding
takes effect over lease period, the income recognised isequaltothe
present value of the minimum lease payment over the lease period
(including non-refundable upfront premium) which is substantially equal
to the fair value of land leased / sub-leased. In respect of land given
on finance lease basis, the corresponding cost of the land and
development costs incurred are expensed off in the statement of profit
and loss,
iii) Deferred Infrastructure Usage
Income from infrastructure usage fee collected upfront basis from the
customers is recognized oven the balance contractual period on straight
line basis,
iv) Development of Infrastructure Assets
In case the Company is involved in development and construction of
infrastructure assets where the outcome of the project cannot be
estimated reasonably, revenue is recognized when all significant risks
and rewards of ownership in the infrastructure assets are transferred
to the customer and all critical approvals necessary for transfer of
the project are received / obtained
v) Contract Revenue
Revenue from construction contracts is recognized on a percentage
completion method, in proportion that the contract costs recurred for
wonk performed up to the reporting date stand to the estimated total
contract costs indicating the stage of completion of the project.
Contract revenue earned in excess of billing has been reflected under
the head "Other Current Assets" and billing in excess of contract
revenue has been reflected under the head "Other Current Liabilities"
in the balance sheet. Full provision is made for any loss in the yean
in which it is first foreseen and cost incurred towards future contract
activity is classified as project wonk in progress.
Income from fixed price contract - Revenue from infrastructure
development project / services under fixed price contract, where there
is no uncertainty as to measurement on collectability of consideration
is recognized based on milestones reached under the contract
vi) Interest
Interest is recognized on a time proportion basis taking into account
the amount outstanding and the applicable rate. Interest income on land
leases is included under the head "Revenue from operations" and other
interest income is included under the head "Other income". Interest
income also include interest earned from multi year payment terms with
customers and is included under the head "Other income",
vii) Dividends
Revenue is recognized when the Company''s right to receive payment is
established by the balance sheet date,
n) Foreign Currency Translation
i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency by
applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency at the date of the
transaction
ii) Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non- monetary items which are
measured in terms of historical cost denominated in a foreign currency
are reported using the exchange rate at the date of the transaction
iii) Exchange Differences
The Company accounts for exchange difference arising on translation /
settlement of foreign currency monetary items as below
a) Exchange differences arising on long-term foreign currency monetary
items (including funds used for projects work in progress) related to
acquisition of a fixed asset are capitalized and depreciated over the
remaining useful life of the asset
b) Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortized over the remaining life
of the concerned monetary item
c) All other exchange differences are recognized as income or as
expenses in the period in which they arise.
For the purpose of (a) and (b) above, the company treats a foreign
monetary item as "long-term foreign currency monetary item", if it has
a term of 12 months or more at the date of its origination
In accordance with MCA circular dated August 09, 2012, exchange
differences for this purpose, are total differences arising on long
term foreign currency monetary items for the period. In other words,
the Company does not differentiate between exchange differences arising
from foreign currency borrowings to the extent they are regarded as an
adjustment to the interest cost and other exchange difference,
iv) Forward Exchange Contracts entered into to hedge foreign currency
risk of an existing asset/ liability
The premium or discount arising at the inception of forward exchange
contracts is amortized as an expense/ income over the life of the
contract. Exchange differences on such contracts, except the contracts
which are long term foreign currency monetary items, are recognized in
the statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
period. Any gain/loss arising on forward contracts which are long term
foreign currency monetary items is recognized in accordance with
paragraph (iii) above,
v) Derivative instruments
The Company enters into derivative contracts such as Cross Currency
Swaps, Interest rate swaps, Foreign currency future options and swaps
foreign currency forward contract to hedge foreign currency future
transactions in respect of which firm commitment are made or which are
highly probable forecast transactions not in the scope of AS 11. From
current year onwards, the Company has voluntarily adopted the "Guidance
Note on Accounting for Derivative Contracts" issued by the Institute of
Chartered Accountants of India. Accordingly, the Company account for
its derivatives at fair value with changes in fair value being
recognised in the statement of profit and loss. All derivative contracts
are recognised on the balance sheet and measured at fair value
o) Retirement and Other Employee Benefits
i) Provident fund and superannuation fund
Retirement benefits in the form of Provident Fund and Superannuation
Fund Schemes are defined contribution schemes and the contributions are
charged to the statement of profit and loss of the year when the
contributions to the respective funds are due as employee renders the
service. There are no other obligations other than the contribution
payable to the respective funds,
ii) Gratuity
Gratuity liability is defined benefit obligation and is provided for on
the basis of an actuarial valuation on projected unit credit method
made at the end of each financial year. The Company has taken an
insurance policy under the Group Gratuity Scheme with the Life
Insurance Corporation of India (LIC) to cover the gratuity liability of
the employees
iii) Leave Benefits
Accumulated leave, which is expected to be utilised within the next
twelve months, is treated as short term employee benefits. The Company
measures the expected cost of such absence as the additional amount
that is expected to pay as a result of the unused estimate that has
accumulated at the reporting date. The company treats accumulated leave
expected to be carried forward beyond twelve months as long term
compensated absences which are provided for based on actuarial
valuation as at the end of the period. The actuarial valuation is done
as per projected unit credit method. The company presents the entire
leave as a current liability in the balance sheet, since it does not
have an unconditional right to defer it''s settlement for twelve month
after the reporting date,
iv) Actuarial Gains/ Losses
Actuarial gains/losses are immediately taken to the statement of profit
and loss and are not deferred
p) Income Tax
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-Tax Act, 1961 enacted in India. The tax
rates and tax laws used to compute the amount are those that are
enacted or substantially enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences of earlier years. Deferred tax
is measured based on the tax rates and the tax laws enacted or
substantively enacted at the reporting date. The Company is eligible
and claiming tax deductions available under section 80IAB of the Income
Tax Act, 1961 w.e.f FY 2007-08
Deferred tax liabilities are recognised for all taxable timing
differences. Deferred tax assets are recognized only to the extent that
there is reasonable certainty that sufficient future taxable income
will be available against which such deferred tax assets can be
realized. In situations where the company has carry forward unabsorbed
depreciation or carry forward tax losses, all deferred tax assets are
recognised only if there is virtual certainty supported by convincing
evidence that they can be realised against future taxable profits.
In view of Company availing tax deduction under Section 80IAB of the
Income Tax Act, 1961, deferred tax has been recognized in respect of
timing difference, which reverse after the tax holiday period in the
year in which the timing difference originate and no deferred tax
(assets or liabilities) is recognised in respect of timing difference
which reverse during tax holiday period, to the extent the Company''s
gross total income is subject to the deduction during the tax holiday
period. For recognition of deferred tax, the timing difference which
originate first are considered to reverse first
The carrying amount of deferred tax assets are reviewed at each
reporting date. The company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income Tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement." The
company reviews the "MAT Credit Entitlement" asset at each reporting
date and writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period
q) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference share dividends and attributable taxes) by the
weighted average number of equity shares outstanding during the period
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares,
r) Provisions
A provision is recognized when the company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on best management estimate required to settle the obligation at
the balance sheet date. These are reviewed at each balance sheet date and
adjusted to reflect the current best management estimates,
s) Segment Reporting Policies
The Company''s operating businesses are organized and managed separately
according to the nature of services provided, with each segment
representing a strategic business unit that offers different services,
the risk and return profile of individual business unit, the
organisational structure and internal reporting system of the Company.
The analysis of geographical segments is not required as the Company''s
operations are within single geographical segment i.e. India
t) Cash and Cash equivalents
Cash and cash equivalents for the purpose of cash flow statement
comprise of cash at bank and in hand and short- term investments with
an original maturity of three months or less,
u) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The company does not
recognize contingent liabilities but discloses it''s existence in the
financial statement
Mar 31, 2015
A) Change in Accounting Policy
i) Depreciation on Fixed Assets
Till the year ended March 31, 2014, Schedule XIV of the Companies Act,
1956, prescribed requirements concerning depreciation of the Fixed
Assets. From the current year, Schedule
XIV has been replaced by Schedule II to the Companies Act, 2013. The
applicability of Schedule II has resulted in following changes related
to depreciation of fixed assets unless stated otherwise, the impact
mentioned for the current year is likely to hold good for future years
also .
ii) Useful lives and Depreciation rates
Till the year ended March 31, 2014, Depreciation rates prescribed under
Schedule XIV were treated as minimum rates and the Company was not
allowed to change depreciation at lower rates even if such lower rate
were justified by the estimated useful life of the asset.
Schedule II of the Companies Act, 2013 prescribes useful lives of the
fixed assets which, in many cases are different from the lives
prescribed under erstwhile Schedule XIV. However Schedule II allows
companies to use higher / lower lives and residual values if such
useful lives and residual values can be technically supported and
justification for difference is disclosed in financial statement .
Considering the applicability of Schedule II, the management has
internally reestimated and changed, wherever necessary the useful lives
and residual values of fixed assets to compute depreciation, to conform
to the requirement of the Companies Act, 2013 and other consideration
as applicable. In respect of intangibles, management has reestimated
useful life of software applications from 3 years to 5 years.
Due to this change in useful lives and residual value of assets
(including intangibles) the depreciation charge of Rs. 20.97 crore (net
of deferred tax) has been recongnised in the opening balance of
retained earning for the assets where estimated remaining useful lives
was NIL as at April 01, 2014 , and the depreciation charge is higher by
Rs. 24.35 crore (net) for the year ended March 31,2015.
iii) Depreciation on assets costing less than Rs 5000
Till year ended March 31, 2014, to comply with the requirements of
Schedule XIV to the Companies Act, 1956, the Company was charging 100%
depreciation on assets costing less than Rs 5,000 in the year of
purchase. However Schedule II of the Companies Act, 2013 applicable
form the current year, does not recongnise such practice. Hence, to
comply with the requirement of Schedule II to the Companies Act, 2013,
the Company has changed it''s accounting policy for depreciation of
assets costing less than Rs 5,000. As per the revised policy, the
Company has depreciated such assets over their useful life as assessed
by the management. The management has decided to apply the revised
accounting policy from accounting period commencing on or after April
01,2014.
