Mar 31, 2023
1. Corporate information
GMR Airports Infrastructure Limited (formerly known as GMR Airports Limited) (''GIL'' or ''the Company'') is a public limited Company domiciled in India. The registered office of the Company is located at Naman Centre, Bandra Kurla Complex, Mumbai, India. Its equity shares are listed on National Stock Exchange and Bombay Stock Exchange in India. The Company carries its business in the following business segments:
a. Engineering Procurement Construction (EPC)
The Company is engaged in handling EPC solutions in the infrastructure sector. Also refer note 39.
b. Others
The Company''s business also comprises of investment activity and corporate support to various infrastructure Special Purpose Vehicles (SPV).
Information on other related party relationships of the Company is provided in Note 31.
Other explanatory information to the standalone financial statement comprises of notes to the financial statements for the year ended March 31, 2023.
The standalone financial statements were approved by the Board of Directors and authorised for issue in accordance with a resolution of the Directors on May 27, 2023.
2. Significant accounting policies
The significant accounting policies applied by the Company in the preparation of its financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these financial statements, unless otherwise indicated below:
Recent accounting pronouncement issued but not made effective:Ind AS 1 - Presentation of Financial Statements
The Ministry of Corporate Affairs ("MCA") vide notification dated March 31, 2023, has issued an amendment to Ind AS 1 which specifies that an entity to disclose their material accounting policies rather than their significant accounting policies and include corresponding amendments to IND AS 107 and IND AS 34 with effect from April 01, 2023.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
The Ministry of Corporate Affairs ("MCA") vide notification dated March 31, 2023, has issued an amendment to Ind AS 8 which
specifies that the definition of ''accounting estimates'' and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates with effect from April 01, 2023.
Ind AS 12 - Income Taxes
The Ministry of Corporate Affairs ("MCA") vide notification dated March 31, 2023 has issued an amendment to Ind AS 12 which narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. Also there is corresponding amendment to IND AS 101. The effective date for adoption of this amendment is annual periods beginning on or after April 01, 2023.
The Company is in the process of evaluating the impact on financial statements.
2.1. Basis of Preparation
The standalone financial statements of the Company have 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).
The standalone financial statements have been prepared on a historical cost basis except for certain financial assets and liabilities (refer accounting policy regarding financial instruments) which have been measured at fair value.
The functional and presentation currency of the Company is Indian Rupee ("''") which is the currency of the primary economic environment in which the Company operates, and all values are rounded to nearest crore except when otherwise indicated.
These standalone financial statements have been prepared by giving effect to the composite scheme of amalgamation and arrangement for amalgamation of GMR Power Infra Limited (GPIL) with the Company and demerger of Engineering Procurement and Construction (EPC) business and Urban Infrastructure Business of the Company (including Energy business) into GMR Power and Urban Infra Limited (GPUIL) ("Scheme") as approved by the Hon''ble National Company Law Tribunal, Mumbai bench (''''the Tribunal'''') vide its order dated December 22, 2021 (formal order received on December 24, 2021). The said Tribunal order was filed to the Registrar of Companies by Company, GPIL and GPUIL on December 31, 2021, thereby making the Scheme effective. Accordingly, assets and liabilities of the EPC business and Urban Infrastructure business (including Energy business), as approved by the board of directors pursuant to the Scheme stand transferred and vested into GPUIL on April 01, 2021, being the Appointed date as per
the Scheme.
The standalone financial statements of the Company do not have any impact of the Composite Scheme, however as per the applicable Ind AS, the EPC business and Urban Infrastructure Business (including Energy business) have been classified as Discontinued operations for the comparative purposes. Also refer note 39.
2.2. Summary of significant accounting policiesa. Current versus non-current classification
The Company presents assets and liabilities in the standalone balance sheet based on current/ non-current classification. An asset is treated as current when it is:
i. Expected to be realised or intended to be sold or consumed in normal operating cycle,
ii. Held primarily for the purpose of trading,
iii. Expected to be realised within twelve months after the reporting period, or
iv. Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
i. It is expected to be settled in normal operating cycle,
ii. It is held primarily for the purpose of trading,
iii. It is due to be settled within twelve months after the reporting period, or
iv. There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
Advance tax paid is classified as non-current assets.
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. Fair value measurement of financial instruments
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date using
valuation techniques.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
a) In the principal market for the asset or liability, or
b) In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the standalone financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 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 standalone 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.
c. Revenue from contracts with customer
The Company recognises revenue from contracts with customers when it satisfies a performance obligation by transferring promised good or service to a customer. The revenue is recognised to the extent of transaction price allocated to the performance obligation satisfied. Performance obligation is satisfied over time when the transfer of control of asset (good or service) to a customer is done over time and in other cases, performance obligation is satisfied at a point in time. For performance obligation satisfied over time, the revenue recognition is done by measuring the progress towards complete satisfaction of performance obligation. The progress is measured in terms of a proportion of actual cost incurred to-date, to the total estimated cost attributable to the performance obligation.
Transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring good or service to a customer excluding amounts collected on behalf of a third party. Variable consideration is estimated using the expected value method or most likely amount as appropriate in a given circumstance. Payment terms agreed with a customer are as per business practice and there is no financing component involved in the transaction price.
Costs to obtain a contract which are incurred regardless of whether the contract was obtained are charged-off in Profit & loss immediately in the period in which such costs are incurred. Incremental costs of obtaining a contract, if any, and costs incurred to fulfil a contract are amortised over the period of execution of the contract in proportion to the progress measured in terms of a proportion of actual cost incurred to-date, to the total estimated cost attributable to the performance obligation.
Significant judgments are used in:
1. Determining the revenue to be recognised in case of performance obligation satisfied over a period of time; revenue recognition is done by measuring the progress towards complete satisfaction of performance obligation. The progress is measured in terms of a proportion of actual cost incurred to-date, to the total estimated cost attributable to the performance obligation.
2. Determining the expected losses, which are recognised in the period in which such losses become probable based on the expected total contract cost as at the reporting date.
Revenue from operation is exclusive of goods and service tax (GST). Revenue includes adjustments made towards liquidated damages and variation wherever applicable. Escalation and other claims, which are not ascertainable/ acknowledged by customers are not taken into account.
Revenue from construction/project related activity is recognised as follows:
1. Cost plus contracts: Revenue from cost plus contracts is recognized over time and is determined with reference to the extent performance obligations have been satisfied. The amount of transaction price allocated to the performance obligations satisfied represents the recoverable costs incurred during the period plus the margin as agreed with the customer.
2. Fixed price contracts: Contract revenue is recognised over time to the extent of performance obligation satisfied and control is transferred to the customer. Contract revenue is recognised at allocable transaction price which represents the cost of work performed on the contract plus proportionate margin, using the percentage of completion method. Percentage of completion is the proportion of cost of work performed to-date, to the total estimated contract costs.
Impairment loss (termed as provision for foreseeable losses in the financial statements) is recognized in the statement of profit and loss to the extent the carrying amount of the contract asset exceeds the remaining amount of consideration that the Company expects to receive towards remaining performance obligations (after deducting the costs that relate directly to fulfil such remaining performance obligations). In addition, the Company recognises impairment loss (termed as provision for expected credit loss on contract assets in the financial statements) on account of credit risk in respect of a contract asset using expected credit loss model on similar basis as applicable to trade receivables.
Contract balancesContract assets
A contract asset is the right to consideration in exchange
for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. Contract assets are transferred to receivables when the rights become unconditional and contract liabilities are recognized as and when the performance obligation is satisfied.
A receivable represents the Company''s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section (m) Financial instruments - initial recognition and subsequent measurement.
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.
Income from management/ technical services
Income from management/ technical services is recognised as per the terms of the agreement on the basis of services rendered.
Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable except the interest income received from customers for delayed payments which are accounted on the basis of reasonable certainty / realisation.
For all debt instruments 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 but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss. Interest income is included in other operating income in the statement of profit and loss.
Dividend income is recognised when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
d. Taxes on income Current income tax
Tax expense for the year comprises current and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The Company''s liability for current tax is calculated using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income 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 is the tax expected to be payable or recoverable on differences between the carrying values of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable profit and is accounted for using the balance sheet liability model. Deferred tax liabilities are generally recognised for all the taxable temporary differences. In contrast, deferred tax assets are only recognised to the extent that is probable that future taxable profits will be available against which the temporary differences can be utilised.
Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, 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.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
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 balance sheet date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or 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.
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 taxes relate to the same taxable entity and the same taxation authority.
Deferred tax assets include Minimum Alternative Tax (''MAT'') paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is recognized as deferred tax asset in the balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realized.
In the year in which the Company recognises MAT credit as an asset, it is created by way of credit to the statement of profit and loss shown as part of deferred tax asset. The Company reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent that it is no longer probable that it will pay normal tax during the specified period.
e. Property, plant and equipment
Freehold land is carried at historical cost and is not depreciated. All other items of property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses, if any.
Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate assets are derecognised when replaced. All other repairs and maintenance are charged to profit and loss during the reporting period in which they are incurred.
The Company identifies and determines cost of each component/ part of the asset separately, if the component/ part has a cost which is significant to the total cost of the asset having useful life that is materially different from that of the remaining asset. These components are depreciated over their useful lives; the remaining asset is depreciated over the life of the principal asset.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:
Category of asset* |
Estimated useful life |
Plant and equipment |
4 - 15 years* |
Office equipment''s |
5 years |
Furniture and fixtures |
10 years |
Vehicles |
8 - 10 years |
Computers |
3 years |
Leasehold improvements are depreciated over the period of lease or estimated useful life, whichever is lower, on straight line basis.
* The Company, based on technical assessment made by the technical expert and management estimate, depreciates certain items of plant and equipment over estimated useful lives which are different from the useful life prescribed in Schedule II to the Companies Act, 2013.
Further, the management has estimated the useful lives of asset individually costing Rs 5,000 or less to be less than one year, whichever is lower than those indicated in Schedule II. 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 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.
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.
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, if any.
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 with the effect of any change in the estimate being accounted for on a prospective basis. 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.
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 |
Useful lives |
Amortisation method used |
Internally generated or acquired |
Computer software |
Definite (6 years) |
Straight-line basis |
Acquired |
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds including interest expense calculated using the effective interest method. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the 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 until such time as the assets are substantially ready for the intended use or sale. All other borrowing costs are expensed in the period in which they occur.
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.
A lease is classified at the inception date as a finance lease or an operating lease.
The Company enters into leasing arrangements for various assets. The assessment of the lease is based on several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee''s option to extend/purchase etc.
At lease commencement date, the Company recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Company, an estimate of any costs to dismantle and remove the asset at the end of the lease (if any), and any lease payments made in advance of the lease commencement date (net of any incentives received).
The Company depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Company also assesses the right-of-use asset for impairment when such indicators exist. At lease commencement date, the Company measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Company''s incremental borrowing rate. Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed payments) and variable payments based on an index or rate. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is re-measured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset. The Company has elected to account for short-term leases using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in statement of profit and loss on a straight-line basis over the lease term.
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.
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.
Raw materials, components, stores and spares are valued at lower of cost and net realisable value. However, materials and other items held for use in the production of inventories
are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Costs incurred that relate to future activities on the contract are recognised as "Contract work in progress".
Contract work in progress comprising construction costs and other directly attributable overheads is valued at lower of cost and net realisable value.
j. Impairment of non-financial assets
As at the end of each accounting year, the Company reviews the carrying amounts of its property, plant and equipment (PPE), investment property, intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If such indication exists, the said assets are tested for impairment so as to determine the impairment loss, if any. Goodwill and the intangible assets with indefinite life are tested for impairment each year.
Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined:
(i) in the case of an individual asset, at the higher of the fair value less costs of disposal and the value in use; and
(ii) in the case of a cash generating unit (a Company of assets that generates identified, independent cash flows), at the higher of the cash generating unit''s net fair value less costs of disposal and the value in use.
(The amount of value in use is determined as the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life. For this purpose, the discount rate (pre-tax) is determined based on the weighted average cost of capital of the company suitably adjusted for risks specified to the estimated cash flows of the asset).
For this purpose, a cash generating unit is ascertained as the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets.
If recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, such deficit is recognised immediately in the statement of profit and loss as impairment loss and the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount.
When an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss is recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the statement of profit and loss.
k. Provisions and contingent liabilities
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
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.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
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 its existence in the standalone financial statements.
Provisions and contingent liability are reviewed at each balance sheet.
l. Retirement and other employee benefits
Retirement benefit in the form of provident fund, pension fund and superannuation fund are defined contribution schemes. The Company has no obligation, other than the contribution payable. The Company recognizes contribution payable to provident fund, pension fund and superannuation fund as expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet reporting date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.
Accumulated leave, which is expected to be utilized within the next twelve month, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward beyond twelve month, as long-term employee benefit for measurement purposes. Such longterm compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end.
The Company presents the leave as a current liability in the standalone balance sheet, to the extent it does not have an unconditional right to defer its settlement for twelve months after the reporting date.
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method using actuarial valuation to be carried out at each balance sheet date.
In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognise the obligation on a net basis.
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 standalone 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.
Past service costs are recognised in profit or loss on the earlier of:
a. The date of the plan amendment or curtailment, and
b. The date that the Company recognises related restructuring costs.
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:
a. Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
b. Net interest expense or income.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contract embodying the related financial instruments. All financial assets, financial liabilities and financial guarantee contracts are initially measured at transaction cost and where such values are different from the fair value, at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability. Transaction costs directly attributable to the acquisition of financial assets and financial liabilities at fair value through profit and loss are immediately recognised in the statement of profit and loss. In case of interest free or concession loans/debentures/preference shares given to subsidiaries, associates and joint ventures, the excess of the actual amount of the loan over initial measure at fair value is accounted as an equity investment. On de-recognition of such financial instruments in its entirety, the difference between the carrying amount measured at the date of de-recognition and the consideration received is adjusted with equity component of the investments.
Pursuant to change in accounting policy as detailed above, the Company has made an irrevocable election to measure investments in equity instruments issued by subsidiaries, associates and joint ventures at Fair Value Through Other Comprehensive Income (FVTOCI). Amounts recognised in OCI are not subsequently reclassified to the statement of profit and loss. Refer note 5 and 35.
Investment in preference shares/ debentures of the subsidiaries are treated as equity instruments if the same are convertible into equity shares or are redeemable out of the proceeds of equity instruments issued for the purpose of redemption of such investments. Investment in preference shares/ debentures not meeting the aforesaid conditions are classified as debt instruments at amortised cost.
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.
(a) Financial assets⢠Measurement and Valuation1. Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
2. Financial assets measured at fair value
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows or to sell these financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial asset not measured at amortised cost or at fair value through other comprehensive income is carried at fair value through the statement of profit and loss.
For financial assets maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
⢠Impairment of financial assets
Loss allowance for expected credit losses is recognised for financial assets measured at amortised cost and fair value through the statement of profit and loss.
The Company recognises impairment loss on trade receivables using expected credit loss model, which involves use of provision matrix constructed on the basis of historical credit loss experience as permitted under Ind AS 109 - Impairment loss on investments.
For financial assets whose credit risk has not significantly increased since initial recognition, loss allowance equal to twelve month expected credit losses is recognised. Loss allowance equal to the lifetime expected credit losses is recognised if the credit risk on the financial instruments has significantly increased since initial recognition.
⢠De-recognition of financial assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the financial asset expire, or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the assets
and an associated liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On de-recognition of a financial asset in its entirety, the difference between the carrying amounts measured at the date of de-recognition and the consideration received is recognised in standalone statement of profit and loss.
For trade and other receivables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
(b) Financial liabilities and equity instruments
⢠Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
⢠Measurement and valuation
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method where the time value of money is significant. Interest bearing bank loans, overdrafts and issued debt are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the statement of profit and loss.
For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
⢠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, 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.
The potential cash payments related to put options issued by the Company over the equity of subsidiary companies to non-controlling interests are accounted for as financial liabilities when such options may only be settled other than by exchange of a fixed amount of cash or another financial asset for a fixed number of shares in the subsidiary. The financial liability for such put option is accounted for under Ind AS 109.
The amount that may become payable under the option on exercise is initially recognised at fair value under other financial liabilities with a corresponding debit to investments.
If the put option is exercised, the entity derecognises the financial liability by discharging the put obligation. In the event that the option expires unexercised, the liability is derecognised with a corresponding adjustment to investment.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is
recognised in the statement of profit and loss.
(c) Off-setting of financial instruments
Financial assets and financial liabilities are offset, and the net amount is reported in the standalone balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
n. Derivative financial instruments
The Company uses derivative financial instruments, such as forward currency contracts to hedge its foreign currency risks. Such derivative financial instruments are initially recognised at fair value 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.
o. Convertible preference shares/ debentures
Convertible preference shares/debentures are separated into liability and equity components based on the terms of the contract.
On issuance of the convertible preference shares/ debentures, 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 conversion or redemption.
The remainder of the proceeds is allocated to the conversion option that is recognised and included in equity since conversion option meets Ind AS 32 criteria for conversion right. Transaction costs are deducted from equity, net of associated income tax. The carrying amount of the conversion option is not re-measured in subsequent years.
Transaction costs are apportioned between the liability and equity components of the convertible preference shares/debentures based on the allocation of proceeds to the liability and equity components when the instruments are initially recognised.
p. Cash and cash equivalents
Cash and cash equivalent in the standalone balance sheet comprise cash at banks and on hand and shortterm deposits with an original maturity of three month 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.
In preparing the financial statements, transactions in the currencies other than the Company''s functional currency are recorded at the rates of exchange prevailing on the date of transaction. At the end of each reporting period, monetary items denominated in the foreign currencies are re-translated at the rates prevailing at the end of the reporting period. Nonmonetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on translation of long term foreign currency monetary items recognised in the financial statements before the beginning of the first Ind AS financial reporting period in respect of which the Company has elected to recognise such exchange differences in equity or as part of cost of assets as allowed under Ind AS 101 -"First time adoption of Indian Accounting Standard" are recognised directly in equity or added/ deducted to/ from the cost of assets as the case may be. Such exchange differences recognised in equity or as part of cost of assets is recognised in the statement of profit and loss on a systematic basis.
Exchange differences arising on the retranslation or
settlement of other monetary items are included in the statement of profit and loss for the period.
r. Corporate social responsibility (''CSR'') expenditure
The Company charges its CSR expenditure during the period to the statement of profit and loss.
s. Interest in joint operations
In respect of its interests in joint operations, the Company recognises its share in assets, liabilities, income and expenses line-by-line in the standalone financial statements of the entity which is party to such joint arrangement. Interests in joint operations are included in the segments to which they relate.
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
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. Potential ordinary shares shall be treated as dilutive when, and only when, there conversion to ordinary share would decrease/ increase earning/ loss per share from continuing operations.
An item of income or expense which due to its size, type or incidence requires disclosure in order to improve an understanding of the performance of the Company is treated as an exceptional item and the same is disclosed in the financial statements.
Mar 31, 2022
1. Corporate information
GMR Infrastructure Limited (''GIL'' or ''the Company'') is a public limited Company domiciled in India. The registered office of the Company is located at Naman Centre, 7th Floor, 701, Opp. Dena Bank, Plot No. C-31, G Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051, India. Its equity shares are listed on National Stock Exchange and Bombay Stock Exchange in India. The Company carries its business in the following business segments:
a. Engineering Procurement Construction (EPC)
The Company is engaged in handling EPC solutions in the infrastructure sector. Also refer note 41.
b. Others
The Company''s business also comprises of investment activity and corporate support to various infrastructure Special Purpose Vehicles (SPV).
Information on other related party relationships of the Company is provided in Note 33.
Other explanatory information to the standalone financial statement comprises of notes to the financial statements for the year ended March 31, 2022.
The standalone financial statements were approved by the Board of Directors and authorised for issue in accordance with a resolution of the directors on May 17, 2022.
2. Significant accounting policies
The significant accounting policies applied by the Company in the preparation of its financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these financial statements, unless otherwise indicated below:
Impact of implementation of new standards/amendments:
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 23, 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, applicable from April 1, 2022, as below:
Ind AS 103 - Reference to Conceptual Framework
The amendments specify that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in the Conceptual Framework for Financial Reporting under Indian Accounting Standards (Conceptual Framework) issued by the Institute of Chartered Accountants of
India at the acquisition date. These changes do not significantly change the requirements of Ind AS 103. The Company does not expect the amendment to have any significant impact in its financial statements.
Ind AS 16 - Proceeds before intended use
The amendments mainly prohibit an entity from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, an entity will recognise such sales proceeds and related cost in profit or loss. The Company does not expect the amendments to have any impact in its recognition of its property, plant and equipment in its financial statements.
Ind AS 37 - Onerous Contracts - Costs of Fulfilling a contract
The amendments specify that the ''cost of fulfilling'' a contract comprises the ''costs that relate directly to the contract''. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts. The amendment is essentially a clarification, and the Company does not expect the amendment to have any significant impact in its financial statements.
Ind AS 109 - Annual Improvements to Ind AS (2021)
The amendment clarifies which fees an entity includes when it applies the ''10 percent'' test of Ind AS 109 in assessing whether to derecognise a financial liability. The Company does not expect the amendment to have any significant impact in its financial statements.
Ind AS 116 - Annual Improvements to Ind AS (2021)
The amendments remove the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives were described in that illustration. The Company does not expect the amendment to have any significant impact in its financial statements.
2.1. Basis of Preparation
The standalone financial statements of the Company have 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).
These standalone financial statements of the Company are also compliant with the disclosure requirements made applicable to companies with effect from April 1, 2021 vide amendments to Schedule III of Companies Act, 2013 dated March 24, 2021, as considered applicable for the preparation of these financial
statements.
The standalone financial statements have been prepared on a historical cost basis except for certain financial assets and liabilities (refer accounting policy regarding financial instruments) which have been measured at fair value.
The functional and presentation currency of the Company is Indian Rupee ("''") which is the currency of the primary economic environment in which the Company operates and all values are rounded to nearest crore except when otherwise indicated.
The standalone financial statements for the year ended March 31, 2022 reflected an excess of current liabilities over current assets of '' 7.87 crores and losses from continuing operations after tax amounting to '' 159.31 crores. The management is of the view that this is situational in nature since the net worth of the Company is positive and management has taken various initiatives to further strengthen its short-term liquidity position including raising finances from financial institutions and strategic investors and other strategic initiatives. Such initiatives will enable the Company to meet its financial obligations, improve net current assets and its cash flows in an orderly manner.
These standalone financial statements have been prepared by giving effect to the Composite Scheme of amalgamation and arrangement for amalgamation of GMR Power Infra Limited (GPIL) with the Company and demerger of Engineering Procurement and Construction (EPC) business and Urban Infrastructure Business of the Company (including Energy business) into GMR Power and Urban Infra Limited (GPUIL) ("Scheme") as approved by the Hon''ble National Company Law Tribunal, Mumbai bench (''''the Tribunal'''') vide its order dated December 22, 2021 (formal order received on December 24, 2021). The said Tribunal order was filed to the Registrar of Companies by Company, GPIL and GPUIL on December 31, 2021 thereby making the Scheme effective. Accordingly, assets and liabilities of the EPC business and Urban Infrastructure business (including Energy business), as approved by the board of directors pursuant to the Scheme stand transferred and vested into GPUIL on April 1, 2021, being the Appointed date as per the Scheme.
The standalone financial statements of the Company do not have any impact of the Composite Scheme, however as per the applicable Ind AS, the EPC business and Urban Infrastructure Business (including Energy business) have been classified for all periods presented as Discontinued operations. Refer note 41 for further disclosures.
2.2. Summary of significant accounting policies a. Current versus non-current classification
The Company presents assets and liabilities in the
standalone balance sheet based on current/ non-current classification. An asset is treated as current when it is:
i. Expected to be realised or intended to be sold or consumed in normal operating cycle,
ii. Held primarily for the purpose of trading,
iii. Expected to be realised within twelve months after the reporting period, or
iv. Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
i. It is expected to be settled in normal operating cycle,
ii. It is held primarily for the purpose of trading,
iii. It is due to be settled within twelve months after the reporting period, or
iv. There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
Advance tax paid is classified as non-current assets.
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. Fair value measurement of financial instruments
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date using valuation techniques.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
a) In the principal market for the asset or liability, or
b) In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the standalone financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 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.
c. Revenue from contracts with customer
The Company recognises revenue from contracts with customers when it satisfies a performance obligation by transferring promised good or service to a customer. The revenue is recognised to the extent of transaction price allocated to the performance obligation satisfied. Performance obligation is satisfied over time when the transfer of control of asset (good or service) to a customer is done over time and in other cases, performance obligation is satisfied at a point in time. For performance obligation satisfied over time, the revenue recognition is done by measuring the progress towards complete satisfaction of performance obligation. The progress is
measured in terms of a proportion of actual cost incurred to-date, to the total estimated cost attributable to the performance obligation.
Transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring good or service to a customer excluding amounts collected on behalf of a third party. Variable consideration is estimated using the expected value method or most likely amount as appropriate in a given circumstance. Payment terms agreed with a customer are as per business practice and there is no financing component involved in the transaction price.
Costs to obtain a contract which are incurred regardless of whether the contract was obtained are charged-off in Profit and loss immediately in the period in which such costs are incurred. Incremental costs of obtaining a contract, if any, and costs incurred to fulfil a contract are amortised over the period of execution of the contract in proportion to the progress measured in terms of a proportion of actual cost incurred to-date, to the total estimated cost attributable to the performance obligation.
Significant judgments are used in:
1. Determining the revenue to be recognised in case of performance obligation satisfied over a period of time; revenue recognition is done by measuring the progress towards complete satisfaction of performance obligation. The progress is measured in terms of a proportion of actual cost incurred to-date, to the total estimated cost attributable to the performance obligation.
2. Determining the expected losses, which are recognised in the period in which such losses become probable based on the expected total contract cost as at the reporting date.
Revenue from operation is exclusive of goods and service tax (GST). Revenue includes adjustments made towards liquidated damages and variation wherever applicable. Escalation and other claims, which are not ascertainable/ acknowledged by customers are not taken into account.
Revenue from construction/project related activity is recognised as follows:
1. Cost plus contracts: Revenue from cost plus contracts
is recognized over time and is determined with reference to the extent performance obligations have been satisfied. The amount of transaction price allocated to the performance obligations satisfied
represents the recoverable costs incurred during the period plus the margin as agreed with the customer.
2. Fixed price contracts: Contract revenue is recognised over time to the extent of performance obligation satisfied and control is transferred to the customer. Contract revenue is recognised at allocable transaction price which represents the cost of work performed on the contract plus proportionate margin, using the percentage of completion method. Percentage of completion is the proportion of cost of work performed to-date, to the total estimated contract costs.
Impairment loss (termed as provision for foreseeable losses in the financial statements) is recognized in profit or loss to the extent the carrying amount of the contract asset exceeds the remaining amount of consideration that the Company expects to receive towards remaining performance obligations (after deducting the costs that relate directly to fulfil such remaining performance obligations). In addition, the Company recognises impairment loss (termed as provision for expected credit loss on contract assets in the financial statements) on account of credit risk in respect of a contract asset using expected credit loss model on similar basis as applicable to trade receivables.
Contract balancesContract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. Contract assets are transferred to receivables when the rights become unconditional and contract liabilities are recognized as and when the performance obligation is satisfied.
A receivable represents the Company''s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section (n) Financial instruments - initial recognition and subsequent measurement.
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received
consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.
Income from management/ technical services
Income from management/ technical services is recognised as per the terms of the agreement on the basis of services rendered.
Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable except the interest income received from customers for delayed payments which are accounted on the basis of reasonable certainty / realisation.
For all debt instruments 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 but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss. Interest income is included in other operating income in the statement of profit and loss.
Dividend income is recognised when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
d. Taxes on incomeCurrent income tax
Tax expense for the year comprises current and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. Current income tax assets and liabilities are measured at the amount expected to be recovered from
or paid to the taxation authorities. The Company''s liability for current tax is calculated using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income 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 is the tax expected to be payable or recoverable on differences between the carrying values of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable profit and is accounted for using the balance sheet liability model. Deferred tax liabilities are generally recognised for all the taxable temporary differences. In contrast, deferred tax assets are only recognised to the extent that is probable that future taxable profits will be available against which the temporary differences can be utilised.
Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, 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.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
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 balance sheet date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or 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.
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 taxes relate to the same taxable entity and the same taxation authority.
Deferred tax assets include Minimum Alternative Tax (''MAT'') paid in accordance with the tax laws, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is recognized as deferred tax asset in the balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realized.
In the year in which the Company recognises MAT credit as an asset, it is created by way of credit to the statement of profit and loss shown as part of deferred tax asset. The Company reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent that it is no longer probable that it will pay normal tax during the specified period.
e. Non-current assets held for sale/ disposal
The Company classifies non-current assets as held for sale/ disposal if their carrying amounts will be recovered principally through a sale rather than through continuing use. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the sale expected within one year from the date of classification.
The criteria for held for sale classification is regarded met only when the assets or disposal Company is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets, its sale is highly probable; and it will genuinely be sold, not abandoned. The Company treats sale of the asset to be highly probable when:
a) The appropriate level of management is committed to a plan to sell the asset,
b) An active programme to locate a buyer and complete the plan has been initiated,
c) The asset (or disposal Company) is being actively marketed for sale at a price that is reasonable in relation to its current fair value,
d) The sale is expected to qualify for recognition as a completed sale within one year from the date of classification, and
e) Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be
made or that the plan will be withdrawn.
Non-current assets held for sale are measured at the lower of their carrying amount and the fair value less costs to sell. Assets and liabilities classified as held for sale are presented separately in the balance sheet.
f. Property, plant and equipment
Freehold land is carried at historical cost and is not depreciated. All other items of property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate assets are derecognised when replaced. All other repairs and maintenance are charged to profit and loss during the reporting period in which they are incurred.