The change in accounting policy for depreciation of assets costing less
than Rs 5,000 did not have any material impact on financial statements
of the Company for the current year .
b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management''s best knowledge of
current events and actions, uncertainty about these assumptions and
estimates could result in the outcomes requiring a material adjustment
to the carrying amounts of assets or liabilities in future periods.
c) Tangible Fixed Assets
i) Fixed assets are stated at cost net of accumulated depreciation and
impairment losses, if any. The cost comprises the purchase price,
borrowing costs if capitalisation criteria are met directly
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing cost relating to acquisition /
construction of fixed assets which take substantial period of time to
get ready for its intended use are also included to the extent they
relate to the period till such assets are ready to be put to use.
ii) Subsequent expenditure related to an item of fixed asset is added
to its book value only if it increases the future economic benefits
from the existing asset beyond its previously assessed standard of
performance. All other expenses on existing fixed assets, including
day- to-day repair and maintenance expenditure and cost of replacing
parts, are charged to the statement of profit and loss for the period
during which such expenses are incurred.
iii) The company adjusts exchange differences arising on
translation/settlement of long-term foreign currency monetary items
pertaining to the acquisition of a depreciable asset to the cost of the
asset and depreciates the same over the remaining useful life of the
asset. In accordance with MCA circular dated August 9, 2012, exchange
differences adjusted to the cost of fixed assets are total differences,
arising on long term foreign currency monetary items pertaining to
acquisition of a depreciable asset, for a period. In other words, the
Company does not differentiate between exchange differences arising
from foreign currency borrowings to the extent they are regarded as an
adjustment to the interest cost and other exchange difference. The
depreciation on such foreign exchange difference is recongnised from
first day of the financial year.
iv) Gains or losses arising from derecognition/ sale proceeds of fixed
assets are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognized in the
statement of profit and loss when the asset is derecognized.
v) Insurance spares are capitalised as part of mother assets.
d) Expenditure on new projects and substantial expansion
Expenditure directly relating to construction / development activity
(net of income, if any) is capitalized. Indirect expenditure incurred
during construction period is capitalized as part of the indirect
construction cost to the extent to which the expenditure is directly
related to construction or is incidental thereto. Other indirect
expenditure (including borrowing costs) incurred during the
construction period which is not related to the construction activity
nor is incidental thereto, is charged to the statement of profit and
loss.
e) Depreciation on tangible fixed assets
i) Depreciation on fixed asset is calculated on Straight Line Method
(SLM) based on the useful lives as prescribed under Part C of Schedule
II of the Companies Act, 2013 except for the assets mentioned in para
(ii) below for which useful lives estimated by the management.
ii) Assets : Estimated Useful Life
Leasehold Land - Right to Use :
Over the balance period of Concession Agreement and approved
Supplementary Concession Agreement by Gujarat Maritime Board, as
applicable.
Leasehold Land Development :
Over the balance period of Concession Agreement and approved
Supplementary Concession Agreement by Gujarat Maritime Board,as applicable
Marine Structure, Dredged Channel, Building RCC Frame Structure :
50 Years as per concession agreement
Dredging Pipes - Plant and Machinery : 1.5 Years
Nylon and Steel coated belt on Conveyor Plant and Machinery :
4 Years and 10 Years respectively
Inner Floating and outer floating hose, String of Single Point Mooring
Plant and Machinery : 6 Years
Fender, Buoy installed at Jetty - Marine Structures : 5 - 10 Years
Bridges, Drains & Culverts : 25 Years as per concession agreement
Carpeted Roads : 10 Years
Tugs : 20 Years as per concession agreement
iii) Insurance spares, whose use is expected to be irregular, are
depreciated prospectively over the remaining useful lives of the
respective mother assets.
At the end of the sub-concession agreement and supplementary concession
agreement, all contracted immovable and movable assets shall be
transferred to and shall vest in Gujarat Maritime Board (''GMB'') for
consideration equivalent to the Depreciated Replacement Value (the
''DRV''). Currently DRV is not determinable, accordingly, residual value
of contract asset is determined based on estimated life of assets at
the end of concession period.
f) Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in an
amalgamation in the nature of purchase is their fair value as at the
date of amalgamation. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any.
Intangible assets are amortized on straight line basis as follows;
Intangible Assets Estimated Useful Life
Goodwill arising on the Over the balance period of Concession
amalgamation of Adani Port Ltd Agreement computed from the Appointed
Date of the Scheme of Amalgamation
i.e. 28 Years.
Software applications 5 Years based on management estimate.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
g) Impairment of tangible and intangible assets
i) The company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, the
company estimates the asset''s recoverable amount. The asset''s
recoverable amount is the higher of the asset''s or cash generating
unit''s (CGU), net selling price and value in use. The recoverable
amount is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other
asset or groups of assets. Where the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount. In assessing value in use, the
estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessment of the
time value of money and risks specific to the asset. In determining net
selling price, relevant market transactions are taken in to account, if
available. If no such transactions can be identified, an appropriate
valuation model is used.
ii) After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
h) Borrowing Costs
Borrowing cost includes interest and amortization of ancillary costs
incurred in connection with the arrangement of borrowings over the loan
period.
Borrowing costs directly attributable to the acquisition or
construction of an assets that necessarily takes substantial period of
time to get ready for its intended use or sale are capitalised as part
of the cost of the respective assets. All other borrowing costs are
expensed in the period they occur.
i) Leases
Where the Company is the lessee
Finance leases including rights of use in leased land, which
effectively transfer to the Company substantially all the risks and
benefits incidental to ownership of the leased item, are capitalized at
the lower of the fair value and present value of the minimum lease
payments at the inception of the lease term and disclosed as leased
assets. Lease payments are apportioned between the finance charges and
reduction of the lease liability so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance charges are
recognised as finance cost in the statement of profit and loss.
A leased asset is depreciated/amortised on a straight line basis over
the useful life of the asset. However, If there is no reasonable
certainty that the Company will obtain the ownership by the end of the
lease term, the capitalized leased assets is depreciated/amortised on a
straight line basis over the shorter of the estimated useful life of
the asset or the lease term.
Leases, wherein the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight line basis over the
lease term.
Where the Company is the lessor
Leases including rights to use in leased / sub leased land in which the
company transfers substantially all the risks and benefits of ownership
of the asset are classified as finance leases.
Assets given under a finance lease are recognized as a receivable at an
amount equal to the net investment in the lease. After initial
recognition, lease rentals are apportioned between principal repayment
and interest income so as to achieve a constant periodic rate of return
on the net investment outstanding in respect of the finance lease. The
principal amount received reduces the net investment in the lease and
interest is recognized as revenue. Initial direct costs such as legal
costs, brokerage costs, etc. are recognized immediately in the
statement of profit and loss.
Leases in which the company does not transfer substantially all the
risks and benefits of ownership of the asset are classified as
operating leases. Assets subject to operating leases are included in
fixed assets. Lease income is recognized in the statement of profit and
loss on a straight-line basis over the lease term. Costs, including
depreciation are recognized as an expense in the statement of profit
and loss. Initial direct costs such as legal costs, brokerage costs,
etc. are recognized immediately in the statement of profit and loss.
j) Investments
Investments, which are readily realizable and intended to be held for
not more than a year from the date on which such investments are made,
are classified as current investments. All other investments are
classified as long - term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis. Long
- term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
k) Inventories
Stores and Spares: Valued at lower of cost and net realizable value.
Cost is determined on a moving weighted average basis. Cost of stores
and spares lying in bonded warehouse includes custom duty accounted for
on an accrual basis.
Costs incurred that relate to future activities on the contracts are
recognised as "Project Work in Progress".
Project work in progress comprising construction costs and other
directly attributable overheads is valued at lower of cost and net
realisable value .
Net Realizable Value in respect of store and spares is the estimated
current procurement price in the ordinary course of the business.
l) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognised:
i) Port Operation Services
Revenue from port operation services including cargo handling, storage
and rail infrastructure are recognized on proportionate completion
method basis based on service performed. Revenue on take-or-pay charges
are recognized for the quantity that is the difference between annual
agreed tonnage and actual quantity of cargo handled. The amount
recognised as a revenue is exclusive of service tax and education cess
where applicable.
Income in the nature of license fees / royalty is recognised as and
when the right to receive such income is established as per terms and
conditions of relevant agreement.
ii) Income from Long Term Leases
As a part of its business activity, the Company leases/ sub-leases land
on long term basis to its customers. In some cases, the Company enters
into cancellable lease / sub-lease transaction, while in other cases,
it enters into non-cancellable lease / sub-lease transaction apart from
other criteria to classify the transaction between the operating lease
or finance lease. The Company recognises the income based on the
principles of leases as per Accounting Standard - 19, Leases and
accordingly in cases where the land lease / sub-lease transaction are
cancellable in nature, the income in the nature of upfront premium
received / receivable is recognised on operating lease basis i.e. on a
straight line basis over the period of lease / sub- lease agreement /
date of Memorandum of understanding takes effect over lease period and
annual lease rentals are recognised on an accrual basis. In cases where
land lease / sub-lease transaction are non-cancellable in nature, the
income is recognised on finance lease basis i.e. at the inception of
lease / sub-lease agreement / date of Memorandum of understanding takes
effect over lease period, the income recognised is equal to the present
value of the minimum lease payment over the lease period (including
non-refundable upfront premium) which is substantially equal to the
fair value of land leased / sub-leased. In respect of land given on
finance lease basis, the corresponding cost of the land and development
costs incurred are expensed off in the statement of profit and loss.
iii) Deferred Infrastructure Usage
Income from infrastructure usage fee collected upfront basis from the
customers is recognised over the balance contractual period on straight
line basis.
iv) Development of Infrastructure Assets
In case the Company is involved in development and construction of
infrastructure assets where the outcome of the project cannot be
estimated reasonably, revenue is recognised when all significant risks
and rewards of ownership in the infrastructure assets are transferred
to the customer and all critical approvals necessary for transfer of
the project are received / obtained.
v) Contract Revenue
Revenue from construction contracts is recognized on a percentage
completion method, in proportion that the contract costs incurred for
work performed up to the reporting date stand to the estimated total
contract costs indicating the stage of completion of the project.
Contract revenue earned in excess of billing has been reflected under
the head "Other Current
Assets" and billing in excess of contract revenue has been reflected
under the head "Other Current Liabilities" in the balance sheet. Full
provision is made for any loss in the year in which it is first
foreseen.
Income from fixed price contract - Revenue from infrastructure
development project / services under fixed price contract, where there
is no uncertainty as to measurement or collectability of consideration
is recognised based on milestones reached under the contract.
vi) Interest
Interest is recognized on a time proportion basis taking into account
the amount outstanding and the applicable rate. Interest income on land
leases is included under the head "Revenue from operations" and other
interest income is included under the head "Other income". Interest
income also include interest earned from multi year payment terms with
customers and is included under the head "Other income".
vii) Dividends
Revenue is recognized when the shareholders'' right to receive payment
is established by the balance sheet date.
m) Foreign Currency Translation
i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
ii) Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non-monetary items which are
measured in terms of historical cost denominated in a foreign currency
are reported using the exchange rate at the date of the transaction.
iii) Exchange Differences
The Company accounts for exchange difference arising on translation /
settlement of foreign currency monetary as below:
a) Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalized and
depreciated over the remaining useful life of the asset.
b) Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortized over the remaining life
of the concerned monetary item.
c) All other exchange differences are recognized as income or as
expenses in the period in which they arise.
For the purpose of (a) and (b) above, the company treats a foreign
monetary item as "long- term foreign currency monetary item", if it has
a term of 12 months or more at the date of its origination. the
exchange differences arising on long-term foreign currency monetary
items are adjusted to the carrying cost of that assets.
iv) Forward Exchange Contracts entered into to hedge foreign currency
risk of an existing asset/ liability
The premium or discount arising at the inception of forward exchange
contracts is amortized as an expense/ income over the life of the
contract. Exchange differences on such contracts, except the contracts
which are long term foreign currency monetary items, are recognized in
the statement of profit and loss in the year in which the exchange
rates change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
period. Any gain/loss arising on forward contracts which are long term
foreign currency monetary items is recognized in accordance with
paragraph (iii) above.
v) Derivative instruments
The Company uses derivative financial instrument, such as principal
only swap i.e. INR to foreign currency to take advantage of lower
interest rate of foreign currency borrowings and foreign currency
forward contract to hedge foreign currency risk arising from future
transactions in respect of which firm commitment are made or which are
highly probable forecast transactions. In accordance with the ICAI
announcement, derivative contracts, other than foreign currency forward
contracts covered under AS 11, are marked to market on a portfolio
basis, and the net loss, if any, after considering the offsetting
effect of gain on the underlying hedged item, is charged to the
statement of profit and loss. Net gain, if any, after considering the
offsetting effect of loss on the underlying hedged item, is ignored.
Derivative (gain)/loss are included under head "Finance Costs".
n) Retirement and Other Employee Benefits
i) Provident fund and superannuation fund
Retirement benefits in the form of Provident Fund and Superannuation
Fund Schemes are defined contribution schemes and the contributions are
charged to the statement of profit and loss of the year when the
contributions to the respective funds are due when an employee renders
the related service. There are no other obligations other than the
contribution payable to the respective funds.
ii) Gratuity
Gratuity liability is defined benefit obligation and is provided for on
the basis of an actuarial valuation on projected unit credit method
made at the end of each financial year. The Company has taken an
insurance policy under the Group Gratuity Scheme with the Life
Insurance Corporation of India (LIC) to cover the gratuity liability of
the employees.
iii) Leave Benefits
Accumulated leave, which is expected to be utilised within the next
twelve months, is treated as short term employee benefits. The Company
measures the expected cost of such absence as the additional amount
that is expected to pay as a result of the unused estimate that has
accumulated at the reporting date. The company treats accumulated leave
expected to be carried forward beyond twelve months as long term
compensated absences which are provided for based on actuarial
valuation as at the end of the period. The actuarial valuation is done
as per projected unit credit method. The company presents the entire
leave as a current liability in the balance sheet, since it does not
have an unconditional right to defer it''s settlement for twelve month
after the reporting date.
iv) Actuarial Gains/ Losses
Actuarial gains/losses are immediately taken to the statement of profit
and loss and are not
deferred.
o) Income Tax
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-Tax Act, 1961 enacted in India. The tax rate
and tax laws used to compute the amount are those that are enacted or
substantially enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences of earlier years. Deferred tax
is measured based on the tax rates and the tax laws enacted or
substantively enacted at the reporting date. The Company is eligible
and claiming tax deductions available under section 80IAB of the Income
Tax Act, 1961 w.e.f FY 2007-08.
In view of Company availing tax deduction under Section 80IAB of the
Income Tax Act, 1961, deferred tax has been recognized in respect of
timing difference, which reverse after the tax holiday period in the
year in which the timing difference originate. For recognition of
deferred tax, the timing difference which originate first are
considered to reverse first. Deferred tax liabilities are recognised
for all taxable timing differences. Deferred tax assets are recognized
only to the extent that there is reasonable certainty that sufficient
future taxable income will be available against which such deferred tax
assets can be realized. In situations where the company has carry
forward unabsorbed depreciation or carry forward tax losses, all
deferred tax assets are recognised only if there is virtual certainty
supported by convincing evidence that they can be realised against
future taxable profits.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income Tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement." The
company reviews the "MAT Credit Entitlement" asset at each reporting
date and writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period.
p) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference share dividends and attributable taxes) by the
weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
q) Provisions
A provision is recognized when the company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on best management estimate required to settle the obligation at
the balance sheet date. These are reviewed at each balance sheet date
and adjusted to reflect the current best management estimates.
r) Segment Reporting Policies
The Company''s operating businesses are organized and managed separately
according to the nature of services provided, with each segment
representing a strategic business unit that offers different services,
the risk and return profile of individual business unit, the
organisational structure and internal reporting system of the Company.
The analysis of geographical segments is not required as the Company''s
operations are within single geographical segment i.e. India.
s) Cash and Cash equivalents
Cash and cash equivalents for the purpose of cash flow statement
comprise of cash at bank and in hand and short-term investments with an
original maturity of three months or less.
t) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The company does not
recognize a contingent liability but discloses it''s existence in the
financial statement.
Mar 31, 2014
A) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
b) Tangible Fixed Assets
I) Fixed assets are stated at cost net of accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price,
borrowing costs if capitalisation criteria are met directly
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing cost relating to acquisition / construction
of fixed assets which take substantial period of time to get ready for
its intended use are also included to the extent they relate to the
period till such assets are ready to be put to use.
ii) Subsequent expenditure related to an item of fixed asset is added
to its book value only if it increases the future economic benefits
from the existing asset beyond its previously assessed standard of
performance. All other expenses on existing fixed assets, including
day- to-day repair and maintenance expenditure and cost of replacing
parts, are charged to the statement of profit and loss for the period
during which such expenses are incurred.
iii) The company adjusts exchange differences arising on
translation/settlement of long-term foreign currency monetary items
pertaining to the acquisition of a depreciable asset to the cost of the
asset and depreciates the same over the remaining useful life in
accordance with MCA circular dated August 09, 2012, exchange
differences adjusted to the cost of fixed assets are total differences,
arising on long term foreign currency monitory items pertaining to
acquisition of a depreciable asset, for a period. In other words, the
Company does not differentiate between exchange differences arising
from foreign currency borrowings to the extent they are regarded as an
adjustment to the interest cost and other exchange difference.
iv) Gains or losses arising from derecognition/ sale proceeds of fixed
assets are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognized in the
statement of profit and loss when the asset is derecognized except
where Company has held the assets with an intention of not being used
for the purpose of providing services.
v) Insurance spares are capitalised as part of mother assets.
c) Expenditure on new projects and substantial expansion
Expenditure directly relating to construction / development activity
(net of income, if any) is capitalized. Indirect expenditure incurred
during construction period is capitalized as part of the indirect
construction cost to the extent to which the expenditure is directly
related to construction or is incidental thereto. Other indirect
expenditure (including borrowing costs) incurred during the
construction period which is not related to the construction activity
nor is incidental thereto, is charged to the statement of profit and
loss.
d) Depreciation on tangible fixed assets
i) Depreciation on fixed asset is calculated on Straight Line Method
(SLM) using the rates arrived at based on the useful lives estimated by
the management or those prescribed under Schedule XIV to the Companies
Act, 1956, whichever is higher. For assets stated in para (ii) to (iv)
below, higher depreciation rate has been used based on the useful life
estimated by the management.
iii) Depreciation on individual assets costing up to Rs. 5,000 and mobile
phones, included under office equipments are provided at the rate of
100% in the month of purchase.
iv) Insurance spares, whose use is expected to be irregular, are
depreciated prospectively over the remaining useful lives of the
respective mother assets.
At the end of the sub -concession agreement and supplementary
concession agreement, all contracted immovable and movable assets shall
be transferred to and shall vest in Gujarat Maritime Board (''GMB'') for
consideration equivalent to the Depreciated Replacement Value (the
''DRV''). For the purpose of depreciation for the year, DRV is considered
Nil on account of uncertainty in determination .
e) Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in an
amalgamation in the nature of purchase is their fair value as at the
date of amalgamation. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
f) Impairment of tangible and intangible assets
i) The company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, the
company estimates the asset''s recoverable amount. The asset''s
recoverable amount is the higher of the asset''s or cash generating
unit''s (CGU), net selling price and value in use. The recoverable
amount is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other
asset or groups of assets. Where the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount. In assessing value in use, the
estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessment of the
time value of money and risks specific to the asset.
ii) After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
g) Borrowing Costs
Borrowing cost includes interest and amortization of ancillary costs
incurred in connection with the arrangement of borrowings over the loan
period.
Borrowing costs directly attributable to the acquisition or
construction of an assets that takes substantial period of time to get
ready for its intended use or sale are capitalised as part of the cost
of the respective assets. All other borrowing costs are charged to
statement of profit and loss.
h) Leases
Where the Company is the lessee
Finance leases includes rights of use in leased land, which effectively
transfer to the Company substantially all the risks and benefits
incidental to ownership of the leased item, are capitalized at the
lower of the fair value and present value of the minimum lease payments
at the inception of the lease term and disclosed as leased assets.
Lease payments are apportioned between the finance charges and
reduction of the lease liability so as to achieve a constant rate of
interest on the remaining balance of the liabilities. Finance charges
are charged as expense in the statement of profit and loss.
A leased asset is depreciated on a straight line basis over the useful
life of the asset or useful life envisaged in Schedule VI of the
Companies Act ,1956 which ever is lower. However, If there is no
reasonable certainty that the Company will obtain the ownership by the
end of the lease term, the capitalized leased assets is depreciated on
a straight line basis over the shorter of the estimated useful life of
the asset or the lease term.
Leases, wherein the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight line basis over the
lease term.
Where the Company is the lessor
Leases includes rights to use in leased / sub leased land in which the
company transfers substantially all the risks and benefits of ownership
of the asset are classified as finance leases. Assets given under a
finance lease are recognized as a receivable at an amount equal to the
net investment in the lease. After initial recognition, lease rentals
are apportioned between principal repayment and interest income so as
to achieve a constant periodic rate of return on the net investment
outstanding in respect of the finance lease. The principal amount
received reduces the net investment in the lease and interest is
recognized as revenue. Initial direct costs such as legal costs,
brokerage costs, etc. are recognized immediately in the statement of
profit and loss. Leases in which the company does not transfer
substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Assets subject to operating leases are
included in fixed assets. Lease income is recognized in the statement
of profit and loss on a straight-line basis over the lease term. Costs,
including depreciation are recognized as an expense in the statement of
profit and loss. Initial direct costs such as legal costs, brokerage
costs, etc. are recognized immediately in the statement of profit and
loss.
i) Investments
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Investments, which are readily realizable and intended to be held for
not more than a year from the date on which such investments are made,
are classified as current investments. All other investments are
classified as long - term investments. Current investments are carried
in the financial statements at lower of cost and fair value determined
on an individual investment basis. Long - term investments are carried
at cost. However, provision for diminution in value is made to
recognize a decline other than temporary in the value of investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
j) Inventories
Stores and Spares: Valued at lower of cost and net realizable value.
Cost is determined on a moving weighted average basis. Cost of stores
and spares lying in bonded warehouse includes custom duty accounted for
on an accrual basis.