The Company identifies and determines cost of each component/ part of the asset separately, if the component/ part has a cost which is significant to the total cost of the asset having useful life that is materially different from that of the remaining asset. These components are depreciated over their useful lives; the remaining asset is depreciated over the life of the principal asset.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:
Category of asset |
Estimated useful life |
Plant and equipment |
4 - 15 years* |
Office equipment''s |
5 years |
Furniture and fixtures |
10 years |
Vehicles |
8 - 10 years |
Computers |
3 years |
Leasehold improvements are depreciated over the period of lease or estimated useful life, whichever is lower, on straight line basis.
* The Company, based on technical assessment made by the technical expert and management estimate, depreciates certain items of plant and equipment over estimated useful lives which are different from the useful life prescribed in Schedule II to the Companies Act, 2013.
Further, the management has estimated the useful lives of
asset individually costing Rs 5,000 or less to be less than one year, whichever is lower than those indicated in Schedule II. 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 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.
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.
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, if any.
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 with the effect of any change in the estimate being accounted for on a prospective basis. 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.
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 |
Useful lives |
Amortisation method used |
Internally generated or acquired |
Computer software |
Definite (6 years) |
Straight-line basis |
Acquired |
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds including interest expense calculated using the effective interest method. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the 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 until such time as the assets are substantially ready for the intended use or sale. All other borrowing costs are expensed in the period in which they occur.
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.
A lease is classified at the inception date as a finance lease or an operating lease.
The Company enters into leasing arrangements for various assets. The assessment of the lease is based on several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee''s option to extend/ purchase etc.
At lease commencement date, the Company recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Company, an estimate of any costs to dismantle and remove the asset at the end of the lease (if any), and any lease payments made in advance of the lease commencement date (net of any incentives received).
The Company depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use
asset or the end of the lease term. The Company also assesses the right-of-use asset for impairment when such indicators exist. At lease commencement date, the Company measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Company''s incremental borrowing rate. Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed payments) and variable payments based on an index or rate. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is re-measured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset. The Company has elected to account for short-term leases using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in statement of profit and loss on a straight-line basis over the lease term.
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.
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.
Raw materials, components, stores and spares are valued at lower of cost and net realisable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at
or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Costs incurred that relate to future activities on the contract are recognised as "Contract work in progress".
Contract work in progress comprising construction costs and other directly attributable overheads is valued at lower of cost and net realisable value.
k. Impairment of non-financial assets
As at the end of each accounting year, the Company reviews the carrying amounts of its property plant and equipment, investment property, intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If such indication exists, the said assets are tested for impairment so as to determine the impairment loss, if any. Goodwill and the intangible assets with indefinite life are tested for impairment each year.
Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined:
(i) in the case of an individual asset, at the higher of the fair value less costs of disposal and the value in use; and
(ii) in the case of a cash generating unit (a Company of assets that generates identified, independent cash flows), at the higher of the cash generating unit''s net fair value less costs of disposal and the value in use.
(The amount of value in use is determined as the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life. For this purpose, the discount rate (pre-tax) is determined based on the weighted average cost of capital of the company suitably adjusted for risks specified to the estimated cash flows of the asset).
For this purpose, a cash generating unit is ascertained as the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets.
If recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, such deficit is recognised immediately in the statement of profit and loss as impairment loss and the carrying amount of the asset (or cash generating unit) is reduced to its recoverable
amount.
When an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss is recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the statement of profit and loss.
l. Provisions and contingent liabilities
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
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.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
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 its existence in the standalone financial statements.
Provisions and contingent liability are reviewed at each balance sheet.
m. Retirement and other employee benefits
Retirement benefit in the form of provident fund, pension fund and superannuation fund are defined contribution schemes. The Company has no obligation, other than the contribution payable. The Company recognizes contribution payable to provident fund, pension fund and superannuation fund as expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet reporting date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.
Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such longterm compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end.
The Company presents the leave as a current liability in the standalone balance sheet, to the extent it does not have an unconditional right to defer its settlement for twelve months after the reporting date.
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method using actuarial valuation to be carried out at each balance sheet date
In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognise the obligation on a net basis.
Re-measurements, comprising of acturial 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.
Past service costs are recognised in profit or loss on the earlier of:
a. The date of the plan amendment or curtailment, and
b. The date that the Company recognises related restructuring costs
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:
a. Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
b. Net interest expense or income.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contract embodying the related financial instruments. All financial assets, financial liabilities and financial guarantee contracts are initially measured at transaction cost and where such values are different from the fair value, at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability. Transaction costs directly attributable to the acquisition of financial assets and financial liabilities at fair value through profit and loss are immediately recognised in the statement of profit and loss. In case of interest free or concession loans/debentures/preference shares given to subsidiaries, associates and joint ventures, the excess of the actual amount of the loan over initial measure at fair value is accounted as an equity investment. On de-recognition of such financial instruments in its entirety, the difference between the carrying amount measured at the date of de-recognition and the consideration received is adjusted with equity component of the investments.
Pursuant to change in accounting policy as detailed above, the Company has made an irrevocable election to measure investments in equity instruments issued by subsidiaries, associates and joint ventures at Fair Value Through Other
Comprehensive Income (FVTOCI). Amounts recognised in OCI are not subsequently reclassified to the statement of profit and loss. Refer note 5 and 37.
Investment in preference shares/ debentures of the subsidiaries are treated as equity instruments if the same are convertible into equity shares or are redeemable out of the proceeds of equity instruments issued for the purpose of redemption of such investments. Investment in preference shares/ debentures not meeting the aforesaid conditions are classified as debt instruments at amortised cost.
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.
(a) Financial assets⢠Measurement and Valuation1. Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
2. Financial assets measured at fair value
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows or to sell these financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial asset not measured at amortised cost or at fair value through other comprehensive income is carried at fair value through the statement of profit and loss.
For financial assets maturing within one year
from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
⢠Impairment of financial assets
Loss allowance for expected credit losses is recognised for financial assets measured at amortised cost and fair value through the statement of profit and loss.
The Company recognises impairment loss on trade receivables using expected credit loss model, which involves use of provision matrix constructed on the basis of historical credit loss experience as permitted under Ind AS 109 - Impairment loss on investments.
For financial assets whose credit risk has not significantly increased since initial recognition, loss allowance equal to twelve months expected credit losses is recognised. Loss allowance equal to the lifetime expected credit losses is recognised if the credit risk on the financial instruments has significantly increased since initial recognition.
⢠De-recognition of financial assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the financial asset expire, or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the assets and an associated liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On de-recognition of a financial asset in its entirety, the difference between the carrying amounts measured at the date of de-recognition and the consideration received is recognised in standalone statement of profit or loss.
For trade and other receivables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
(b) Financial liabilities and equity instruments⢠Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
⢠Measurement and valuation1. Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method where the time value of money is significant. Interest bearing bank loans, overdrafts and issued debt are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the statement of profit and loss.
For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
⢠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, 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.
The potential cash payments related to put options issued by the Company over the equity of subsidiary companies to non-controlling interests are accounted for as financial liabilities when such options may only be settled other than by exchange of a fixed amount of cash or another financial asset for a fixed number of shares in the subsidiary. The financial liability for such put option is accounted for under Ind AS 109.
The amount that may become payable under the option on exercise is initially recognised at fair value under other financial liabilities with a corresponding debit to investments.
If the put option is exercised, the entity derecognises the financial liability by discharging the put obligation. In the event that the option expires unexercised, the liability is derecognised with a corresponding adjustment to investment.
⢠De-recognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
(c) Off-setting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the standalone balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
o. Derivative financial instruments
The Company uses derivative financial instruments, such as forward currency contracts to hedge its foreign currency risks. Such derivative financial instruments are initially recognised at fair value 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.
p. Convertible preference shares/ debentures
Convertible preference shares/debentures are separated into liability and equity components based on the terms of the contract.
On issuance of the convertible preference shares/ debentures, the fair value of the liability component is determined using a market rate for an equivalent nonconvertible instrument. This amount is classified as a financial liability measured at amortised cost (net of transaction costs) until it is extinguished on conversion or redemption.
The remainder of the proceeds is allocated to the conversion option that is recognised and included in equity since conversion option meets Ind AS 32 criteria for conversion right. Transaction costs are deducted from equity, net of associated income tax. The carrying amount of the conversion option is not re-measured in subsequent years.
Transaction costs are apportioned between the liability and equity components of the convertible preference shares/ debentures based on the allocation of proceeds to the liability and equity components when the instruments are initially recognised.
Cash and cash equivalent in the standalone 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.
r. Foreign currencies
In preparing the financial statements, transactions in the currencies other than the Company''s functional currency are recorded at the rates of exchange prevailing on the date of transaction. At the end of each reporting period, monetary items denominated in the foreign currencies are re-translated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on translation of long term
foreign currency monetary items recognised in the financial statements before the beginning of the first Ind AS financial reporting period in respect of which the Company has elected to recognise such exchange differences in equity or as part of cost of assets as allowed under Ind AS 101-"First time adoption of Indian Accounting Standard" are recognised directly in equi
Mar 31, 2018
Notes to the standalone financial statements for the year ended March 31, 2018
1 CORPORATE INFORMATION
GMR Infrastructure Limited (âGILâ or âthe Companyâ) is a public limited Company domiciled in India. The registered office of the Company is located at Naman Centre, Bandra Kurla Complex, Mumbai, India. Its equity shares are listed on National Stock Exchange and Bombay Stock Exchange in India. The Company carries its business in the following business segments:
a. Engineering Procurement Construction (EPC)
The Company is engaged in handling EPC solutions in the infrastructure sector.
b. Others
The Companyâs business also comprises of investment activity and corporate support to various infrastructure Special Purpose Vehicles (SPV). Information on other related party relationships of the Company is provided in Note 33.
The standalone financial statements were approved by the Board of Directors and authorised for issue in accordance with a resolution of the directors on May 30, 2018.
The standalone financial statements comprise the financial statements of the Company and its controlled staff welfare trust. The Company is the sponsoring entity of staff welfare trust. Based on the internal assessment by the management, it believes that the staff welfare trust is an extension arm of the Company.
2 SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied by the Company in the preparation of its financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these financial statements, unless otherwise indicated below;
The Company applied for the first time amendments to the standards, which are effective for annual periods beginning on or after 1 April 2017. The nature and the impact of such amendment is described below:
Amendments to Ind AS 7 Statement of Cash Flows
The amendments require entities to provide disclosure of changes in their liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses). The Company has provided the information for the current period under the standalone statement of cash flows.
2.1. BASIS OF PREPARATION
The standalone financial statements of the Company have 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).
The standalone financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities (refer accounting policy regarding financial instruments) which have been measured at fair value.
The functional and presentation currency of the Company is Indian Rupee (â'' â) which is the currency of the primary economic environment in which the Company operates and all values are rounded to nearest crore 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 standalone balance sheet based on current/ non-current classification. An asset is treated as current when it is:
i. Expected to be realized or intended to be sold or consumed in normal operating cycle,
ii. Held primarily for the purpose of trading,
iii. Expected to be realized within twelve months after the reporting period, or
iv. Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
i. It is expected to be settled in normal operating cycle,
ii. It is held primarily for the purpose of trading,
iii. It is due to be settled within twelve months after the reporting period, or
iv. There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Advance tax paid is classified as non-current assets.
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 Fair value measurement of financial instruments
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date using valuation techniques.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
a) In the principal market for the asset or liability, or
b) In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market 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 standalone financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable For assets and liabilities that are recognized in the standalone 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.
c 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 Company has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory and credit risks.
The specific recognition criteria described below must also be met before revenue is recognized
Revenue from construction activity
Construction revenue and costs are recognized by reference to the stage of completion of the construction activity at the balance sheet date, as measured by the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs. Where the outcome of the construction cannot be estimated reliably, revenue is recognized to the extent of the construction costs incurred if it is probable that they will be recoverable. When the outcome of the contract is ascertained reliably, contract revenue is recognized at cost of work performed on the contract plus proportionate margin, using the percentage of completion method. Percentage of completion is the proportion of cost of work performed to-date, to the total estimated contract costs. The estimated outcome of a contract is considered reliable when all the following conditions are satisfied:
i. The amount of revenue can be measured reliably,
ii. It is probable that the economic benefits associated with the contract will flow to the Company,
iii. The stage of completion of the contract at the end of the reporting period can be measured reliably,
iv. The costs incurred or to be incurred in respect of the contract can be measured reliably
Provision is made for all losses incurred to the balance sheet date. Variations in contract work, claims and incentive payments are recognized to the extent that it is probable that they will result in revenue and they are capable of being reliably measured. Expected loss, if any, on a contract is recognized as expense in the period in which it is foreseen, irrespective of the stage of completion of the contract. For contracts where progress billing exceeds the aggregate of contract costs incurred to-date and recognized profits (or recognized losses, as the case may be), the surplus is shown as the amount due to customers. Amount received before the related work is performed are disclosed in the Balance Sheet as a liability towards advance received. Amounts billed for work performed but yet to be paid by the customers are disclosed in the Balance Sheet as trade receivables.
Income from management/ technical services
Income from management/ technical services is recognized as per the terms of the agreement on the basis of services rendered.
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 but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
Dividends
Dividend income is recognized when the Companyâs right to receive the payment is established, which is generally when shareholders approve the dividend.
d Taxes on income
Current income tax
Tax expense for the year comprises current and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The Companyâs liability for current tax is calculated using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income 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 the tax expected to be payable or recoverable on differences between the carrying values of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable profit and is accounted for using the balance sheet liability model. Deferred tax liabilities are generally recognized for all the taxable temporary differences. In contrast, deferred tax assets are only recognized to the extent that is probable that future taxable profits will be available against which the temporary differences can be utilized.
Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, 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.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
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 balance sheet 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.
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 taxes relate to the same taxable entity and the same taxation authority.
Deferred tax assets include Minimum Alternative Tax (âMATâ) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is recognized as deferred tax asset in the balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realized.
In the year in which the Company recognizes MAT credit as an asset, it is created by way of credit to the statement of profit and loss shown as part of deferred tax asset. The Company reviews the âMAT credit entitlementâ asset at each reporting date and writes down the asset to the extent that it is no longer probable that it will pay normal tax during the specified period.
e Non-current assets held for sale
The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the sale expected within one year from the date of classification.
The criteria for held for sale classification is regarded met only when the assets or disposal group is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets , its sale is highly probable; and it will genuinely be sold, not abandoned. The Company treats sale of the asset to be highly probable when:
a) The appropriate level of management is committed to a plan to sell the asset,
b) An active programme to locate a buyer and complete the plan has been initiated,
c) The asset (or disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value,
d) The sale is expected to qualify for recognition as a completed sale within one year from the date of classification , and
e) Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Non-current assets held for sale are measured at the lower of their carrying amount and the fair value less costs to sell. Assets and liabilities classified as held for sale are presented separately in the standalone balance sheet.
f Property, plant and equipment
Freehold land is carried at historical cost and is not depreciated. All other items of property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the assetâs carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate assets are derecognized when replaced. All other repairs and maintenance are charged to profit and loss during the reporting period in which they are incurred.