Net Realizable Value is the estimated current procurement price in the
ordinary course of the business.
k) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognised:
i) Port Operation Services
Revenue from port operation services including cargo handling, storage
and rail infrastructure are recognized on proportionate completion
method basis based on service performed. Revenue on take-or-pay charges
are recognized for the quantity that is the difference between annual
agreed tonnage and actual quantity of cargo handled. The amount
recognised as a revenue is exclusive of service tax and education cess
where applicable. Income in the nature of license fees / royalty is
recognised as and when the right to receive such income is performed as
per terms and conditions of relevant agreement.
ii) Income from Long Term Leases
As a part of its business activity, the Company leases/ sub-leases land
on long term basis to its customers. In some cases, the Company enters
into cancellable lease / sub-lease transaction, while in other cases,
it enters into non-cancellable lease / sub-lease transaction apart from
other criteria to classify the transaction between the operating lease
or finance lease. The Company recognises the income based on the
principles of leases as per Accounting Standard
 19, Leases and accordingly in cases where the land lease / sub-lease
transaction are cancellable in nature, the income in the nature of
upfront premium received / receivable is recognised on operating lease
basis i.e. on a straight line basis over the period of lease / sub-
lease agreement / date of Memorandum of understanding takes effect over
lease period and annual lease rentals are recognised on an accrual
basis. In cases where land lease / sub-lease transaction are
non-cancellable in nature, the income is recognised on finance lease
basis i.e. at the inception of lease / sub-lease agreement / date of
Memorandum of understanding takes effect over lease period, the income
recognised is equal to the present value of the minimum lease payment
over the lease period (including non-refundable upfront premium) which
is substantially equal to the fair value of land leased / sub-leased.
In respect of land given on finance lease basis, the corresponding cost
of the land and development costs incurred are expensed off in the
statement of profit and loss.
iii) Deferred Infrastructure Usage
Income from infrastructure usage fee collected upfront basis from the
customer is recognised over the balance contractual period on straight
line basis.
iv) Development of Infrastructure Assets
In case the Company is involved in development and construction of
infrastructure assets where the outcome of the project cannot be
estimated reasonably, revenue is recognised when all significant risks
and rewards of ownership in the infrastructure assets are transferred
to the customer and all critical approvals necessary for transfer of
the project are received / obtained.
v) Contract Revenue
Revenue from construction contracts is recognized on a percentage
completion method, in proportion that the contract costs incurred for
work performed up to the reporting date stand to the estimated total
contract costs indicating the stage of completion of the project.
Contract revenue earned in excess of billing has been reflected under
the head "Other Current Assets" and billing in excess of contract
revenue has been reflected under the head "Other Current Liabilities"
in the balance sheet. Full provision is made for any loss in the year
in which it is first foreseen.
Income from fixed price contract - Revenue from infrastructure
development project / services under fixed price contract, where there
is no uncertainty as to measurement or collectability of consideration
is recognised based on milestones reached under the contract.
vi) Interest
Interest is recognized on a time proportion basis taking into account
the amount outstanding and the applicable rate. Interest income on land
leases is included under the head "Revenue from operations" and other
interest income is included under the head "Other income". Interest
income also include interest earned from multi year payment terms with
customers and is included under the head "Other income".
vii) Dividends
Revenue is recognized when the shareholders'' right to receive payment
is established by the balance sheet date.
l) Foreign Currency Translation
i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
ii) Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non-monetary items which are
measured in terms of historical cost denominated in a foreign currency
are reported using the exchange rate at the date of the transaction.
iii) Exchange Differences
The Company accounts for exchange difference arising on translation /
settlement of foreign currency monetary as below:
a) Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalized and
depreciated over the remaining useful life of the asset.
b) Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortized over the remaining life
of the concerned monetary item.
c) All other exchange differences are recognized as income or as
expenses in the period in which they arise.
For the purpose of (a) and (b) above, the company treats a foreign
monetary item as "long-term foreign currency monetary item", if it has
a term of 12 months or more at the date of its origination. The
exchange differences arising on long-term foreign currency monetary
items are adjusted to the carrying cost of that assets.
iv) Forward Exchange Contracts entered into to hedge foreign currency
risk of an existing asset / liability
The premium or discount arising at the inception of forward exchange
contracts is amortized as an expense/ income over the life of the
contract. Exchange differences on such contracts, except the contracts
which are long term foreign currency monetary items, are recognized in
the statement of profit and loss in the year in which the exchange
rates change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
period. Any gain/loss arising on forward contracts which are long term
foreign currency monetary items is recognized in accordance with
paragraph (iii) above.
v) Derivative instruments
The Company uses derivative financial instrument, such as principal
only swap i.e. INR to foreign currency to take advantage of lower
interest rate of foreign currency borrowings. In accordance with the
ICAI announcement, derivative contracts, other than foreign currency
forward contracts covered under AS 11, are marked to market on a
portfolio basis, and the net loss, if any, after considering the
offsetting effect of gain on the underlying hedged item, is charged to
the statement of profit and loss. Net gain, if any, after considering
the offsetting effect of loss on the underlying hedged item, is
ignored.
m) Retirement and Other Employee Benefits
i) Provident fund and superannuation fund
Retirement benefits in the form of Provident Fund and Superannuation
Fund Schemes are defined contribution schemes and the contributions are
charged to the statement of profit and loss of the year when the
contributions to the respective funds are due when an employee renders
the related service. There are no other obligations other than the
contribution payable to the respective funds.
ii) Gratuity
Gratuity liability is defined benefit obligation and is provided for on
the basis of an actuarial valuation on projected unit credit method
made at the end of each financial year. The Company has taken an
insurance policy under the Group Gratuity Scheme with the Life
Insurance Corporation of India (LIC) to cover the gratuity liability of
the employee.
iii) Leave Benefits
Short term compensated absences are provided for based on estimates.
Long term compensated absences are provided for based on actuarial
valuation as at the end of the period. The actuarial valuation is done
as per projected unit credit method. The company presents the entire
leave as a current liability in the balance sheet, since it does not
have an unconditional right to defer it''s settlement for twelve month
after the reporting date.
iv) Actuarial Gains / Losses
Actuarial gains/losses are immediately taken to the statement of profit
and loss and are not deferred.
n) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-Tax Act, 1961 enacted in India. The tax rate
and tax laws used to compute the amount are those that are enacted or
substantially enacted, at the reporting date. Deferred income taxes
reflects the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years. The Company is eligible and claiming tax
deductions available under section 80IAB of the Income Tax Act, 1961
w.e.f FY 2007-08.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. In view of
Company availing tax deduction under Section 80IAB of the Income Tax
Act, 1961, deferred tax has been recognized in respect of timing
difference, which originates during the tax holiday period but reverse
after the tax holiday period. Deferred tax assets are recognized only
to the extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized. In situations where the company has carry forward
unabsorbed depreciation or carry forward tax losses, all deferred tax
assets are recognized only if there is virtual certainty supported by
convincing evidence that they can be realised against future taxable
profits.
At each balance sheet date, unrecognized deferred tax assets of earlier
years and carrying amount of deferred tax assets are reviewed to the
extent that it has become reasonably certain that future taxable income
will be available against which such deferred tax assets can be
realized. The company writes-down the carrying amount of deferred tax
asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income Tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement." The
company reviews the "MAT Credit Entitlement" asset at each reporting
date and writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period.
o) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference share dividends and attributable taxes) by the
weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
p) Provisions
A provision is recognized when the company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on best management estimate required to settle the obligation at
the balance sheet date. These are reviewed at each balance sheet date
and adjusted to reflect the current best management estimates.
q) Segment Reporting Policies
The Company''s operating businesses are organized and managed separately
according to the nature of services provided, with each segment
representing a strategic business unit that offers different services,
the risk and return profile of individual business unit, the
organisational structure and internal reporting system of the Company.
The analysis of geographical segments is not required as the Company''s
operations are within single geographical segment i.e. India.
r) Cash and Cash equivalents
Cash and cash equivalents for the purpose of cash flow statement
comprise of cash at bank and in hand and short-term investments with an
original maturity of three months or less.
s) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The company does not
recognize a contingent liabilities but discloses it''s existence in the
financial statement.
Mar 31, 2013
A) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
b) Tangible Fixed Assets
i) Fixed assets are stated at cost net of accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price,
borrowing costs and any attributable cost of bringing the asset to its
working condition for its intended use. Borrowing cost relating to
acquisition / construction of fixed assets which take substantial
period of time to get ready for its intended use are also included to
the extent they relate to the period till such assets are ready to be
put to use.
ii) Subsequent expenditure related to an item of fixed asset is added
to its book value only if it increases the future economic benefits
from the existing asset beyond its previously assessed standard of
performance. All other expenses on existing fixed assets, including
day- to-day repair and maintenance expenditure and cost of replacing
parts, are charged to the statement of profit and loss for the period
during which such expenses are incurred.
iii) From accounting periods commencing on or after August 9, 2012, the
company adjusts exchange differences arising on translation /
settlement of long-term foreign currency monetary items pertaining to
the acquisition of a depreciable asset to the cost of the asset and
depreciates the same over the remaining useful life of the asset.
iv) Gains or losses arising from derecognition / sale proceeds of fixed
assets are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognized in the
statement of profit and loss when the asset is derecognized.
v) Insurance spares are capitalised as part of mother assets.
c) Expenditure on new projects and substantial expansion
Expenditure directly relating to construction / development activity
(net of income, if any) is capitalized. Indirect expenditure incurred
during construction period is capitalized as part of the indirect
construction cost to the extent to which the expenditure is directly
related to construction or is incidental thereto. Other indirect
expenditure (including borrowing costs) incurred during the
construction period which is not related to the construction activity
nor is incidental thereto, is charged to the statement of profit and
loss.
d) Depreciation on tangible fixed assets
i) Depreciation on fixed asset is calculated on Straight Line Method
(SLM) using the rates arrived at based on the useful lives estimated by
the management or those prescribed under Schedule XIV to the Companies
Act, 1956, whichever is higher. For assets stated in para (ii) to
(iv) below, higher depreciation rate has been used based on the useful
life estimated by the management.
iii) Depreciation on individual assets costing up to Rs. 5,000 and
mobile phones, included under office equipments are provided at the
rate of 100% in the month of purchase.
iv) Insurance spares, whose use is expected to be irregular, are
depreciated prospectively over the remaining useful lives of the
respective mother assets.
e) Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in an
amalgamation in the nature of purchase is their fair value as at the
date of amalgamation. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any.
Intangible assets are amortized on straight line basis over their
estimated useful lives as follows:
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized
f) Impairment of tangible and intangible assets
i) The company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, the
company estimates the asset''s recoverable amount. The asset''s
recoverable amount is the higher of the asset''s or cash generating
unit''s (CGU), net selling price and value in use. The recoverable
amount is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other
asset or groups of assets. Where the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset is consider impaired and is
written down to its recoverable amount. In assessing value in use, the
estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessment of the
time value of money and risks specific to the asset.
ii) After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
g) Borrowing Costs
Borrowing cost includes interest & amortization of ancillary costs
incurred in connection with the arrangement of borrowings over the loan
period.