The Company identifies and determines cost of each component/ part of the asset separately, if the component/ part has a cost which is significant to the total cost of the asset having useful life that is materially different from that of the remaining asset. These components are depreciated over their useful lives; the remaining asset is depreciated over the life of the principal asset.
Leasehold improvements are depreciated over the period of lease or estimated useful life, whichever is lower, on straight line basis.
*The Company, based on technical assessment made by the technical expert and management estimate, depreciates certain items of plant and equipment over estimated useful lives which are different from the useful life prescribed in Schedule II to the Companies Act, 2013.
Further, the management has estimated the useful lives of asset individually costing ''5,000 or less to be less than one year, whichever is lower than those indicated in Schedule II. 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 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.
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
g 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, if any.
The useful lives of intangible assets are assessed as either definite 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 with the affect of any change in the estimate being accounted for on a prospective basis. 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.
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
h Borrowing cost
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.
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 until such time as the assets are substantially ready for the intended use or sale. All other borrowing costs are expensed in the period in which they occur.
i 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.
A lease is classified at the inception date as a finance lease or an operating lease.
Company as a lessee
A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
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.
Finance leases are capitalized at the commencement of the lease at the inception date fair value of the leased asset or, at the present value of the minimum lease payments at the inception of the lease, whichever is lower. 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 Companyâs general policy on the borrowing costs.
Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term unless either:
a. another systematic basis is more representative of the time pattern of the userâs benefit even if the payments to the lessors are not on that basis; or
b. the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases. If payments to the less or vary because of factors other than general inflation, then this condition is not met.
j Inventories
Raw materials, components, stores and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Costs incurred that relate to future activities on the contract are recognized as âContract work in progressâ.
Contract work in progress comprising construction costs and other directly attributable overheads is valued at lower of cost and net realizable value.
k. Impairment of non-financial assets, investment in subsidiary, associate and joint venture companies
As at the end of each accounting year, the Company reviews the carrying amounts of its PPE, investment property, intangible assets and investments in subsidiary, associate and joint venture companies to determine whether there is any indication that those assets have suffered an impairment loss. If such indication exists, the said assets are tested for impairment so as to determine the impairment loss, if any. Goodwill and the intangible assets with indefinite life are tested for impairment each year.
Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined:
(i) in the case of an individual asset, at the higher of the fair value less costs of disposal and the value in use; and
(ii) in the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of the cash generating unitâs net fair value less costs of disposal and the value in use.
(The amount of value in use is determined as the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life. For this purpose, the discount rate (pre-tax) is determined based on the weighted average cost of capital of the company suitably adjusted for risks specified to the estimated cash flows of the asset).
For this purpose, a cash generating unit is ascertained as the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
If recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, such deficit is recognized immediately in the Statement of Profit and Loss as impairment loss and the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount.
When an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss is recognized for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognized immediately in the Statement of Profit and Loss.
l. Provisions and contingent liabilities
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
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.
A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract.
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 its existence in the standalone financial statements.
Provisions and contingent liability are reviewed at each balance sheet.
m. Retirement and other employee benefits
Retirement benefit in the form of provident fund, pension fund and superannuation fund are defined contribution schemes. The Company has no obligation, other than the contribution payable. The Company recognizes contribution payable to provident fund, pension fund and superannuation fund as expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet reporting date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.
Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end.
The Company presents the leave as a current liability in the standalone balance sheet, to the extent it does not have an unconditional right to defer its settlement for twelve months after the reporting date.
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method using actuarial valuation to be carried out at each balance sheet date.
In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognize the obligation on a net basis.
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 standalone 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.
Past service costs are recognized in profit or loss on the earlier of:
a. The date of the plan amendment or curtailment, and
b. The date that the Company recognizes related restructuring costs
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognizes the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
a. Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
b. Net interest expense or income.
n. Financial instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contract embodying the related financial instruments. All financial assets, financial liabilities and financial guarantee contracts are initially measured at transaction cost and where such values are different from the fair value, at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability. Transaction costs directly attributable to the acquisition of financial assets and financial liabilities at fair value through profit and loss are immediately recognized in the statement of profit and loss. In case of interest free or concession loans/debentures/preference shares given to subsidiaries, associates and joint ventures, the excess of the actual amount of the loan over initial measure at fair value is accounted as an equity investment. On de-recognition of such financial instruments in its entirety, the difference between the carrying amount measured at the date of de-recognition and the consideration received is adjusted with equity component of the investments.
Investment in equity instruments issued by subsidiaries, associates and joint ventures are measured at cost less impairment.
Investment in preference shares/debentures of the subsidiaries are treated as equity instruments if the same are convertible into equity shares or are redeemable out of the proceeds of equity instruments issued for the purpose of redemption of such investments. Investment in preference shares/debentures not meeting the aforesaid conditions are classified as debt instruments at amortized cost.
Effective interest method
The effective interest method is a method of calculating the amortized cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.
(a) Financial assets Financial assets at amortized cost
Financial assets are subsequently measured at amortized cost if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets measured at fair value
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows or to sell these financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial asset not measured at amortized cost or at fair value through other comprehensive income is carried at fair value through the statement of profit and loss.
For financial assets maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
Impairment of financial assets, excluding investments in subsidiary, associate and joint venture companies
Loss allowance for expected credit losses is recognized for financial assets measured at amortized cost and fair value through the statement of profit of loss.
The Company recognizes impairment loss on trade receivables using expected credit loss model, which involves use of provision matrix constructed on the basis of historical credit loss experience as permitted under Ind AS 109 - Impairment loss on investments.
For financial assets whose credit risk has not significantly increased since initial recognition, loss allowance equal to twelve months expected credit losses is recognized Loss allowance equal to the lifetime expected credit losses is recognized if the credit risk on the financial instruments has significantly increased since initial recognition.
De-recognition of financial assets
The Company de-recognizes a financial asset only when the contractual rights to the cash flows from the financial asset expire, or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the assets and an associated liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.
(b) Financial liabilities and equity instruments Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Financial Liabilities
Financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently measured at amortized cost, using the effective interest rate method where the time value of money is significant. Interest bearing bank loans, overdrafts and issued debt are initially measured at fair value and are subsequently measured at amortized cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognized over the term of the borrowings in the statement of profit and loss.
For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
a. 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, 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.
b. De-recognition
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 de-recognition 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.
Off-setting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the standalone balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
o. Derivative financial instruments
The Company uses derivative financial instruments, such as forward currency contracts to hedge its foreign currency risks. Such derivative financial instruments are initially recognized at fair value 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.
p. Convertible preference shares/debentures
Convertible preference shares/debentures are separated into liability and equity components based on the terms of the contract.
On issuance of the convertible preference shares/debentures, 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 conversion or redemption.
The remainder of the proceeds is allocated to the conversion option that is recognized and included in equity since conversion option meets Ind AS 32 criteria for conversion right. Transaction costs are deducted from equity, net of associated income tax. The carrying amount of the conversion option is not re-measured in subsequent years.
Transaction costs are apportioned between the liability and equity components of the convertible preference shares/debentures based on the allocation of proceeds to the liability and equity components when the instruments are initially recognized
q. Cash and cash equivalents
Cash and cash equivalent in the standalone 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.
r. Cash dividend
The Company recognizes a liability to make cash distributions to equity holders of the Company when the distribution is authorized and the distribution is no longer at the discretion of the Company. Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Companyâs Board of Directors.
s. Foreign currencies
In preparing the financial statements, transactions in the currencies other than the Companyâs functional currency are recorded at the rates of exchange prevailing on the date of transaction. At the end of each reporting period, monetary items denominated in the foreign currencies are re-translated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on translation of long term foreign currency monetary items recognized in the financial statements before the beginning of the first Ind AS financial reporting period in respect of which the Company has elected to recognize such exchange differences in equity or as part of cost of assets as allowed under Ind AS 101-âFirst time adoption of Indian Accounting Standardâ are recognized directly in equity or added/ deducted to/ from the cost of assets as the case may be. Such exchange differences recognized in equity or as part of cost of assets is recognized in the statement of profit and loss on a systematic basis.
Exchange differences arising on the retranslation or settlement of other monetary items are included in the statement of profit and loss for the period.
t. Treasury shares
The Company has created a Staff welfare Trust (âSWTâ) for providing staff welfare to its employees. The Company treats SWT as its extension and shares held by SWT are treated as treasury shares. Own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Companyâs own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognized in capital reserve.
u. Corporate social responsibility (âCSR'') expenditure
The Company charges its CSR expenditure during the year to the statement of profit and loss. v. Interest in Joint Operations
In respect of its interests in joint operations, the Company recognizes its share in assets, liabilities, income and expense line by line in the standalone Ind AS financial statements of the entity which is party to such joint arrangement. Interests in joint operations are included in the segments to which they relate.
Mar 31, 2017
1 CORPORATE INFORMATION
GMR Infrastructure Limited (âGILâ or âthe Companyâ) is a public limited Company domiciled in India. The registered office of the Company is located at Naman Centre, Bandra Kurla Complex, Mumbai, India. Its equity shares are listed on National Stock Exchange and Bombay Stock Exchange in India. The Company carries its business in the following business segments:
a. Engineering Procurement Construction (EPC)
The Company is engaged in handling EPC solutions in the infrastructure sector.
b. Others
The Companyâs business also comprises of investment activity and corporate support to various infrastructure Special Purpose Vehicles (SPV). Information on other related party relationships of the Company is provided in Note 33.
The standalone financial statements were approved by the Board of Directors and authorized for issue in accordance with a resolution of the directors on June 1, 2017.
The standalone financial statements comprise the financial statements of the Company and its controlled staff welfare trust. The Company is the sponsoring entity of staff welfare trusts. Based on the internal assessment by the management, it believes that the staff welfare trust is an extension arm of the Company.
2 SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied by the Company in the preparation of its financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these financial statements and in preparing the opening Ind AS Balance Sheet as at April 1,2015 for the purpose of transition to Ind AS, unless otherwise indicated.
2.1. STATEMENT OF COMPLIANCE
In accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (referred to as âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) amendment Rules 2016, as amended with effect from April 1, 2016. The standalone financial statements of the Company, have been prepared and presented in accordance with Ind AS. Previous year numbers in the standalone financial statements have been restated to Ind AS. In accordance with Ind AS 101 First-time Adoption of Indian Accounting Standards, the Company has presented a reconciliation from the presentation of standalone financial statements under Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (âPrevious GAAPâ) to Ind AS of Shareholdersâ equity as at March 31, 2016 and April 1, 2015 and of the comprehensive net income for the year ended March 31, 2016 (refer note 40 for reconciliations and effect of transitions).
The standalone financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities (refer accounting policy regarding financial instruments) which have been measured at fair value.
The functional and presentation currency of the Company is Indian Rupee (âRsâ) which is the currency of the primary economic environment in which the Company operates.
2.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a Current versus non-current classification
The Company presents assets and liabilities in the standalone balance sheet based on current/ non-current classification. An asset is treated as current when it is:
i. Expected to be realized or intended to be sold or consumed in normal operating cycle,
ii. Held primarily for the purpose of trading,
iii. Expected to be realized within twelve months after the reporting period, or
iv. Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
i. It is expected to be settled in normal operating cycle,
ii. It is held primarily for the purpose of trading,
iii. It is due to be settled within twelve months after the reporting period, or
iv. There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Advance tax paid is classified as non-current assets.
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 Fair value measurement of financial instruments
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date using valuation techniques.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
a) In the principal market for the asset or liability, or
b) In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market 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 standalone financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable For assets and liabilities that are recognized in the standalone 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. c 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 Company has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory and credit risks.
The specific recognition criteria described below must also be met before revenue is recognized.
Revenue from construction activity
Construction revenue and costs are recognized by reference to the stage of completion of the construction activity at the balance sheet date, as measured by the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs. Where the outcome of the construction cannot be estimated reliably, revenue is recognized to the extent of the construction costs incurred if it is probable that they will be recoverable. When the outcome of the contract is ascertained reliably, contract revenue is recognized at cost of work performed on the contract plus proportionate margin, using the percentage of completion method. Percentage of completion is the proportion of cost of work performed to-date, to the total estimated contract costs. The estimated outcome of a contract is considered reliable when all the following conditions are satisfied:
i. The amount of revenue can be measured reliably,
ii. It is probable that the economic benefits associated with the contract will flow to the Company,
iii. The stage of completion of the contract at the end of the reporting period can be measured reliably,
iv. The costs incurred or to be incurred in respect of the contract can be measured reliably
Provision is made for all losses incurred to the balance sheet date. Variations in contract work, claims and incentive payments are recognized to the extent that it is probable that they will result in revenue and they are capable of being reliably measured. Expected loss, if any, on a contract is recognized as expense in the period in which it is foreseen, irrespective of the stage of completion of the contract. For contracts where progress billing exceeds the aggregate of contract costs incurred to-date and recognized profits (or recognized losses, as the case may be), the surplus is shown as the amount due to customers. Amount received before the related work is performed are disclosed in the Balance Sheet as a liability towards advance received. Amounts billed for work performed but yet to be paid by the customers are disclosed in the Balance Sheet as trade receivables.
Income from management/ technical services
Income from management/ technical services is recognized as per the terms of the agreement on the basis of services rendered.
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 mortised 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 but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
Dividends
Dividend income is recognized when the Companyâs right to receive the payment is established, which is generally when shareholders approve the dividend.
d Taxes on income
Current income tax
Tax expense for the year comprises current and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Companyâs liability for current tax is calculated using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income 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 income tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying values of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable profit and is accounted for using the balance sheet liability model. Deferred tax liabilities are generally recognized for all the taxable temporary differences. In contrast, deferred assets are only recognized to the extent that is probable that future taxable profits will be available against which the temporary differences can be utilized.
Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, 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.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply 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 balance sheet 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.
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 taxes relate to the same taxable entity and the same taxation authority.
Deferred tax assets include Minimum Alternative Tax (âMATâ) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is recognized as deferred tax asset in the balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realized.
e Non-current assets held for sale
The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the sale expected within one year from the date of classification.
The criteria for held for sale classification is regarded met only when the assets or disposal group is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets , its sale is highly probable; and it will genuinely be sold, not abandoned. The Company treats sale of the asset to be highly probable when:
a) The appropriate level of management is committed to a plan to sell the asset,
b) An active programme to locate a buyer and complete the plan has been initiated,
c) The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value,
d) The sale is expected to qualify for recognition as a completed sale within one year from the date of classification , and
e) Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Non-current assets held for sale are measured at the lower of their carrying amount and the fair value less costs to sell. Assets and liabilities classified as held for sale are presented separately in the standalone balance sheet.
f Property, plant and equipment
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as at March 31, 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment as on April 1, 2015.
Freehold land is carried at historical cost and is not depreciated. All other items of property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the assetâs carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate assets are derecognized when replaced. All other repairs and maintenance are charged to profit and loss during the reporting period in which they are incurred.