Borrowing costs directly attributable to the acquisition or
construction of an assets that takes substantial period of time to get
ready for its intended use or sale are capitalised as part of the cost
of the respective assets. All other borrowing costs are charged to the
statement of profit and loss.
h) Leases
Where the Company is the lessee
Finance leases includes rights of use in leased land, which effectively
transfer to the Company substantially all the risks and benefits
incidental to ownership of the leased item, are capitalized at the
lower of the fair value and present value of the minimum lease payments
at the inception of the lease term and disclosed as leased assets.
Lease payments are apportioned between the finance charges and
reduction of the lease liability so as to achieve a constant rate of
interest on the remaining balance of the liabilities. Finance charges
are charged as expense in the statement of profit and loss.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term the capitalized leased assets is
depreciated on a straight line basis over the shorter of the estimated
useful life of the asset or the lease term.
Leases, wherein the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight line basis over the
lease term.
Where the Company is the lessor
Leases includes rights to use in leased / sub-leased land in which the
company transfers substantially all the risks and benefits of ownership
of the asset are classified as finance leases. Assets given under a
finance lease are recognized as a receivable at an amount equal to the
net investment in the lease. After initial recognition, lease rentals
are apportioned between principal repayment and interest income so as
to achieve a constant periodic rate of return on the net investment
outstanding in respect of the finance lease. The principal amount
received reduces the net investment in the lease and interest is
recognized as revenue. Initial direct costs such as legal costs,
brokerage costs, etc. are recognized immediately in the statement of
profit and loss.
Leases in which the company does not transfer substantially all the
risks and benefits of ownership of the asset are classified as
operating leases. Assets subject to operating leases are included in
fixed assets. Lease income is recognized in the statement of profit and
loss on a straight-line basis over the lease term. Costs, including
depreciation are recognized as an expense in the statement of profit
and loss. Initial direct costs such as legal costs, brokerage costs,
etc. are recognized immediately in the statement of profit and loss.
i) Investments
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Investments, which are readily realizable and intended to be held for
not more than a year from the date on which such investments are made,
are classified as current investments. All other investments are
classified as long - term investments. Current investments are carried
in the financial statements at lower of cost and fair value determined
on an individual investment basis. Long - term investments are carried
at cost. However, provision for diminution in value is made to
recognize a decline other than temporary in the value of investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
j) Inventories
Stores and Spares: Valued at lower of cost and net realizable value.
Cost is determined on a moving weighted average basis. Cost of stores
and spares lying in bonded warehouse includes custom duty accounted for
on an accrual basis.
Net Realizable Value is the estimated current procurement price in the
ordinary course of the business.
k) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognised:
i) Port Operation Services
Revenue from port operation services including cargo handling, storage
and rail infrastructure are recognized on proportionate completion
method basis based on service performed. Revenue on take-or-pay charges
are recognized for the quantity that is the difference between annual
agreed tonnage and actual quantity of cargo handled. The amount
recognised as a revenue is exclusive of service tax and education cess
where applicable.
Income in the nature of license fees / royalty is recognised as and
when the right to receive such income is performed as per terms and
conditions of relevant agreement.
ii) Income from Long Term Leases
As a part of its business activity, the Company leases / sub-leases
land on long term basis to its customers. In some cases, the Company
enters into cancellable lease / sub-lease transaction, while in other
cases, it enters into non-cancellable lease / sub-lease transaction
apart from other criteria to classify the transaction between the
operating lease or finance lease. The Company recognises the income
based on the principles of leases as per Accounting Standard -19,
Leases and accordingly in cases where the land lease / sub-lease
transaction are cancellable in nature, the income in the nature of
upfront premium received / receivable is recognised on operating lease
basis i.e. on a straight line basis over the period of lease / sub-
lease agreement / date of Memorandum of understanding takes effect over
lease period and annual lease rentals are recognised on an accrual
basis. In cases where land lease / sub-lease transaction are
non-cancellable in nature, the income is recognised on finance lease
basis i.e. at the inception of lease / sub-lease agreement / date of
Memorandum of understanding takes effect over lease period, the income
recognised is equal to the present value of the minimum lease payment
over the lease period (including non-refundable upfront premium) which
is substantially equal to the fair value of land leased / sub-leased.
In respect of land given on finance lease basis, the corresponding cost
of the land and development costs incurred are expensed off in the
statement of profit and loss.
iii) Contract Revenue
Revenue from construction contracts is recognized on a percentage
completion method, in proportion that the contract costs incurred for
work performed up to the reporting date stand to the estimated total
contract costs indicating the stage of completion of the project.
Contract revenue earned in excess of billing has been reflected under
the head "Other Current Assets" and billing in excess of contract
revenue has been reflected under the head "Other Current Liabilities"
in the balance sheet. Full provision is made for any loss in the year
in which it is first foreseen.
Income from fixed price contract - Revenue from infrastructure
development project/ services under fixed price contract, where there
is no uncertainty as to measurement or collectability of consideration
is recognised based on milestones reached under the contract.
iv) Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the applicable rate. Interest income on land
leases is included under the head "Revenue from operations" and other
interest income is included under the head "Other income".
v) Dividends
Revenue is recognized when the shareholders'' right to receive payment
is established by the balance sheet date. l) Foreign Currency
Translation
i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
ii) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction.
iii) Exchange Differences
The Company accounts for exchange difference arising on translation /
settlement of foreign currency monetary as below:
a) Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalized and
depreciated over the remaining useful life of the asset.
b) Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortized over the remaining life
of the concerned monetary item.
c) All other exchange differences are recognized as income or as
expenses in the period in which they arise.
For the purpose of (a) and (b) above, the company treats a foreign
monetary item as "long- term foreign currency monetary item", if it has
a term of 12 months or more at the date of its origination. In
accordance with MCA circular dated August 09, 2012, exchange
differences for this purpose, are total differences arising on
long-term foreign currency monetary items for the period. In other
words, the company does not differentiate between exchange differences
arising from foreign currency borrowings to the extent they are
regarded as an adjustment to the interest cost and other exchange
difference.
iv) Forward Exchange Contracts entered into to hedge foreign currency
risk of an existing asset / liability
The premium or discount arising at the inception of forward exchange
contracts is amortized as an expense / income over the life of the
contract. Exchange differences on such contracts, except the contracts
which are long term foreign currency monetary items, are recognized in
the statement of profit and loss in the year in which the exchange
rates change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
period. Any gain / loss arising on forward contracts which are long
term foreign currency monetary items is recognized in accordance with
paragraph (iii) above.
v) Derivative instruments
The Company uses derivative financial instrument, such as principal
only swap i.e. INR to foreign currency to take advantage of lower
interest rate of foreign currency loan. In accordance with the ICAI
announcement, derivative contracts, other than foreign currency forward
contracts covered under AS 11, are marked to market on a portfolio
basis, and the net loss, if any, after considering the offsetting
effect of gain on the underlying hedged item, is charged to the
statement of profit and loss. Net gain, if any, after considering the
offsetting effect of loss on the underlying hedged item, is ignored.
m) Retirement and Other Employee Benefits
i) Provident fund and superannuation fund
Retirement benefits in the form of Provident Fund and Superannuation
Fund Schemes are defined contribution schemes and the contributions are
charged to the statement of profit and loss of the year when the
contributions to the respective funds are due. There are no other
obligations other than the contribution payable to the respective
funds. If the contribution payable to the scheme for service received
before the balance sheet date exceeds the contribution already paid,
the deficit payable to the scheme is recognized as a liability.
ii) Gratuity
Gratuity liability is defined benefit obligation and is provided for on
the basis of an actuarial valuation on projected unit credit method
made at the end of each financial year. The Company has taken an
insurance policy under the Group Gratuity Scheme with the Life
Insurance Corporation of India (LIC) to cover the gratuity liability of
the employees and amount paid / payable in respect of the present value
of liability for past services is charged to the statement of profit
and loss every year.
iii) Leave Benefits
Short term compensated absences are provided for based on estimates.
Long term compensated absences are provided for based on actuarial
valuation as at the end of the period. The actuarial valuation is done
as per projected unit credit method. The company presents the entire
leave as a current liability in the balance sheet, since it does not
have an unconditional right to defer it''s settlement for twelve month
after the reporting date.
iv) Actuarial Gains / Losses
Actuarial gains / losses are immediately taken to the statement of
profit and loss and are not deferred.
n) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-Tax Act, 1961 enacted in India. The tax rate
and tax laws used to compute the amount are those that are enacted or
substantially enacted, at the reporting date. Deferred income taxes
reflects the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years. The Company is eligible and claims tax
deductions available under section 80IAB of the Income Tax Act, 1961.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. In view of
Company availing tax deduction under Section 80IAB of the Income Tax
Act, 1961, deferred tax has been recognized in respect of timing
difference, which originates during the tax holiday period but reverse
after the tax holiday period. Deferred tax assets are recognized only
to the extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized. In situations where the company has carry forward
unabsorbed depreciation or carry forward tax losses, all deferred tax
assets are recognized only if there is virtual certainty supported by
convincing evidence that they can be realised against future taxable
profits. At each balance sheet date, unrecognized deferred tax assets
of earlier years are re-assessed and recognized to the extent that it
has become reasonably certain that future taxable income will be
available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternate Tax under the
Income Tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement." The
company reviews the "MAT Credit Entitlement" asset at each reporting
date and writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period.
o) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference share dividends and attributable taxes) by the
weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
p) Provisions
A provision is recognized when the company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on best management estimate required to settle the obligation at
the balance sheet date. These are reviewed at each balance sheet date
and adjusted to reflect the current best management estimates.
q) Segment Reporting Policies
The Company''s operating businesses are organized and managed separately
according to the nature of services provided, with each segment
representing a strategic business unit that offers different services,
the risk and return profile of individual business unit, the
organisational structure and internal reporting system of the Company.
The analysis of geographical segments is not required as the Company''s
operations are within single geographical segment i.e. India.
r) Cash and Cash equivalents
Cash and cash equivalents for the purpose of cash flow statement
comprise of cash at bank and in hand and short-term investments with an
original maturity of three months or less.
s) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The company does not
recognize a contingent liabilities but discloses it''s existence in the
financial statement.