The Company identifies and determines cost of each component/ part of the asset separately, if the component/ part has a cost which is significant to the total cost of the asset having useful life that is materially different from that of the remaining asset. These components are depreciated over their useful lives; the remaining asset is depreciated over the life of the principal asset.
Leasehold improvements are depreciated over the period of lease or estimated useful life, whichever is lower, on straight line basis.
*The Company, based on technical assessment made by the technical expert and management estimate, depreciates certain items of plant and equipment over estimated useful lives which are different from the useful life prescribed in Schedule II to the Companies Act, 2013.
Further, the management has estimated the useful lives of asset individually costing Rs 5,000 or less to be less than one year, whichever is lower than those indicated in Schedule II. 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 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.
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.
g 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, if any.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are mortised 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 with the affect of any change in the estimate being accounted for on a prospective basis. 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.
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.
h Borrowing cost
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.
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 until such time as the assets are substantially ready for the intended use or sale. All other borrowing costs are expensed in the period in which they occur.
i 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.
A lease is classified at the inception date as a finance lease or an operating lease.
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 that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
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.
Finance leases are capitalized at the commencement of the lease at the inception date fair value of the leased asset or, at the present value of the minimum lease payments at the inception of the lease, whichever is lower. 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 Companyâs general policy on the borrowing costs.
Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term unless either:
a. another systematic basis is more representative of the time pattern of the userâs benefit even if the payments to the lessons are not on that basis; or
b. the payments to the less or are structured to increase in line with expected general inflation to compensate for the less orâs expected inflationary cost increases. If payments to the less or vary because of factors other than general inflation, then this condition is not met.
j Inventories
Raw materials, components, stores and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Costs incurred that relate to future activities on the contract are recognized as âContract work in progressâ.
Contract work in progress comprising construction costs and other directly attributable overheads is valued at lower of cost and net realizable value.
k. Impairment of non-financial assets
As at the end of each accounting year, the company reviews the carrying amounts of its PPE, investment property, intangible assets and investments in subsidiary, associate and joint venture companies to determine whether there is any indication that those assets have suffered an impairment loss. If such indication exists, the said assets are tested for impairment so as to determine the impairment loss, if any. Goodwill and the intangible assets with indefinite life are tested for impairment each year.
Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined:
(i) in the case of an individual asset, at the higher of the net selling price and the value in use; and
(ii) in the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of the cash generating unitâs net selling price and the value in use.
(The amount of value in use is determined as the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life. For this purpose, the discount rate (pre-tax) is determined based on the weighted average cost of capital of the company suitably adjusted for risks specified to the estimated cash flows of the asset).
For this purpose, a cash generating unit is ascertained as the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
If recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, such deficit is recognized immediately in the Statement of Profit and Loss as impairment loss and the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount.
When an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss is recognized for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognized immediately in the Statement of Profit and Loss
l. Provisions and contingent liabilities
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
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.
A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract.
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 its existence in the standalone financial statements.
Provisions and contingent liability are reviewed at each balance sheet.
m. Retirement and other employee benefits
Retirement benefit in the form of provident fund, pension fund and superannuation fund are defined contribution scheme. The Company has no obligation, other than the contribution payable. The Company recognizes contribution payable to provident fund, pension fund and superannuation fund as expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet reporting date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.
Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end.
The Company presents the leave as a current liability in the standalone balance sheet, to the extent it does not have an unconditional right to defer its settlement for twelve months after the reporting date.
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method using actuarial valuation to be carried out at each balance sheet date
In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognize the obligation on a net basis.
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 standalone 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.
Past service costs are recognized in profit or loss on the earlier of:
a. The date of the plan amendment or curtailment, and
b. The date that the Company recognizes related restructuring costs
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognizes the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
a. Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
b. Net interest expense or income. n. Financial instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contract embodying the related financial instruments. All financial assets, financial liabilities and financial guarantee contracts are initially measured at transaction cost and where such values are different from the fair value, at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value measured on initial recognitionof financial asset or financial liability. Transaction costs directly attributable to the acquisition of financial assets and financial liabilities at fair value through profit and loss are immediately recognized in the statement of profit and loss. In case of interest free or concession loans/debentures/preference shares given to subsidiaries, associates and joint ventures, the excess of the actual amount of the loan over initial measure at fair value is accounted as an equity investment.
Investment in equity instruments issued by subsidiaries, associates and joint ventures are measured at cost less impairment.
Investment in preference shares/debentures of the subsidiaries are treated as equity instruments if the same are convertible into equity shares or are redeemable out of the proceeds of equity instruments issued for the purpose of redemption of such investments. Investment in preference shares/debentures not meeting the aforesaid conditions are classified as debt instruments at amortized cost.
Effective interest method
The effective interest method is a method of calculating the mortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.
(a) Financial assets Financial assets at amortized cost
Financial assets are subsequently measured at amortized cost if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets measured at fair value
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows or to sell these financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company in respect of equity investments (other than in subsidiaries, associates and joint ventures) which are not held for trading has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of such equity instruments. Such an election is made by the Company on an instrument by instrument basis at the time of initial recognition of such equity investments.
Financial asset not measured at amortized cost or at fair value through other comprehensive income is carried at fair value through the statement of profit and loss.
For financial assets maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the shorter maturity of these instruments.
Impairment of financial assets
Loss allowance for expected credit losses is recognized for financial assets measured at amortized cost and fair value through the statement of profit of loss.
The company recognizes impairment loss on trade receivables using expected credit loss model, which involves use of provision matrix constructed on the basis of historical credit loss experience as permitted under Ind AS 109 - Impairment loss on investments.
For financial assets whose credit risk has not significantly increased since initial recognition, loss allowance equal to twelve months expected credit losses is recognized. Loss allowance equal to the lifetime expected credit losses is recognized if the credit risk on the financial instruments has significantly increased since initial recognition.
De-recognition of financial assets
The Company de-recognizes a financial asset only when the contractual rights to the cash flows from the financial asset expire, or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the assets and an associated liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.
On de-recognition of a financial asset in its entirety, the difference between the carrying amount measured at the date of de-recognition and the consideration received is recognized in statement of profit or loss.
(b) Financial liabilities and equity instruments Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Financial Liabilities
Financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently measured at amortized cost, using the effective interest rate method where the time value of money is significant. Interest bearing bank loans, overdrafts and issued debt are initially measured at fair value and are subsequently measured at amortized cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognized over the term of the borrowings in the statement of profit and loss.
For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
a. 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, adjusted for transaction costs that are directly attributable to the issuance of the guarantee.
b. De-recognition
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 de-recognition 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.
Off-setting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the standalone balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
o. Derivative financial instruments
The Company uses derivative financial instruments, such as forward currency contracts to hedge its foreign currency risks. Such derivative financial instruments are initially recognized at fair value 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.
p. Convertible preference shares/debentures
Convertible preference shares/debentures are separated into liability and equity components based on the terms of the contract.
On issuance of the convertible preference shares/debentures, 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 conversion or redemption.
The remainder of the proceeds is allocated to the conversion option that is recognized and included in equity since conversion option meets Ind AS 32 criteria for conversion right. Transaction costs are deducted from equity, net of associated income tax. The carrying amount of the conversion option is not re-measured in subsequent years.
Transaction costs are apportioned between the liability and equity components of the convertible preference shares/debentures based on the allocation of proceeds to the liability and equity components when the instruments are initially recognized.
q. Cash and cash equivalents
Cash and cash equivalent in the standalone 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.
r. Cash dividend
The Company recognizes a liability to make cash distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Companyâs Board of Directors.
s. Foreign currencies
In preparing the financial statements, transactions in the currencies other than the Companyâs functional currency are recorded at the rates of exchange prevailing on the date of transaction. At the end of each reporting period, monetary items denominated in the foreign currencies are re-translated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on translation of long term foreign currency monetary items recognized in the financial statements before the beginning of the first Ind AS financial reporting period in respect of which the Company has elected to recognise such exchange differences in equity or as part of cost of assets as allowed under Ind AS 101-âFirst time adoption of Indian Accounting Standardâ are recognized directly in equity or added/ deducted to/ from the cost of assets as the case may be. Such exchange differences recognized in equity or as part of cost of assets is recognized in the statement of profit and loss on a systematic basis.
Exchange differences arising on the retranslation or settlement of other monetary items are included in the statement of profit and loss for the period.
t. Treasury shares
The Company has created a Staff welfare Trust (âSWTâ) for providing staff welfare to its employees. The Company treats SWT as its extension and shares held by SWT are treated as treasury shares. Own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Companyâs own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognized in capital reserve.
u. Corporate social responsibility (âCSR'') expenditure
The Company charges its CSR expenditure during the year to the statement of profit and loss. v. Interest in Joint Operations
In respect of its interests in joint operations, the Company recognizes its share in assets, liabilities, income and expenes line by line in the standalone Ind AS financial statements of the entities which is party to such joint arrangement. Interests in joint operations are included in the segments to which they relate.
Mar 31, 2016
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
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
b Tangible fixed assets
Tangible fixed assets are stated at cost, net of accumulated
depreciation and accumulated impairment losses, if any. The cost
comprises purchase price, borrowing costs if capitalisation criteria
are met and directly attributable cost of bringing the asset to its
working condition for the intended use. Any trade discounts and rebates
are deducted in arriving at the purchase price.
Subsequent expenditure related to an item of tangible fixed asset is
added to its book value only if it increases the future benefits from
the existing asset beyond its previously assessed standard of
performance. All other expenses on existing tangible fixed assets,
including day to day repairs and maintenance expenditure and cost of
replacing parts, are charged to the statement of profit and loss for
the period during which such expenses are incurred.
The Company adjusts exchange differences arising on translation/
settlement of long-term foreign currency monetary items pertaining to
the acquisition of a depreciable asset to the cost of the tangible
asset and depreciates the same over the remaining life of the asset. In
accordance with the Ministry of Corporate Affairs (''MCA'') circular
dated August 09, 2012, exchange differences adjusted to the cost of
tangible fixed assets are total differences, arising on long-term
foreign currency monetary items pertaining to the acquisition of a
depreciable asset, for the period. In other words, the Company does not
differentiate between exchange differences arising from foreign
currency borrowings to the extent they are regarded as an adjustment to
the interest cost and other exchange differences.
Gains or losses arising from derecognition of tangible fixed assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the tangible fixed assets and are recognised in the
statement of profit and loss when the tangible fixed asset is
derecognised.
c Depreciation on tangible fixed assets
Depreciation on tangible fixed assets is calculated on a straight-line
basis using the rates arrived at, based on the useful lives estimated
by the management, which coincides with the lives prescribed under
Schedule II of the Act. The Company has used the following useful lives
to provide depreciation on its tangible fixed assets. The identified
components are depreciated separately over their useful lives; the
remaining components are depreciated over the life of the principal
asset.
d Intangible assets and amortisation
intangible assets (Computer software) acquired separately are measured
on initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated amortisation and
accumulated impairment losses, if any.
Computer software is amortised based on the useful life of 6 years on a
straight line basis as estimated by the management.
Gains or losses arisingfrom derecognition of intangible assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the intangible assets and are recognised in the
statement of profit and loss when the intangible asset is derecognised.
e Impairment of tangible/ intangible assets
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Company
estimates the asset''s recoverable amount. An asset''s recoverable amount
is the higher of an asset''s or cash-generating unit''s (CGU) net selling
price and its value in use. The recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. In determining net
selling price, recent market transactions are taken into account, if
available. If no such transactions can be identified, an appropriate
valuation model is used.
The Company bases its impairment calculation on detailed budgets and
forecast calculations which are prepared separately for each of the
Company''s CGUs to which the individual assets are allocated. These
budgets and forecast calculations are generally covering a period of
five years. For longer periods, a long term growth rate is calculated
and applied to project future cash flows after the fifth year.
impairment losses of operations, including impairment on inventories,
are recognised in the statement of profit and loss, except for
previously revalued tangible fixed assets, where the revaluation was
taken to revaluation reserve. In this case, the impairment is also
recognised in the revaluation reserve up to the amount of any previous
revaluation.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
An assessment is made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer
exist or may have decreased. If such indication exists, the Company
estimates the asset''s or CGU''s recoverable amount. A previously
recognised impairment loss is reversed only if there has been a change
in the assumptions used to determine the asset''s recoverable amount
since the last impairment loss was recognised. The reversal is limited
so that the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised
for the asset in prior years. Such reversal is recognised in the
statement of profit and loss unless the asset is carried at a revalued
amount, in which case the reversal is treated as a revaluation
increase.
f Leases
Where the Company is lessee
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to the ownership of the leased
item, are capitalised at the inception of the lease term at the lower
of the fair value of the leased property and present value of the
minimum lease payments. Lease payments are apportioned between the
finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability.
Finance charges are recognised as finance costs in the statement of
profit and loss. Lease management fees, legal charges and other initial
direct costs of lease are capitalised.
A leased asset is depreciated on a straight-line basis over the useful
life of the asset. However, if there is no reasonable certainty that
the Company will obtain the ownership by the end of the lease term, the
capitalised asset is depreciated on a straight-line basis over the
shorter of the estimated useful life of the asset or the lease term.
Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
g Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred in connection with the arrangement of borrowings.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalised as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
h Investments
investments, which are readily realisable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties. If an investment is acquired, or
partly acquired, by the issue of shares or other securities, the
acquisition cost is the fair value of the securities issued. If an
investment is acquired in exchange for another asset, the acquisition
is determined by reference to the fair value of the asset given up or
by reference to the fair value of the investment acquired, whichever is
more clearly evident.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis. Long-
term investments are carried at cost. However, provision for diminution
in value is made to recognise a decline other than temporary in the
value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
i Inventories
Raw materials, components, stores and spares are valued at lower of
cost and net realisable value. However, materials and other items held
for use in the production of inventories are not written down below
cost if the finished products in which they will be incorporated are
expected to be sold at or above cost. Cost of raw materials, components
and stores and spares is determined on a weighted average basis.
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
Costs incurred that relate to future activities on the contract are
recognised as "Contract work in progress".
Contract work in progress comprising construction costs and other
directly attributable overheads is valued at lower of cost and net
realisable value.
j Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognised:
Revenue from construction activity
Construction revenue and costs are recognised by reference to the stage
of completion of the construction activity at the balance sheet date,
as measured by the proportion that contract costs incurred for work
performed to date bear to the estimated total contract costs. Where the
outcome of the construction cannot be estimated reliably, revenue is
recognised to the extent of the construction costs incurred if it is
probable that they will be recoverable. In the case of contracts with
defined milestones and assigned price for each milestone, it recognises
revenue on transfer of significant risks and rewards which coincides
with achievement of milestone and its acceptance by its customer.
Provision is made for all losses incurred to the balance sheet date.
Any further losses that are foreseen in bringing contracts to
completion are also recognised. Variations in contract work, claims
and incentive payments are recognised to the extent that it is probable
that they will result in revenue and they are capable of being reliably
measured. Contract revenue earned in excess of billing has been
reflected as unbilled revenue and billing in excess of contract revenue
has been reflected as unearned revenue.