Mar 31, 2012
A) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management's best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
b) Tangible Fixed Assets
i) Fixed assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing cost relating to acquisition / construction
of fixed assets which take substantial period of time to get ready for
its intended use are also included to the extent they relate to the
period till such assets are ready to be put to use.
ii) Subsequent expenditure related to an item of fixed asset is added
to its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
iii) From accounting periods commencing on or after December 7, 2006,
the company adjusts exchange differences arising on
translation/settlement of long-term foreign currency monetary items
pertaining to the acquisition of a depreciable asset to the cost of the
asset and depreciates the same over the remaining useful life of the
asset.
iv) Gains or losses arising from de-recognition/ sale proceeds of fixed
assets are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognized in the
statement of profit and loss when the asset is derecognized.
v) Insurance spares / standby equipments are capitalized as part of
mother assets.
c) Expenditure on new projects and substantial expansion
Expenditure directly relating to construction activity (net of income,
if any) is capitalized. Indirect expenditure incurred during
construction period is capitalized as part of the indirect construction
cost to the extent to which the expenditure is indirectly related to
construction or is incidental thereto. Other indirect expenditure
(including borrowing costs) incurred during the construction period
which is not related to the construction activity nor is incidental
thereto, is charged to the statement of profit and loss.
d) Depreciation on tangible fixed assets
i) Depreciation on Fixed Assets, except for those stated in para (ii)
to (iv) below, is provided on Straight Line Method (SLM) at the rates
prescribed under Schedule XIV of the Companies Act, 1956, or the rates
determined on the basis of useful lives of the respective assets,
whichever is higher.__
f) Impairment of tangible and intangible assets
i) The carrying amounts of assets are reviewed at each balance sheet
date if there is any indication of impairment based on internal /
external factors. An impairment loss is recognized wherever the
carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the asset's net selling price and
value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessment of the time value of money
and risks specific to the asset.
ii) After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
g) Borrowing Costs
Borrowing costs directly attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets to the extent they relate to the period till such assets
are ready to be put to use. A qualifying asset is one that necessarily
takes substantial period of time to get ready for its intended use. All
other borrowing costs are charged to statement of profit and loss.
Borrowing cost includes interest & amortization of ancillary costs
incurred in connection with the arrangement of borrowings.
h) Leases
Where the Company is the lessee
Finance leases including rights of use in Leased Land, which
effectively transfer to the Company substantially all the risks and
benefits incidental to ownership of the leased item, are capitalized at
the lower of the fair value and present value of the minimum lease
payments at the inception of the lease term and disclosed as leased
assets. Lease payments are apportioned between the finance charges and
reduction of the lease liability based on the implicit rate of return.
Finance charges are charged as expense in the statement of profit and
loss.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases, wherein the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
Where the Company is the lessor
Leases in which the company transfers substantially all the risks and
benefits of ownership of the asset are classified as finance leases.
Assets given under a finance lease including lease / sub- lease of land
are recognized as a receivable at an amount equal to the net investment
in the lease. Lease rentals are apportioned between principal and
interest on the Internal Rate of Return method. The principal amount
received reduces the net investment in the lease and interest is
recognized as revenue. Initial direct costs such as legal costs,
brokerage costs, etc. are recognized immediately in the statement of
profit and loss.
Leases in which the company does not transfer substantially all the
risks and benefits of ownership of the asset are classified as
operating leases. Assets subject to operating leases are included in
fixed assets. Lease income is recognized in the statement of profit and
loss on a straight-line basis over the lease term. Costs, including
depreciation are recognized as an expense in the statement of profit
and loss. Initial direct costs such as legal costs, brokerage costs,
etc. are recognized immediately in the statement of profit and loss.
i) Investments
Investments, which are readily realizable and intended to be held for
not more than a year from the date of purchase are classified as
current investments. All other investments are classified as long -
term investments. Current investments are carried at lower of cost and
fair value determined on an individual investment basis. Long - term
investments are carried at cost. However, provision for diminution in
value is made to recognize a decline other than temporary in the value
of investments.
j) Inventories
Stores and Spares: Valued at lower of cost and net realizable value.
Cost is determined on a moving weighted average basis. Cost of stores
and spares lying in bonded warehouse includes custom duty accounted for
on an accrual basis.
Net Realizable Value is the estimated current procurement price in the
ordinary course of the business.
k) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognised:
i) Port Operation Services
Revenue from port operation services including rail infrastructure is
recognized on proportionate completion method basis based on service
rendered.
Income in the nature of license fees / royalty is recognised as and
when the right to receive such income is established as per terms and
conditions of relevant agreement.
ii) Income from Long Term Leases
As a part of its business activity, the Company leases/ sub-leases land
on long term basis to its customers. In some cases, the Company enters
into cancellable lease / sub-lease transaction, while in other cases,
it enters into non-cancellable lease / sub-lease transaction. The
Company recognises the income based on the principles of leases as per
Accounting Standard - 19, Leases and accordingly in cases where the
land lease / sub-lease transaction are cancellable in nature, the
income in the nature of upfront premium received / receivable is
recognised on operating lease basis i.e. on a straight line basis over
the period of lease / sub-lease agreement / date of Memorandum of
understanding takes effect over lease period and annual lease rentals
are recognised on an accrual basis. In cases where land lease /
sub-lease transaction are non-cancellable in nature, the income is
recognised on finance lease basis i.e. at the inception of lease /
sub-lease agreement / date of Memorandum of understanding takes effect
over lease period, the income recognised is equal to the present value
of the minimum lease payment over the lease period (including
non-refundable upfront premium) which is substantially equal to the
fair value of land leased / sub-leased. In respect of land given on
finance lease basis, the corresponding cost of the land and development
costs incurred are expensed off in the statement of profit and loss.
iii) Contract Revenue
Revenue from construction contracts is recognized on a percentage
completion method, in proportion that the contract costs incurred for
work performed up to the reporting date stand to the estimated total
contract costs indicating the stage of completion of the project.
Contract revenue earned in excess of billing has been reflected under
the head "Other Assets" and billing in excess of contract revenue has
been reflected under the head "Other Current Liabilities" in the
balance sheet. Full provision is made for any loss in the year in which
it is first foreseen.
iv) Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
v) Dividends
Revenue is recognized when the shareholders' right to receive payment
is established by the balance sheet date.
l) Foreign Currency Translation
i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
ii) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction.
iii) Exchange Differences
Exchange differences, in respect of accounting periods commencing on or
after December 7, 2006, arising on reporting of long-term foreign
currency monetary items at rates different from those at which they
were initially recorded during the period, or reported in previous
financial statements, in so far as they relate to the acquisition of a
depreciable capital asset, are added to or deducted from the cost of
the asset and are depreciated over the balance life of the asset, and
in other cases, are accumulated in a "Foreign Currency Monetary Item
Translation Difference Account" in the company's financial statements
and amortized over the remaining life of the concerned monetary item
but not beyond accounting period ending on March 31, 2020.
Exchange differences arising on the settlement of monetary items not
covered above, or on reporting such monetary items of company at rates
different from those at which they were initially recorded during the
year, or reported in previous financial statements, are recognized as
income or as expenses in the year in which they arise.
iv) Forward Exchange Contracts entered into to hedge foreign currency
risk of an existing asset/ liability
The premium or discount arising at the inception of forward exchange
contracts and recognised is amortized as an expense/ income over the
life of the contract. Exchange differences on such contracts, except
the contracts which are long term foreign currency monetary items, are
recognized in the statement of profit and loss in the year in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of forward exchange contract is recognized as income or as
expense for the period. Any gain/loss arising on forward contracts
which are long term foreign currency monetary items is recognized in
accordance with paragraph (iii) above.
v) Derivative instruments
In accordance with the ICAI announcement, derivative contracts, other
than foreign currency forward contracts covered under AS 11, are marked
to market on a portfolio basis, and the net loss, if any, after
considering the offsetting effect of gain on the underlying hedged
item, is charged to the statement of profit and loss. Net gain, if any,
after considering the offsetting effect of loss on the underlying
hedged item, is ignored.
m) Retirement and Other Employee Benefits
i) Provident fund and superannuation fund
Retirement benefits in the form of Provident Fund and Superannuation
Fund Schemes are defined contribution schemes and the contributions are
charged to the statement of profit and loss of the year when the
contributions to the respective funds are due. There are no other
obligations other than the contribution payable to the respective
funds.
ii) Gratuity
Gratuity liability is defined benefit obligation and is provided for on
the basis of an actuarial valuation on projected unit credit method
made at the end of each financial year. The Company has taken an
insurance policy under the Group Gratuity Scheme with the Life
Insurance Corporation of India (LIC) to cover the gratuity liability of
the employees and amount paid/payable in respect of the present value
of liability for past services is charged to the statement of profit
and loss every year.
iii) Leave Benefits
Short term compensated absences are provided for based on estimates.
Long term compensated absences are provided for based on actuarial
valuation as at the end of the period. The actuarial valuation is done
as per projected unit credit method. The company presents the entire
leave as a current liability in the balance sheet, since it does not
have an unconditional right to defer it's settlement for twelve month
after the reporting date.
iv) Actuarial Gains/ Losses
Actuarial gains/losses are immediately taken to the statement of profit
and loss and are not deferred.
n) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-Tax Act, 1961 enacted in India. Deferred
income taxes reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. The Company is eligible and
claims tax deductions available under section 80IAB of the Income Tax
Act, 1961, in respect of income attributable to Special Economic Zone
activities.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. In view of
Company availing tax deduction under Section 80IAB of the Income Tax
Act, 1961, deferred tax has been recognized in respect of timing
difference, which originates during the tax holiday period but reverse
after the tax holiday period. Deferred tax assets are recognized only
to the extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized. In situations where the company has carry forward
unabsorbed depreciation or carry forward tax losses, all deferred tax
assets are recognized only if there is virtual certainty supported by
convincing evidence that they can be realised against future taxable
profits. At each balance sheet date,
unrecognized deferred tax assets of earlier years are re-assessed and
recognized to the extent that it has become reasonably certain that
future taxable income will be available against which such deferred tax
assets can be realized.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income Tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement." The
company reviews the "MAT Credit Entitlement" asset at each reporting
date and writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period.
o) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference share dividends and attributable taxes) by the
weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
p) Provisions
A provision is recognized when the company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on best management estimate required to settle the obligation at
the balance sheet date. These are reviewed at each balance sheet date
and adjusted to reflect the current best management estimates.
q) Segment Reporting Policies
The Company's operating businesses are organized and managed separately
according to the nature of services provided, with each segment
representing a strategic business unit that offers different services,
the risk and return profile of individual business unit, the
organisational structure and internal reporting system of the Company.
The analysis of geographical segments is not required as the Company's
operations are within single geographical segment i.e. India.
r) Cash and Cash equivalents
Cash and cash equivalents for the purpose of cash flow statement
comprise of cash at bank and in hand and short-term investments with an
original maturity of three months or less.
s) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The company does not
recognize a contingent liabilities but discloses it's existence in the
financial statement.
Mar 31, 2011
A) Basis of Preparation
The financial statements have been prepared to comply in all material
respects with the Accounting Standards notified by Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention on an accrual basis.