Dividends
Dividend income is recognised when the Company''s right to receive
dividend is established by the reporting date.
Income from management/ technical services
Income from management/technical services is recognised as per the
terms of the agreement on the basis of services rendered.
Interest
interest income on loans, investments and bank deposits are recognised
on a time proportion basis taking into account the amounts invested and
the rate applicable.
k Foreign currency translation
Foreign currency transactions and balances
(i) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
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.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
(iii) Exchange differences
The Company accounts for exchange differences arising on translation/
settlement of foreign currency monetary items as below:
1. Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalised and
depreciated over the remaining useful life of the asset.
2. Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortised over the remaining life
of the concerned monetary item.
3. All other exchange differences are recognised as income or as
expenses in the period in which they arise.
For the purpose of (iii)(l) and (iii)(2) above, the Company treats a
foreign monetary item as "long-term foreign currency monetary item", if
it has a term of twelve months or more at the date of its origination.
In accordance with MCA circular dated August 09,2012, exchange
differences for this purpose, are total differences arising on
long-term foreign currency monetary items for the period. In other
words, the Company does not differentiate between exchange differences
arising from foreign currency borrowings to the extent they are
regarded as an adjustment to the interest cost and other exchange
differences.
iv) Forward exchange contracts entered into to hedge foreign currency
risk of an existing asset/ liability
The premium or discount arising at the inception of forward exchange
contract entered into for the purpose of hedging foreign currency risk
on monetary items are amortized and recognized as an expense/ income
over the life of the contract. Exchange differences on such contracts,
except the contracts which are long-term foreign currency monetary
items for acquisition of Fixed Assets, are recognized in the Statement
of Profit and Loss in the period in which the exchange rates change.
Any profit or loss arising on cancellation or renewal of such forward
exchange contract is also recognized as income or as expense for the
period. Any gain/ loss arising on forward contracts which are long-term
foreign currency monetary items is recognized in accordance with
paragraphs (iii)(l) and (iii)(2) above.
I Retirement and other employee benefits
(i) Defined contribution plans
Retirement benefit in the form of provident fund, superannuation fund
and pension fund are defined contribution schemes. The Company has no
obligation, other than the contributions payable to the provident fund,
pension fund and superannuation fund. The Company recognizes
contribution payable to the provident fund, pension fund and
superannuation fund schemes as an expenditure, when an employee renders
the related service. If the contribution payable to the scheme for
service received before the balance sheet date exceeds the contribution
already paid, the deficit payable to the scheme is recognised as a
liability after deducting the contribution already paid. If the
contribution already paid exceeds the contribution due for services
received before the balance sheet date, then excess is recognised as an
asset to the extent that the pre payment will lead to, for example, a
reduction in future payment or a cash refund.
(ii) Defined benefit plan
Gratuity liability is a defined benefit obligation and is provided on
the basis of actuarial valuation, based on projected unit credit method
at the balance sheet date, carried out by an independent actuary.
Actuarial gains and losses comprise experience adjustments and the
effect of changes in the actuarial assumptions and are recognised in
full in the period in which they occur in the statement of profit and
loss as an income or expense.
(iii) Other long term employee benefits
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
year end. Actuarial gains/ losses are immediately taken to the
statement of profit and loss and are not deferred. The Company
presents the entire leave as a current liability in the balance sheet,
since it does not have an unconditional right to defer its settlement
for twelve months after the reporting date.
(iv) Short term employee benefits
Accumulated leave, which is expected to be utilised within the next
twelve months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
m Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all potential dilutive equity shares.
n Income taxes
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income tax Act, 1961 (the ''IT Act'') enacted in
India. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognised directly in equity is
recognised in equity and not in the statement of profit and loss.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date. Deferred income tax
relating to items recognised directly in equity is recognised in equity
and not in the statement of profit and loss.
Deferred tax liabilities are recognised for all taxable timing
differences. Deferred tax assets are recognised for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable
profits.
At each reporting date, the Company re-assesses unrecognised deferred
tax assets. It recognises unrecognised deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum Alternate Tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognises MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the Company recognises MAT
credit as an asset in accordance with the Guidance Note on Accounting
for credit available in respect of MAT under the IT Act, the said asset
is created by way of credit to the statement of profit and loss and
shown as "MAT credit entitlement." The Company reviews the "MAT credit
entitlement" asset at each reporting date and writes down the asset to
the extent the Company does not have convincing evidence that it will
pay normal tax during the specified period.
o Segment reporting
Identification of segments
The Company''s operating businesses are organised and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statement of the Company as a whole.
p Shares/ debentures issue expenses and premium on redemption
Shares issue expenses incurred are adjusted in the year of issue and
debenture issue expenses and redemption premium payable on debentures
are adjusted over the term of debentures to the securities premium
account, net of taxes, as permitted/prescribed under Section 78 of the
Companies Act, 1956/Section 52 of the Companies Act, 2013 to the extent
of balance available in premium account.
q Provisions
A provision is recognised when the Company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting date and
adjusted to reflect the current best estimates.
Where the Company expects some or all of a provision to be reimbursed,
for example under an insurance contract, the reimbursement is
recognised as a separate asset but only when the reimbursement is
virtually certain. The expense relating to any provision is presented
in the statement of profit and loss net of any reimbursement.
r Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognised
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognised because it cannot be measured reliably. The Company does not
recognise a contingent liability but discloses its existence in the
financial statements.
s Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and cash/ cheques/ drafts on hand and short-term
investments with an original maturity of three months or less.
t Corporate Social Responsibility (''CSR'') expenditure
The Company charges its CSR expenditure during the year to the
statement of profit and loss.
Mar 31, 2015
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
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
b Tangible fixed assets
Tangible fixed assets are stated at cost, net of accumulated
depreciation and accumulated impairment losses, if any. The cost
comprises purchase price, borrowing costs if capitalisation criteria
are met and directly attributable cost of bringing the asset to its
working condition for the intended use. Any trade discounts and rebates
are deducted in arriving at the purchase price.
Subsequent expenditure related to an item of tangible fixed asset is
added to its book value only if it increases the future benefits from
the existing asset beyond its previously assessed standard of
performance. All other expenses on existing tangible fixed assets,
including day to day repairs and maintenance expenditure and cost of
replacing parts, are charged to the statement of profit and loss for
the period during which such expenses are incurred.
The Company adjusts exchange differences arising on translation/
settlement of long-term foreign currency monetary items pertaining to
the acquisition of a depreciable asset to the cost of the tangible
asset and depreciates the same over the remaining life of the asset. In
accordance with the Ministry of Corporate Affairs (''MCA'') circular
dated August 09, 2012, exchange differences adjusted to the cost of
tangible fixed assets are total differences, arising on long-term
foreign currency monetary items pertaining to the acquisition of a
depreciable asset, for the period. In other words, the Company does
not differentiate between exchange differences arising from foreign
currency borrowings to the extent they are regarded as an adjustment to
the interest cost and other exchange differences.
Gains or losses arising from derecognition of tangible fixed assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the tangible fixed assets and are recognised in the
statement of profit and loss when the tangible fixed asset is
derecognised.
c Depreciation on tangible fixed assets
Depreciation on tangible fixed assets is calculated on a straight-line
basis using the rates arrived at, based on the useful lives estimated
by the management, which coincides with the lives prescribed under
Schedule II of the Act .The Company has used the following useful lives
to provide depreciation on its tangible fixed assets.
Tangible fixed assets** Useful lives estimated Rate of
by the management (in depreciation
years) (straight line
basis)
Plant and equipments 4 to 15 * 21.05 4.75%
Office equipments 5 21.05 4.75%
Furniture and fixtures 10 15.80 6.33%
Vehicles 8 to 10 10.53 9.50%
Computers 3 6.17 16.21%
* The management has estimated , supported by technical evaluation and
past experience , the useful lives of plant and equipments.
** The management has estimated the useful lives of asset individually
costing Rs. 5,000 or less to be less than one year, which is lower than
those indicated in Schedule II.
d Intangible assets and amortisation
Intangible assets (Computer software) acquired separately are measured
on initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated amortisation and
accumulated impairment losses, if any.
Computer software is amortised based on the useful life of 6 years on a
straight line basis as estimated by the management.
Gains or losses arising from derecognition of intangible assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the intangible assets and are recognised in the
statement of profit and loss when the intangible asset is derecognised.
e Impairment of tangible/ intangible assets
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Company
estimates the asset''s recoverable amount. An asset''s recoverable amount
is the higher of an asset''s or cash-generating unit''s (CGU) net selling
price and its value in use. The recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. In determining net
selling price, recent market transactions are taken into account, if
available. If no such transactions can be identified, an appropriate
valuation model is used.
The Company bases its impairment calculation on detailed budgets and
forecast calculations which are prepared separately for each of the
Company''s cash-generating units to which the individual assets are
allocated. These budgets and forecast calculations are generally
covering a period of five years. For longer periods, a long term growth
rate is calculated and applied to project future cash flows after the
fifth year. Impairment losses of operations, including impairment on
inventories, are recognised in the statement of profit and loss, except
for previously revalued tangible fixed assets, where the revaluation
was taken to revaluation reserve. In this case, the impairment is also
recognised in the revaluation reserve up to the amount of any previous
revaluation.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
An assessment is made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer
exist or may have decreased. If such indication exists, the Company
estimates the asset''s or CGU''s recoverable amount. A previously
recognised impairment loss is reversed only if there has been a change
in the assumptions used to determine the asset''s recoverable amount
since the last impairment loss was recognised. The reversal is limited
so that the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised
for the asset in prior years. Such reversal is recognised in the
statement of profit and loss unless the asset is carried at a revalued
amount, in which case the reversal is treated as a revaluation
increase.
f Leases
Where the Company is lessee
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to the ownership of the leased
item, are capitalised at the inception of the lease term at the lower
of the fair value of the leased property and present value of the
minimum lease payments. Lease payments are apportioned between the
finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability.
Finance charges are recognised as finance costs in the statement of
profit and loss. Lease management fees, legal charges and other initial
direct costs of lease are capitalised.
A leased asset is depreciated on a straight-line basis over the useful
life of the asset. However, if there is no reasonable certainty that
the Company will obtain the ownership by the end of the lease term, the
capitalised asset is depreciated on a straight-line basis over the
shorter of the estimated useful life of the asset or the lease term.
Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
g Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred in connection with the arrangement of borrowings.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalised as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
h Investments
Investments, which are readily realisable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties. If an investment is acquired, or
partly acquired, by the issue of shares or other securities, the
acquisition cost is the fair value of the securities issued. If an
investment is acquired in exchange for another asset, the acquisition
is determined by reference to the fair value of the asset given up or
by reference to the fair value of the investment acquired, whichever is
more clearly evident. Current investments are carried in the financial
statements at lower of cost and fair value determined on an individual
investment basis. Long-term investments are carried at cost. However,
provision for diminution in value is made to recognise a decline other
than temporary in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
i Inventories
Raw materials, components, stores and spares are valued at lower of
cost and net realisable value. However, materials and other items held
for use in the production of inventories are not written down below
cost if the finished products in which they will be incorporated are
expected to be sold at or above cost. Cost of raw materials, components
and stores and spares is determined on a weighted average basis.
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
Costs incurred that relate to future activities on the contract are
recognised as "Contract work in progress".
Contract work in progress comprising construction costs and other
directly attributable overheads is valued at lower of cost and net
realisable value.
j Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognised:
Revenue from construction activity
Construction revenue and costs are recognised by reference to the stage
of completion of the construction activity at the balance sheet date,
as measured by the proportion that contract costs incurred for work
performed to date bear to the estimated total contract costs. Where the
outcome of the construction cannot be estimated reliably, revenue is
recognised to the extent of the construction costs incurred if it is
probable that they will be recoverable. In the case of contracts with
defined milestones and assigned price for each milestone, it recognises
revenue on transfer of significant risks and rewards which coincides
with achievement of milestone and its acceptance by its customer.
Provision is made for all losses incurred to the balance sheet date.
Any further losses that are foreseen in bringing contracts to
completion are also recognised. Variations in contract work, claims and
incentive payments are recognised to the extent that it is probable
that they will result in revenue and they are capable of being reliably
measured. Contract revenue earned in excess of billing has been
reflected as unbilled revenue and billing in excess of contract revenue
has been reflected as unearned revenue.
Dividends
Dividend income is recognised when the Company''s right to receive
dividend is established by the reporting date.
Income from management/ technical services
Income from management/ technical services is recognised as per the
terms of the agreement on the basis of services rendered.
Interest
Interest on loans, investments and bank deposits are recognised on a
time proportion basis taking into account the amounts invested and the
rate applicable.
k Foreign currency translation
Foreign currency transactions and balances
(i) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
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.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
(iii) Exchange differences
The Company accounts for exchange differences arising on translation/
settlement of foreign currency monetary items as below:
1. Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalised and
depreciated over the remaining useful life of the asset.
2. Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortised over the remaining life
of the concerned monetary item.
3. All other exchange differences are recognised as income or as
expenses in the period in which they arise.
For the purpose of (iii)(1) and (iii)(2) above, the Company treats a
foreign monetary item as "long-term foreign currency monetary item", if
it has a term of twelve months or more at the date of its origination.
In accordance with MCA circular dated August 09, 2012, exchange
differences for this purpose, are total differences arising on
long-term foreign currency monetary items for the period. In other
words, the Company does not differentiate between exchange differences
arising from foreign currency borrowings to the extent they are
regarded as an adjustment to the interest cost and other exchange
differences.
l Retirement and other employee benefits
(i) Defined contribution plans
Retirement benefit in the form of provident fund, superannuation fund
and pension fund are defined contribution schemes. The Company has no
obligation, other than the contributions payable to the provident fund,
pension fund and superannuation fund. The Company recognizes
contribution payable to the provident fund, pension fund and
superannuation fund schemes as an expenditure, when an employee renders
the related service. If the contribution payable to the scheme for
service received before the balance sheet date exceeds the contribution
already paid, the deficit payable to the scheme is recognised as a
liability after deducting the contribution already paid. If the
contribution already paid exceeds the contribution due for services
received before the balance sheet date, then excess is recognised as an
asset to the extent that the pre payment will lead to, for example, a
reduction in future payment or a cash refund.
(ii) Defined benefit plan
Gratuity liability is a defined benefit obligation and is provided on
the basis of actuarial valuation, based on projected unit credit method
at the balance sheet date, carried out by an independent actuary.
Actuarial gains and losses comprise experience adjustments and the
effect of changes in the actuarial assumptions and are recognised in
full in the period in which they occur in the statement of profit and
loss as an income or expense.
(iii) Other long term employee benefits
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
year end. Actuarial gains/ losses are immediately taken to the
statement of profit and loss and are not deferred. The Company
presents the entire leave as a current liability in the balance sheet,
since it does not have an unconditional right to defer its settlement
for twelve months after the reporting date.