The accounting policies have been consistently applied by the Company
and except for the changes in accounting policy discussed more fully
below, 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 requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon managements best
knowledge of current events and actions, actual results could differ
from these estimates.
c) Changes in Accounting Policies:
(i) Pursuant to The Institute of Chartered Accountants of India (ICAI)
issue of "Technical Guide on Accounting for Special Economic Zones
(SEZs) Development Activities", the Company, with respect to accounting
of leases/ sub-leases of land, has decided to apply the accounting
principles of Accounting Standard - 19 Leases. Accordingly, in case
of lease/ sub-lease transaction, where at the inception of the lease/
sub-lease, the present value of the minimum lease payment over the
lease period (including non-refundable premium) amounts to
substantially the fair value of land leased / sub-leased, the
transaction is accounted on the principles of finance lease and
otherwise as the operating lease. Hitherto, the Company had been
recognizing non- refundable upfront premium as income in the year in
which the lease / sub-lease agreement / Memorandum of Understanding
takes effect and annual lease rental on accrual basis on leased/
sub-leased land. As per the revised policy, where the land lease/
sub-lease transaction is in the nature of finance lease, the revenue
amount is recognized equal to present value of the future lease payment
at the inception of the lease and where land lease/ sub-lease
transaction is in the nature of operating lease, the land lease income
is recognized on a systematic proportionate basis over the lease term.
As a result of this change, the net credit taken to Profit and Loss
Account on account of such land lease transactions is higher by Rs.
8,397.87 Lacs for the year (including Rs. 7,726.90 Lacs in respect of
land lease/ sub-lease agreements entered in earlier years).
(ii) Based on the principles of finance leases, the Company has
expensed proportionate cost of land / rights of use in leased land
which have been leased / sub-leased along with the recognition of
income.
d) Fixed Assets
i) Fixed assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing cost relating to acquisition / construction
of fixed assets which take substantial period of time to get ready for
its intended use are also included to the extent they relate to the
period till such assets are ready to be put to use.
ii) Exchange differences arising on reporting of the long-term foreign
currency monetary items at rates different from those at which they
were initially recorded during the period, or reported in the previous
financial statements are added to or deducted from the cost of the
asset and are depreciated over the balance life of the asset, if these
monetary items pertain to the acquisition of a depreciable fixed asset.
iii) Insurance spares / standby equipments are capitalized as part of
mother assets.
e) Expenditure on new projects and substantial expansion
Expenditure directly relating to construction activity (net of income,
if any) is capitalized. Indirect expenditure incurred during
construction period is capitalized as part of the indirect construction
cost to the extent to which the expenditure is indirectly related to
construction or is incidental thereto. Other indirect expenditure
(including borrowing costs) incurred during the construction period
which is not related to the construction activity nor is incidental
thereto, is charged to the Profit and Loss Account.
f) Depreciation
i) Depreciation on Fixed Assets, except for those stated in para (ii)
to (iv) below, is provided on Straight Line Method (SLM) at the rates
prescribed under Schedule XIV of the Companies Act, 1956, or the rates
determined on the basis of useful lives of the respective assets,
whichever is higher.
iii) Depreciation on individual assets costing up to Rs. 5,000 and mobile
phones, included under office equipments are provided at the rate of
100% in the month of purchase.
iv) Insurance spares / standby equipments are depreciated prospectively
over the remaining useful lives of the respective mother assets.
h) Impairment
i) The carrying amounts of assets are reviewed at each Balance Sheet
date if there is any indication of impairment based on internal /
external factors. An impairment loss is recognized wherever the
carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the assets net selling price and
value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessment of the time value of money
and risks specific to the asset.
ii) After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
i) Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets to the extent they relate to the period till such assets
are ready to be put to use. A qualifying asset is one that necessarily
takes substantial period of time to get ready for its intended use. All
other borrowing costs are charged to revenue. Borrowing costs consist
of interest and other costs that an entity incurs in connection with
the borrowing of funds.
j) Leases
Where the Company is the lessee
Finance leases including rights of use in Leased Land, which
effectively transfer to the Company substantially all the risks and
benefits incidental to ownership of the leased item, are capitalized at
the lower of the fair value and present value of the minimum lease
payments at the inception of the lease term and disclosed as leased
assets. Lease payments are apportioned between the fnance charges and
reduction of the lease liability based on the implicit rate of return.
Finance charges are charged as expense.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases, wherein the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss Account on a straight-line basis over the lease
term.
Where the Company is the lessor
Assets given under a finance lease including lease / sub-lease of land
are recognized as a receivable at an amount equal to the net investment
in the lease. Lease rentals are apportioned between principal and
interest on the Internal Rate of Return method. The principal amount
received reduces the net investment in the lease and interest is
recognized as revenue. Initial direct costs such as legal costs,
brokerage costs, etc. are recognized immediately in the Profit and Loss
Account.
Assets subject to operating leases are included in fixed assets. Lease
income is recognized in the Profit and Loss Account on a
straight-line basis over the lease term. Costs, including depreciation
are recognized as an expense in the Profit and Loss Account. Initial
direct costs such as legal costs, brokerage costs, etc. are recognized
immediately in the Profit and Loss Account.
k) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long - term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long - term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of investments.
l) Inventories
Stores and Spares: Valued at lower of cost and net realizable value.
Cost is determined on a moving weighted average basis. Cost of stores
and spares lying in bonded warehouse includes custom duty accounted for
on an accrual basis.
Net Realizable Value is the estimated current procurement price in the
ordinary course of the business.
m) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
i) Port Operation Services
Revenue from port operation services including rail infrastructure is
recognized on proportionate completion method basis based on service
rendered.
Income in the nature of license fees / royalty are recognised as and
when the right to receive such income is established as per terms and
conditions of relevant agreement.
ii) Income from Long Term Leases
As a part of its business activity, the Company leases/ sub-leases land
on long term basis to its customers. In some cases, the Company enters
into cancellable lease / sub-lease transaction, while in other cases,
it enters into non-cancellable lease / sub-lease transaction. The
Company recognises the income based on the principles of leases as per
Accounting Standard - 19 Leases and accordingly in cases the land lease
/ sub-lease transaction are cancellable in nature, the income as
regards to upfront premium received / receivable is recognised on
operating lease basis i.e.pro-rata over the period of lease / sub-lease
agreement / Memorandum of Understanding takes effect and annual lease
rentals are recognised on an accrual basis. In cases where land lease /
sub-lease transaction are non-cancellable in nature, the income is
recognised on finance lease basis i.e. at the inception of lease /
sub-lease agreement / Memorandum of Understanding takes effect, the
income recognised is equal to the present value of the minimum lease
payment over the lease period (including non-refundable upfront
premium) which is substantially equal to the fair value of land leased
/ sub-leased. In respect of land given on finance lease basis, the
corresponding cost of the land is expensed off in the Profit and Loss
Account.
iii) Contract Revenue
Revenue from construction contracts is recognized on a percentage
completion method, in proportion that the contract costs incurred for
work performed up to the reporting date stand to the estimated total
contract costs indicating the stage of completion of the project.
Contract revenue earned in excess of billing has been reflected under
the head "Other Current Assets" and billing in excess of contract
revenue has been reflected under the head "Current Liabilities" in the
Balance Sheet. Full provision is made for any loss in the year in
which it is first foreseen.
iv) Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
v) Dividends
Revenue is recognized when the shareholders right to receive payment
is established by the balance sheet date.
n) Foreign Currency Translation
i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
ii) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction.
iii) Exchange Differences
Exchange differences, in respect of accounting periods commencing on or
after December 7, 2006, arising on reporting of long-term foreign
currency monetary items at rates different from those at which they
were initially recorded during the period, or reported in previous
financial statements, in so far as they relate to the acquisition of a
depreciable capital asset, are added to or deducted from the cost of
the asset and are depreciated over the balance life of the asset, and
in other cases, are accumulated in a "Foreign Currency Monetary Item
Translation Difference Account" in the enterprises financial
statements and amortized over the balance period of such long-term
asset/liability but not beyond accounting period ending on or before
March 31, 2011.
Exchange differences arising on the settlement of monetary items not
covered above, or on reporting such monetary items of company at rates
different from those at which they were initially recorded during the
year, or reported in previous financial statements, are recognized as
income or as expenses in the year in which they arise.
iv) Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
year.
v) Derivative transactions
The Company enters into various foreign currency option contracts and
options to hedge its risks with respect to foreign currency
fluctuations. These foreign exchange forward contracts and options are
not used for trading or speculation purpose. At every period end, all
outstanding derivative contracts are fair valued on a marked-to-market
basis and any loss on valuation is recognized in the Profit and Loss
Account. Any gain on marked-to-market valuation of respective contracts
is only recognized to the extent of the loss on foreign currency
re-instatement of the underlying transaction, keeping in view the
principle of prudence as enunciated in AS 1, Disclosure of Accounting
Policies. Any subsequent change in fair values, occurring after
Balance Sheet date, is accounted for in subsequent period.
o) Retirement and Other Employee Benefits
i) Provident fund and superannuation fund
Retirement benefits in the form of Provident Fund and Superannuation
Fund Schemes are defined contribution schemes and the contributions are
charged to the Profit and Loss Account of the year when the
contributions to the respective funds are due. There are no other
obligations other than the contribution payable to the respective
funds.
ii) Gratuity
Gratuity liability is defined benefit obligation and is provided for on
the basis of an actuarial valuation on projected unit credit method
made at the end of each financial year. The Company has taken an
insurance policy under the Group Gratuity Scheme with the Life
Insurance Corporation of India (LIC) to cover the gratuity liability of
the employees and amount paid/payable in respect of the present value
of liability for past services is charged to the Profit and Loss
account every year. The difference, if any, between the actuarial
valuation of the gratuity of employees at the year end and the balance
of funds with LIC is provided for as liability in the books.
iii) Leave Benefits
Short term compensated absences are provided for based on estimates.
Long term compensated absences are provided for based on actuarial
valuation as at the end of the period. The actuarial valuation is done
as per projected unit credit method.
iv) Actuarial Gains/ Losses
Actuarial gains/losses are immediately taken to the Profit and Loss
Account and are not deferred.
p) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-Tax Act, 1961 enacted in India. Deferred
income taxes reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. The Company is eligible and
claims tax deductions available under section 80IAB of the Income Tax
Act, 1961, in respect of income attributable to Special Economic Zone
activities (including notified port area).