(iv) Short term employee benefits
Accumulated leave, which is expected to be utilised within the next
twelve months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
m Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all potential dilutive equity shares.
n Income taxes
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income tax Act, 1961 (the ''IT Act'') enacted in
India. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognised directly in equity is
recognised in equity and not in the statement of profit and loss.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date. Deferred income tax
relating to items recognised directly in equity is recognised in equity
and not in the statement of profit and loss.
Deferred tax liabilities are recognised for all taxable timing
differences. Deferred tax assets are recognised for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable
profits.
At each reporting date, the Company re-assesses unrecognised deferred
tax assets. It recognises unrecognised deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum Alternate Tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognises MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the Company recognises MAT
credit as an asset in accordance with the Guidance Note on Accounting
for credit available in respect of MAT under the IT Act, the said asset
is created by way of credit to the statement of profit and loss and
shown as "MAT credit entitlement." The Company reviews the "MAT credit
entitlement" asset at each reporting date and writes down the asset to
the extent the Company does not have convincing evidence that it will
pay normal tax during the specified period.
o Segment reporting
Identification of segments
The Company''s operating businesses are organised and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statement of the Company as a whole.
p Shares/ debentures issue expenses and premium on redemption
Shares issue expenses incurred are adjusted in the year of issue and
debenture issue expenses and redemption premium payable on debentures
are adjusted over the term of debentures to the securities premium
account, net of taxes, as permitted/prescribed under Section 78 of the
Companies Act, 1956/Section 52 of the Companies Act, 2013 to the extent
of balance available in premium account.
q Provisions
A provision is recognised when the Company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting date and
adjusted to reflect the current best estimates.
Where the Company expects some or all of a provision to be reimbursed,
for example under an insurance contract, the reimbursement is
recognised as a separate asset but only when the reimbursement is
virtually certain. The expense relating to any provision is presented
in the statement of profit and loss net of any reimbursement.
r Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognised
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognised because it cannot be measured reliably. The Company does not
recognise a contingent liability but discloses its existence in the
financial statements.
s Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and cash/ cheques/ drafts on hand and short-term
investments with an original maturity of three months or less.
t Corporate Social Responsibility (CSR) expenditure
The Company has charged its CSR expenditure during the year to the
statement of profit and loss.
Mar 31, 2014
NOTE 1 CORPORATE INFORMATION
GMR Infrastructure Limited (''GIL'' or ''the Company'') is a public limited
Company domiciled in India and incorporated under the provisions of the
Companies Act, 1956 (''the Act''). Its equity shares are listed on two
stock exchanges in India. The Company carries its business in the
following business segments:
a. Engineering Procurement Construction (EPC)
The Company is engaged in handling EPC solutions in the infrastructure
sector.
b. Others
The Company''s business also comprises of investment activity and
corporate support to various infrastructure Special Purpose Vehicles
(SPV).
NOTE 2 BASIS OF PREPARATION
The financial statements of the Company have been prepared in
accordance with the 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 the Companies Act, 1956, read with General Circular 8/2014 dated
April 4, 2014 issued by the Ministry of Corporate Affairs. The
financial statements have been prepared on an accrual basis and under
the historical cost convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year.
NOTE 2.1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
b Tangible fixed assets
Tangible fixed assets are stated at cost, net of accumulated
depreciation and accumulated impairment losses, if any. The cost
comprises purchase price, borrowing costs if capitalisation criteria
are met and directly attributable cost of bringing the asset to its
working condition for the intended use. Any trade discounts and rebates
are deducted in arriving at the purchase price.
Subsequent expenditure related to an item of tangible fixed asset is
added to its book value only if it increases the future benefits from
the existing asset beyond its previously assessed standard of
performance. All other expenses on existing tangible fixed assets,
including day to day repairs and maintenance expenditure and cost of
replacing parts, are charged to the statement of profit and loss for
the period during which such expenses are incurred.
The Company adjusts exchange differences arising on translation/
settlement of long-term foreign currency monetary items pertaining to
the acquisition of a depreciable asset to the cost of the tangible
asset and depreciates the same over the remaining life of the asset. In
accordance with the Ministry of Corporate Affairs (''MCA'') circular
dated August 09, 2012, exchange differences adjusted to the cost of
tangible fixed assets are total differences, arising on long-term
foreign currency monetary items pertaining to the acquisition of a
depreciable asset, for the period. In other words, the Company does
not differentiate between exchange differences arising from foreign
currency borrowings to the extent they are regarded as an adjustment to
the interest cost and other exchange differences.
Gains or losses arising from derecognition of tangible fixed assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the tangible fixed assets and are recognised in the
statement of profit and loss when the tangible fixed asset is
derecognised.
c Depreciation on tangible fixed assets
Depreciation on tangible fixed assets is calculated on a straight-line
basis using the rates arrived at based on the useful lives estimated by
the management, or those prescribed under the Schedule XIV to the Act,
whichever is higher. The Company has used the following rates to
provide depreciation on its tangible fixed assets.
Asset individually costing Indian Rupees (Rs.) 5,000 or less, are fully
depreciated in the year of acquisition.
d Intangible assets
Intangible assets (Computer software) acquired separately are measured
on initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated amortisation and
accumulated impairment losses, if any.
Computer software is amortised based on the useful life of 6 years on a
straight line basis as estimated by the management.
Gains or losses arising from derecognition of intangible assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the intangible assets and are recognised in the
statement of profit and loss when the intangible asset is derecognised.
e Impairment of tangible/ intangible assets
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Company
estimates the asset''s recoverable amount. An asset''s recoverable amount
is the higher of an asset''s or cash-generating unit''s (CGU) net selling
price and its value in use. The recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. In determining net
selling price, recent market transactions are taken into account, if
available. If no such transactions can be identified, an appropriate
valuation model is used.
The Company bases its impairment calculation on detailed budgets and
forecast calculations which are prepared separately for each of the
Company''s cash-generating units to which the individual assets are
allocated. These budgets and forecast calculations are generally
covering a period of five years. For longer periods, a long term growth
rate is calculated and applied to project future cash flows after the
fifth year.
Impairment losses of continuing operations, including impairment on
inventories, are recognised in the statement of profit and loss, except
for previously revalued tangible fixed assets, where the revaluation
was taken to revaluation reserve. In this case, the impairment is also
recognised in the revaluation reserve up to the amount of any previous
revaluation.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
An assessment is made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer
exist or may have decreased. If such indication exists, the Company
estimates the asset''s or CGU''s recoverable amount. A previously
recognised impairment loss is reversed only if there has been a change
in the assumptions used to determine the asset''s recoverable amount
since the last impairment loss was recognised. The reversal is limited
so that the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised
for the asset in prior years. Such reversal is recognised in the
statement of profit and loss unless the asset is carried at a revalued
amount, in which case the reversal is treated as a revaluation
increase.
f Leases
Where the Company is lessee
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to the ownership of the leased
item, are capitalised at the inception of the lease term at the lower
of the fair value of the leased property and present value of the
minimum lease payments. Lease payments are apportioned between the
finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability.
Finance charges are recognised as finance costs in the statement of
profit and loss. Lease management fees, legal charges and other initial
direct costs of lease are capitalised.
A leased asset is depreciated on a straight-line basis over the useful
life of the asset or the useful life envisaged in Schedule XIV to the
Act, whichever is lower. However, if there is no reasonable certainty
that the Company will obtain the ownership by the end of the lease
term, the capitalised asset is depreciated on a straight-line basis
over the shorter of the estimated useful life of the asset, the lease
term or the useful life envisaged in Schedule XIV to the Act.
Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
g Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred in connection with the arrangement of borrowings.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalised as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
h Investments
Investments, which are readily realisable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties. If an investment is acquired, or
partly acquired, by the issue of shares or other securities, the
acquisition cost is the fair value of the securities issued. If an
investment is acquired in exchange for another asset, the acquisition
is determined by reference to the fair value of the asset given up or
by reference to the fair value of the investment acquired, whichever is
more clearly evident.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis. Long-
term investments are carried at cost. However, provision for diminution
in value is made to recognise a decline other than temporary in the
value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
i Inventories
Raw materials, components, stores and spares are valued at lower of
cost and net realisable value. However, materials and other items held
for use in the production of inventories are not written down below
cost if the finished products in which they will be incorporated are
expected to be sold at or above cost. Cost of raw materials, components
and stores and spares is determined on a weighted average basis.
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
Costs incurred that relate to future activities on the contract are
recognised as "Contract work in progress".
Contract work in progress comprising construction costs and other
directly attributable overheads is valued at lower of cost and net
realisable value.
j Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognised:
Revenue from construction activity
Construction revenue and costs are recognised by reference to the stage
of completion of the construction activity at the balance sheet date,
as measured by the proportion that contract costs incurred for work
performed to date bear to the estimated total contract costs. Where the
outcome of the construction cannot be estimated reliably, revenue is
recognised to the extent of the construction costs incurred if it is
probable that they will be recoverable. In the case of contracts with
defined milestones and assigned price for each milestone, it recognises
revenue on transfer of significant risks and rewards which coincides
with achievement of milestone and its acceptance by its customer.
Provision is made for all losses incurred to the balance sheet date.
Any further losses that are foreseen in bringing contracts to
completion are also recognised. Variations in contract work, claims and
incentive payments are recognised to the extent that it is probable
that they will result in revenue and they are capable of being reliably
measured. Contract revenue earned in excess of billing has been
reflected as unbilled revenue and billing in excess of contract revenue
has been reflected as unearned revenue.
Dividends
Dividend income is recognised when the Company''s right to receive
dividend is established by the reporting date.
Income from management/ technical services
Income from management/ technical services is recognised as per the
terms of the agreement on the basis of services rendered.
Interest
Interest on investments and bank deposits are recognised on a time
proportion basis taking into account the amounts invested and the rate
applicable.
k Foreign currency translation
Foreign currency transactions and balances
(i) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
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.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
(iii) Exchange differences
The Company accounts for exchange differences arising on translation/
settlement of foreign currency monetary items as below:
1. Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalised and
depreciated over the remaining useful life of the asset.
2. Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortised over the remaining life
of the concerned monetary item.
3. All other exchange differences are recognised as income or as
expenses in the period in which they arise.
For the purpose of (iii)(1) and (iii)(2) above, the Company treats a
foreign monetary item as "long-term foreign currency monetary item", if
it has a term of twelve months or more at the date of its origination.
In accordance with MCA circular dated August 09, 2012, exchange
differences for this purpose, are total differences arising on
long-term foreign currency monetary items for the period. In other
words, the Company does not differentiate between exchange differences
arising from foreign currency borrowings to the extent they are
regarded as an adjustment to the interest cost and other exchange
differences.
l Retirement and other employee benefits
(i) Defined contribution plans
Retirement benefit in the form of provident fund, superannuation fund
and pension fund are defined contribution schemes. The Company has no
obligation, other than the contributions payable to the provident fund,
pension fund and superannuation fund. The Company recognizes
contribution payable to the provident fund, pension fund and
superannuation fund schemes as an expenditure, when an employee renders
the related service. If the contribution payable to the scheme for
service received before the balance sheet date exceeds the contribution
already paid, the deficit payable to the scheme is recognised as a
liability after deducting the contribution already paid. If the
contribution already paid exceeds the contribution due for services
received before the balance sheet date, then excess is recognised as an
asset to the extent that the pre payment will lead to, for example, a
reduction in future payment or a cash refund.
(ii) Defined benefit plan
Gratuity liability is a defined benefit obligation and is provided on
the basis of actuarial valuation, based on projected unit credit method
at the balance sheet date, carried out by an independent actuary.
Actuarial gains and losses comprise experience adjustments and the
effect of changes in the actuarial assumptions and are recognised in
full in the period in which they occur in the statement of profit and
loss as an income or expense.
(iii) Other long term employee benefits
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
year end. Actuarial gains/ losses are immediately taken to the
statement of profit and loss and are not deferred. The Company
presents the entire leave as a current liability in the balance sheet,
since it does not have an unconditional right to defer its settlement
for twelve months after the reporting date.
(iv) Short term employee benefits
Accumulated leave, which is expected to be utilised within the next
twelve months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
m Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all potential dilutive equity shares.
n Income taxes
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income tax Act, 1961 (the ''IT Act'') enacted in
India. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognised directly in equity is
recognised in equity and not in the statement of profit and loss.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date. Deferred income tax
relating to items recognised directly in equity is recognised in equity
and not in the statement of profit and loss.
Deferred tax liabilities are recognised for all taxable timing
differences. Deferred tax assets are recognised for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable
profits.
At each reporting date, the Company re-assesses unrecognised deferred
tax assets. It recognises unrecognised deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
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 taxes
liabilities relate to the same taxable entity and the same taxation
authority.
Minimum Alternate Tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognises MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the Company recognises MAT
credit as an asset in accordance with the Guidance Note on Accounting
for credit available in respect of MAT under the IT Act, the said asset
is created by way of credit to the statement of profit and loss and
shown as "MAT credit entitlement." The Company reviews the "MAT credit
entitlement" asset at each reporting date and writes down the asset to
the extent the Company does not have convincing evidence that it will
pay normal tax during the specified period.
o Segment reporting
Identification of segments
The Company''s operating businesses are organised and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statement of the Company as a whole.
p Shares/ debentures issue expenses and premium redemption
Equity shares issue expenses incurred are expensed in the year of issue
and debenture/ preference share issue expenses and redemption premium
payable on preference shares/ debentures are expensed over the term of
preference shares/ debentures. These are adjusted to the securities
premium account as permitted by Section 78(2) of the Act to the extent
of balance available in such securities premium account. These
expenses are adjusted to the securities premium account net of taxes.
q Provisions
A provision is recognised when the Company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting date and
adjusted to reflect the current best estimates.
Where the Company expects some or all of a provision to be reimbursed,
for example under an insurance contract, the reimbursement is
recognised as a separate asset but only when the reimbursement is
virtually certain. The expense relating to any provision is presented
in the statement of profit and loss net of any reimbursement.
r Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or non-
occurrence of one or more uncertain future events beyond the control of
the Company or a present obligation that is not recognised because it
is not probable that an outflow of resources will be required to settle
the obligation. A contingent liability also arises in extremely rare
cases where there is a liability that cannot be recognised because it
cannot be measured reliably. The Company does not recognise a
contingent liability but discloses its existence in the financial
statements.
s Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and cash/ cheques/ drafts on hand and short-term
investments with an original maturity of three months or less.
b) Terms / rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs.
1 per share. Every member holding equity shares there in shall have
voting rights in proportion to the member''s share of the paid up equity
share capital. The Company declares and pays dividend in Indian rupees.