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the Balance Sheet date. In view of
Company availing tax deduction under Section 80IAB of the Income Tax
Act, 1961, deferred tax has been recognized in respect of timing
difference, which originates during the tax holiday period but reverse
after the tax holiday period. Deferred tax assets are recognized only
to the extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised. In situations where the company has carry forward
unabsorbed depreciation or carry forward tax losses, all deferred tax
assets are recognized only if there is virtual certainty supported by
convincing evidence that they can be realised against future taxable
profits. At each Balance Sheet date unrecognized deferred tax assets of
earlier years are re-assessed and recognized to the extent that it has
become reasonably certain that future taxable income will be available
against which such deferred tax assets can be realised.
q) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference share dividends) by the weighted average number of
equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
r) Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted to
its present value and are determined based on best management estimate
required to settle the obligation at the Balance Sheet date. These are
reviewed at each Balance Sheet date and adjusted to reflect the current
best management estimates.
s) Segment Reporting Policies
The Companys operating businesses are organized and managed separately
according to the nature of services provided, with each segment
representing a strategic business unit that offers different services
and serves different category of customers. The analysis of
geographical segments is based on the geographical location of the
customers.
t) Cash and Cash equivalents
Cash and cash equivalents for the purpose of Cash Flow Statement
comprise of cash at bank and in hand and short-term investments with an
original maturity of three months or less.
u) Miscellaneous Expenditure
Miscellaneous Expenditure represents the expenses incurred during
Initial Public Offer which stands adjusted against Securities Premium
Account as permitted under Section 78 of the Companies Act, 1956.
Mar 31, 2010
A) Basis of Preparation
The financial statements have been prepared to comply in all material
respects with the Notified accounting standards by Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention on an accrual basis.
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 requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon managements best
knowledge of current events and actions, actual results could differ
from these estimates.
c) Fixed Assets
i) Fixed assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use.
ii) In respect of accounting periods commencing on after December 7,
2006, exchange differences arising on reporting of the long-term
foreign currency monetary items at rates different from those at which
they were initially recorded during the period, or reported in the
previous financial statements are added to or deducted from the cost of
the asset and are depreciated over the balance life of the asset, if
these monetary items pertain to the acquisition of a depreciable fixed
asset.
iii) Insurance spares / stand by equipments are capitalized as part of
mother assets.
d) Expenditure on new projects and substantial expansion
Expenditure directly relating to construction activity (net of income,
if any) is capitalized. Indirect expenditure incurred during
construction period is capitalized as part of the indirect construction
cost to the extent to which the expenditure is indirectly related to
construction or is incidental thereto. Other indirect expenditure
(including borrowing costs) incurred during the construction period,
which is not related to the construction activity nor is incidental
thereto, is charged to the Profit & Loss Account. Income earned during
construction period is deducted from the total of the indirect
expenditure.
All direct capital expenditure on expansion is capitalized. As regards
indirect expenditure on expansion, only that portion is capitalized
which represents the marginal increase in such expenditure as a result
of capital expansion. The same is treated as pre-operative expenditure
pending allocation to fixed assets in progress and is shown under
"Capital Work-in-Progress". The same is transferred to fixed assets on
progressive basis and is capitalized along with fixed assets on
commencement of commercial activities.
e) Depreciation
i) Depreciation on Fixed Assets, except for those stated in para (ii)
to (vi) below, is provided on straight line method (SLM) at the rates
prescribed under Schedule XIV of the Companies Act, 1956, or the rates
determined on the basis of useful life of the respective assets,
whichever is higher.
ii) Cost of Leasehold Land Development, Marine Structures and Dredged
Channels is amortized over the period of the Concession Agreement of 30
years effective from February 17, 2001 with Gujarat Maritime Board or
their useful life, whichever is lower.
iii) Depreciation on Mobile phones, included under Office Equipment,
Furniture and Fixtures, is provided at the rate of 100% in the month of
purchase.
iv) Depreciation on Dredging Pipes, included under Plant and Machinery,
is provided on the basis of their useful life which is estimated at 18
months.
v) Depreciation on individual assets costing up to Rs. 5,000.00 is
provided at the rate of 100% in the month of purchase.
vi) Insurance spares/standby equipments are depreciated prospectively
over the remaining useful lives of the respective mother assets.
g) Impairment
i) The carrying amounts of assets are reviewed at each balance sheet
date if there is any indication of impairment based on
internal/external factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the assets net selling price and
value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value at the weighted average
cost of capital.
ii) After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
h) Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to revenue.
i) Leases
Where the Company is the lessee
Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss Account on a straight-line basis over the lease
term.
Where the Company is the lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognised in the Profit and Loss Account on a straight-line
basis over the lease term. Costs, including depreciation are recognised
as an expense in the Profit and Loss Account. Initial direct costs
such as legal costs, brokerage costs, etc. are recognised immediately
in the Profit and Loss Account.
j) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of such investments.
k) Inventories
Stores and Spares: Valued at lower of cost and net realizable value.
Cost is determined on a moving weighted average basis. Cost of stores
and spares lying in bonded warehouse includes custom duty accounted for
on accrual basis.
Net Realizable Value is the estimated current procurement price in the
ordinary course of the business.
I) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
i) Port Operation Services
Revenue from port operation services including rail infrastructure is
recognized on proportionate completion method basis based on service
rendered.
ii) Income from Long Term Leases/Infrastructure Usage Agreements
As a part of its business activity, the Company also leases/sub-leases
land on long term basis to its customers. In some cases, the upfront
premium received/receivable on such sub-leases is refundable
proportionately on cancellation of such sub-leases before maturity,
while in other cases, it is non-refundable. In cases where such upfront
premium is non-refundable, the Company recognizes the entire premium as
income in the year in which the sub-lease agreement/memorandum of
understanding takes effect while in cases where such upfront is
proportionately refundable, such premium is recognized as income
pro-rata over the period of sub-lease agreement. Land sub-lease rent
receivable under the above agreements is accounted for as income in
accordance with the terms of such agreements. Income under Long Term
Infrastructure Usage Agreements is recognized in accordance with the
terms of such agreements.
iii) Contract Revenue
Revenues from construction contracts are recognized on a percentage
completion method, in proportion that the contract costs incurred for
work performed up to the reporting date bear to the estimated total
contract costs. Contract revenue earned in excess of billing has been
reflected under "Other Current Assets" and billing in excess of
contract revenue has been reflected under "Current Liabilities" in the
balance sheet. Full provision is made for any loss in the year in which
it is first foreseen.
iv) Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable. v) Dividends
Revenue is recognised when the shareholders right to receive payment
is established by the balance sheet date.
m) Foreign Currency Translation
i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
ii) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction.
iii) Exchange Differences
Exchange differences, in respect of accounting periods commencing on or
after December 7, 2006, arising on reporting of long-term foreign
currency monetary items at rates different from those at which they
were initially recorded during the period, or reported in previous
financial statements, in so far as they relate to the acquisition of a
depreciable capital asset, are added to or deducted from the cost of
the asset and are depreciated over the balance life of the asset, and
in other cases, are accumulated in a "Foreign Currency Monetary Item
Translation Difference Account" in the enterprises financial
statements and amortized over the balance period of such long term
asset/liability but not beyond accounting period ending on or before
March 31,2011.
Exchange differences arising on the settlement of monetary items not
covered above, or on reporting such monetary items of company at rates
different from those at which they were initially recorded during the
year, or reported in previous financial statements, are recognized as
income or as expenses in the year in which they arise.
iv) Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or as expense for the
year.
v) Derivative transactions
The Company enters into various foreign currency option contracts and
options to hedge its risks with respect to foreign currency
fluctuations. These foreign exchange forward contracts and options are
not used for trading or speculation purpose. At every period end, all
outstanding derivative contracts are fair valued on a marked-to-market
basis and any loss on valuation is recognized in the profit and loss
account. Any gain on marked-to-market valuation of respective contracts
is only recognized to the extent of the loss on foreign currency
re-instatement of the underlying transaction, keeping in view the
principle of prudence as enunciated in AS 1, Disclosure of Accounting
Policies. Any subsequent change in fair values, occurring after
balance sheet date, is accounted for in subsequent period.
n) Employee Benefits
i) Provident fund and superannuation fund
Retirement benefits in the form of Provident Fund and Superannuation
Fund Schemes are defined contribution schemes and the contributions are
charged to the Profit and Loss Account in the year when the
contributions to the respective funds are due. There are no other
obligations other than the contribution payable to the respective
trusts.
ii) Gratuity
Gratuity liability is defined benefit obligation and is provided for on
the basis of an actuarial valuation on projected unit credit method
made at the end of each financial year. The Company has taken an
insurance policy under the Group Gratuity Scheme with the Life
Insurance Corporation of India (LIC) to cover the gratuity liability of
the employees and amount paid/payable in respect of the present value
of liability for past services is charged to the Profit & Loss account
every year. The difference, if any, between the actuarial valuation of
the gratuity of employees at the year end and the balance of funds with
LIC is provided for as liability in the books.
iii) Leave Benefits
Short term compensated absences are provided for based on estimates.
Long term compensated absences are provided for based on actuarial
valuation as at the end of the period. The actuarial valuation is done
as per projected unit credit method.
iv) Actuarial Gains/Losses
Actuarial gains/losses are immediately taken to the Profit and Loss
Account and are not deferred.
o) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act, 1961 enacted in India. Deferred
income tax reflect the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. The Company is eligible and
claims tax deductions available under Section 80IAB of the Income Tax
Act, 1961, in respect of income attributable to Special Economic Zone
activities (including notified port area).
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. In view of
Company availing tax deduction under Section 80IAB of the Income Tax
Act, 1961, deferred tax has been recognized in respect of timing
difference, which originates during the tax holiday period but reverse
after the tax holiday period. Deferred tax assets and deferred tax
liabilities are offset, if a legally enforceable right exists to set
off current tax assets against current tax liabilities and the deferred
tax assets and deferred tax liabilities relate to the taxes on income
levied by same governing taxation laws. Deferred tax assets are
recognised only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. If the Company has carry forward
unabsorbed depreciation or carry forward tax losses, deferred tax
assets are recognised only if there is virtual certainty supported by
convincing evidence that they can be realized against future taxable
profits. Unrecognised deferred tax assets of earlier years are
re-assessed and recognised to the extent that it has become reasonably
certain that future taxable income will be available against which such
deferred tax assets can be realized.
MAT credit is recognised, as an asset only when and to the extent there
is convincing evidence that the Company will pay normal income tax
during the specified period. In the year in which the Minimum
Alternative Tax (MAT) credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in Guidance Note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of a credit to the profit and loss account and
shown as MAT Credit Entitlement. The Company reviews the same at each
balance sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specified
period.
p) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting Preference Dividends) by the weighted average number of
equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
q) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted to
its present value and are determined based on best management estimate
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
best estimates. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best management estimates. Contingent
liabilities are not recognized but are disclosed in the Notes.
Contingent Assets are neither recognized nor disclosed in the financial
statements.
r) Segment Reporting Policies
The Companys operating businesses are organised and managed separately
according to the nature of services provided, with each representing a
strategic business unit that offers different services and serves
different category of customers. The analysis of geographical segments
is based on the geographical location of the customers.
s) Cash and Cash equivalents
Cash and cash equivalents for the purpose of cash flow statement
comprise of cash at bank, cash in hand and short-term investments with
an original maturity of ninety days or less.
t) Miscellaneous Expenditure
Miscellaneous Expenditure represents the expenses incurred on Initial
Public Offer and the same are adjusted against Securities Premium
Account as permitted under Section 78 of the Companies Act, 1956.