The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity
shares would be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the equity
shareholders.
c) Terms / rights attached to CCPS:
"Pursuant to the equity shareholders'' approval obtained on March 20,
2014, the Company issued 11,366,704 CCPS of face value of Rs. 1,000 each
comprising of (a) 5,683,351 Series A CCPS each fully paid up, carrying
a coupon rate of 0.001% per annum (''p.a.'') and having a term of 17
months from the date of allotment and (b) 5,683,353 Series B CCPS each
fully paid up, carrying a coupon rate of 0.001% p.a. and having a term
of 18 months from the date of allotment, to IDFC Limited, Dunearn
Investments (Mauritius) Pte Limited, GKFF Ventures, Premier Edu-Infra
Solutions Private Limited and Skyron Eco- Ventures Private Limited. The
Series A CCPS and Series B CCPS shall be converted into equity shares
upon the expiry of their respective terms in accordance with the
provisions of Chapter VII of the SEBI (Issue of Capital Disclosure
Requirements) Regulations, 2009 (''ICDR Regulations''). The number of
equity shares allotted to the Investors upon conversion of the Investor
Securities shall be on the basis of the minimum permissible price,
computed in accordance with Regulation 76 read with Regulation 71(b) of
the SEBI ICDR Regulations on the conversion date.
The preference shareholders have a right to attend General Meetings of
the Company and vote on resolutions directly affecting their interest.
In the event of winding up, the Company would repay the preference
share capital in priority to the equity shares of the Company but it
does not confer any further right to participate either in profits or
assets of the Company."
1. During the year ended March 31, 2012, the Company had entered into
an agreement to issue 7,000 secured, redeemable, non convertible
debentures of Rs. 1,000,000 each to ICICI Bank Limited (''ICICI'')
(''Tranche 1''). During the year ended March 31, 2013 the Company has
further entered into an agreement with ICICI to issue 3,000 secured,
redeemable, non convertible debentures of Rs. 1,000,000 each (''Tranche
2''). These debentures are secured by way of first ranking (i) pari
passu charge on the fixed assets of GMR Vemagiri Power Generation
Limited (''GVPGL''); (ii) pari passu pledge over 30% of fully paid-up
equity shares of Rs. 10 each of GMR Energy Limited (''GEL'') held by GMR
Renewable Energy Limited (''GREEL''); (iii) pari passu pledge over 30% of
fully paid-up equity shares of Rs. 10 each of GVPGL held by GEL; (iv)
pari passu charge over GVPGL excess cash flow account, as defined in
the subscription agreement executed between the Company and ICICI; (v)
exclusive charge over Debt Service and Reserve Account (''DSRA'')
maintained by the Company with ICICI. These debentures are redeemable
at a premium yielding 14.50% p.a. till March 25, 2013 and after March
25, 2013 with a yield of base rate of ICICI plus 4.50% p.a. The Tranche
1 is redeemable in thirty seven quarterly unequal instalments
commencing from March 25, 2012 and Tranche 2 is redeemable in thirty
six quarterly unequal instalments commencing from June 25, 2012. As at
March 31, 2014, the Company has partially redeemed these debentures and
the revised face value of these debentures after redemption is Rs.
977,500 (March 31, 2013: Rs. 987,500 ) per debenture.
2. During the year ended March 31, 2010, the Company had issued 5,000
unsecured redeemable, non convertible debentures of Rs. 1,000,000 each to
ICICI which are redeemable at a premium yielding 14.00% p.a. (March 31,
2013: 14.00% p.a.) and are repayable in 5 annual unequal instalments
commencing from April 2011. As at March 31, 2014, the Company has
partially redeemed these debentures and the revised face value of these
debentures after redemption is Rs. 350,000 (March 31, 2013: Rs. 700,000)
per debenture.
3. Indian rupee term loan from a financial institution of Rs. 150.00
Crore (March 31, 2013: Rs. Nil) carries interest @ 12.00% p.a. (March 31,
2013: Nil) payable on a quarterly basis. The loan is repayable in 7
equal annual instalments commencing at the end of four years from the
date of first disbursement i.e. September, 2013. The loan is secured
by exclusive first charge on land held by GMR Krishnagiri SEZ Limited
(''GKSEZ'').
4. Indian rupee term loan from a financial institution of Rs. 183.33
Crore (March 31, 2013: Rs. 275.00 Crore) carries periodic rates of
interest as agreed with the lenders and payable on a yearly basis. The
loan is repayable in 3 equated annual instalment commencing from August
2013. The loan is secured by way of a corporate guarantee issued by
GHPL and pledge of 269,238,300 (March 31, 2013: 269,238,300) equity
shares of Rs. 1 each of the Company, held by GHPL.
5. Indian rupee term loan from a financial institution of Rs. 800.00
Crore (March 31, 2013: Rs. 900.00 Crore) carries interest @ 11.75% p.a.
(March 31, 2013 : 11.75% p.a.) payable on a half yearly basis. The loan
is repayable in 10 equated annual instalments commencing from December
2012. The loan is secured by exclusive first charge on barge mounted
plant of a subsidiary Company and pledge of 133,198,216 (March 31,
2013: 115,103,532) equity shares of Rs. 1 each of the Company, held by
GHPL.
6. Indian rupee term loan from a bank of Rs. 1,000.00 Crore (March 31,
2013: Rs. Nil) carries interest @ base rate of lender plus spread of
4.75% p.a. (March 31, 2013 : Nil) payable on a monthly basis. The loan
is secured by i) subservient charge on the immovable properties and
moveable assets of EMCO Energy Limited (''EMCO'') both present and future
ii) subservient charge on non agricultural land in the State of Andhra
Pradesh of Kakinada SEZ Private Limited (''KSPL'') iii) pledge of equity
shares of the Company, held by GHPL iv) pledge of 23% equity shares of
EMCO held by GEL v) pledge of 30% equity shares of GMR Chattisgarh
Energy Limited (''GCHEL'') held by GEL vi) pledge over 30% of equity
shares of GEL held by GREEL vii) subservient charge on immovable
properties situated in the State of Gujarat (both present and future)
and all moveable assets of GMR Gujarat Solar Power Private Limited
(''GGSPPL''). The loan is repayable in 32 structured quarterly
instalments commencing from April 25, 2016 and ending on January 25,
2024. Out of the above Rs. 1,000.00 Crore, the Company has availed Rs.
900.00 Crore as at March 31, 2014. There are certain mandatory
prepayment events agreed with the bank including divestment of
shareholding in Istanbul Sabiha Gokcen Uluslararasi Havalimani Yatirim
Yapim Ve Isletme Anonim Sirketi (''ISG'') and hence Rs. 200.00 Crore has
been considered as current maturities.
7. Indian rupee term loan from a bank of Rs. 250.00 Crore (March 31,
2013: Rs. 300.00 Crore) carries interest @ base rate of lender plus
spread of 1.50% p.a. (March 31, 2013 : base rate of lender plus spread
of 1.50% p.a.) and interest is payable on a monthly basis. The loan is
secured by i) 10% of cash margin on the outstanding amount in the form
of lien on fixed deposits in favour of the lender ii) exclusive charge
on loans and advances provided by the Company created out of this
facility. The loan is repayable in 6 equal quarterly instalments
commencing from March 31, 2014.
8. Indian rupee term loan from a bank of Rs. 200.00 Crore (March 31,
2013: Rs. 200.00 Crore) carries interest @ base rate of lender plus
spread of 1.50% p.a. (March 31, 2013 : base rate of lender plus spread
of 1.50% p.a.) and interest is payable on a monthly basis. The loan is
secured by a first charge over the immovable properties of Rs. 17.70
Crore, aircrafts of Rs. 38.75 Crore, lien marked fixed deposit of Rs.13.55
Crore and exclusive charge on loans and advances provided by the
Company out of this loan facility, charge over 30% shares of GHPL in
GMR Sports Private Limited (''GSPL'') and non-disposable undertaking with
regard to 19% of shareholding of GHPL in GSPL. The loan is repayable in
8 equal quarterly instalments commencing from June 26, 2016. Of the
above Rs. 200.00 Crore, the Company has availed Rs. 188.00 Crore as at
March 31, 2014 (March 31, 2013: Rs.180.00 Crore).
9. Indian rupee term loan from a bank of Rs. 500.00 Crore (March 31,
2013: Rs. Nil) carries interest @ base rate of lender plus spread of
1.50% p.a. (March 31, 2013 : Nil) and interest is payable on a monthly
basis. The loan is secured by i) residual charge over all current
assets and movable fixed assets both present and future ii) first
charge over loans and advances both present and future (excluding EPC
division) to provide minimum cover of 1.25 times of the facility
outstanding iii) second charge over cash flows both present and future
of GMR Highways Limited (''GMRHL'') iv) exclusive charge over rights and
interest of GMR group in IBC Knowledge Park property at Bangalore and
v) pledge of 30% shares of GMRHL. The loan is repayable in 8 equal
quarterly instalments after a moratorium of 39 months from the date of
first disbursement i.e., the first instalment is due on September 30,
2016. There are certain mandatory prepayment events agreed with the
bank including divestment of shareholding in ISG and GMR Ulundurpet
Expressways Private Limited (''GUEPL'') and hence Rs. 150.00 Crore has been
considered as current maturities of such loans.
10. Indian rupee term loan from a bank of Rs. Nil (March 31, 2013: Rs.
43.50 Crore) carried interest @ BBR plus 2.50% p.a. (March 31, 2013 :
BBR plus 2.50% p.a). and was payable on a monthly basis. The loan was
repayable in 3 equal instalments at the end of 12th, 18th and 24th
month from the date of first disbursement i.e. February 16, 2012. The
loan was secured by an exclusive first charge on assets acquired out of
the proceeds of the loan and second charge on the current assets of EPC
division of the Company.
11. Vehicle loan from a bank of Rs.0.61 Crore (March 31, 2013: Rs.Nil)
carries interest @ 10.00% p.a. (March 31, 2013 : Nil) and the same is
payable on a monthly basis. The loan is repayable in 60 equal monthly
instalments commencing from October 01, 2013 and is secured by the
vehicle taken on loan.
12. Indian rupee term loan from a bank of Rs. 500.00 Crore (March 31,
2013: Rs. 500.00 Crore) carries interest @ base rate of lender plus
applicable spread of 3.25% p.a (March 31, 2013 : base rate of lender
plus applicable spread of 3.25% p.a.) and interest is payable on a
monthly basis. The loan is secured by exclusive first mortgage and
charge on i) movable fixed assets and immovable properties of GMR Power
Corporation Limited (''GPCL'') ii) non agricultural lands of GMR Hebbal
Towers Private Limited (''GHTPL'') and Mr. G. M. Rao iii) certain
immovable properties of Boyance Infrastructure Private Limited (''BIPL'')
in Mamidipally, Ranga Reddy district iv) commercial apartment owned by
Honey Flower Estates Private Limited (''HFEPL'') v) an irrevocable and
unconditional guarantee of GHPL, BIPL and HFEPL and demand promissory
note equal to principal amount of the loan and interest payable on the
loan. The loan is repayable in 16 quarterly instalments commencing from
October 1, 2014. Of the above Rs. 500.00 Crore, the Company has availed Rs.
300.00 Crore as at March 31, 2014 (March 31, 2013: Rs.200.00 Crore).
13. Indian rupee term loan from a bank of Rs. 250.00 Crore (March 31,
2013: Rs.250 Crore ) carries interest @ base rate of lender plus 1.50%
p.a. (March 31, 2013 :base rate of lender plus 1.50% p.a.) and is
payable on a monthly basis. This loan is secured by exclusive first
mortgage and charge on i) non-agricultural lands of BIPL, Namitha Real
Estates Private Limited (''NREPL''), Sri Varalakshmi Jute Twine Mills
Private Limited (''SVJTMPL'') and Neozone Properties Private Limited
(''NPPL''). The loan is repayable in 5 equated monthly instalments
commencing from November 30, 2014.
14. Loans from group company of Rs. 100.00 Crore (March 31, 2013: Rs.Nil )
from its subsidiary, GMR Airport Developers Limited (''GADL'') carries
interest @ 12.95% p.a. (March 31, 2013: Nil. ) and is payable on a
monthly basis. The loan is to be prepaid on occurance of any liquidity
event as per the terms of the agreement or repayable in 28 structured
quarterly instalments commencing from December 23, 2013 . Out of the
above Rs. 100 Crore, the Company has availed Rs. 93.40 Crore and Rs.92.00
Crore is outstanding as at March 31, 2014.
15. Indian rupee term loan from a financial institution of Rs. 50.00
Crore (March 31, 2013: Rs. Nil) carries interest @ 14.75% p.a. linked
with SBR on reducing balance (March 31, 2013: Nil) and is payable on a
monthly basis. The loan is repayable in 57 monthly instalments
commencing from April, 2014. The loan is secured by a charge on assets
of the Company. Of the above Rs. 50.00 Crore, the Company has availed Rs.
44.00 Crore as at March 31, 2014.
16. Indian rupee term loan from a financial institution of Rs. 200.00
Crore (March 31, 2013: Rs.Nil) carries interest rate @14.25% p.a. (March
31,2013: Nil) and is payable on a monthly basis. The loan is repayable
in 18 quarterly instalments commencing from October, 2016. The loan is
secured by way of i) first mortgage and charge on non agriculture lands
of SJK Powergen Limited (''SJK'') ii) pledge of 20,000,000 (March 31,
2013: Nil ) equity shares of Rs. 1 each of the Company, held by GHPL and
iii) pledge of such number of equity shares of Rs. 10 each of GEL having
book value of minimum of Rs. 400.00 Crore (March 31, 2013: Rs. Nil ) held
by the Company and in case of default of repayment of loan, the lender
has the right to convert the loan into equity. Of the above Rs. 200.00
Crore, the Company has availed Rs. 195.00 Crore as at March 31, 2014.
17. Vehicle loan from others of Rs. 0.27 Crore (March 31, 2013: Rs. Nil)
carries interest @10.33 % p.a. (March 31, 2013: Nil) and interest is
payable on a monthly basis. The loan is repayable in 60 equal monthly
instalments commencing from April, 2014 and is secured by vehicle taken
on loan.
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
management''s best knowledge of current events and actions,
uncertainty about these assumptions and estimates could result in the
outcomes requiring a material adjustment to the carrying amounts of
assets or liabilities in future periods.
b) Tangible fixed assets
Tangible fixed assets are stated at cost, net of accumulated
depreciation and accumulated impairment losses, if any. The cost
comprises purchase price, borrowing costs if capitalisation criteria
are met and directly attributable cost of bringing the asset to its
working condition for the intended use. Any trade discounts and rebates
are deducted in arriving at the purchase price.
Subsequent expenditure related to an item of tangible fixed asset is
added to its book value only if it increases the future benefits from
the existing asset beyond its previously assessed standard of
performance. All other expenses on existing tangible fixed assets,
including day to day repairs and maintenance expenditure and cost of
replacing parts, are charged to the statement of profit and loss for
the period during which such expenses are incurred.
The Company adjusts exchange differences arising on
translation/settlement of long-term foreign currency monetary items
pertaining to the acquisition of a depreciable asset to the cost of the
tangible asset and depreciates the same over the remaining life of the
asset. In accordance with the Ministry of Corporate Affairs (''MCA'')
circular dated August 09, 2012, exchange differences adjusted to the
cost of tangible fixed assets are total differences, arising on
long-term foreign currency monetary items pertaining to the acquisition
of a depreciable asset, for the period. In other words, the Company
does not differentiate between exchange differences arising from
foreign currency borrowings to the extent they are regarded as an
adjustment to the interest cost and other exchange differences.
Gains or losses arising from derecognition of tangible fixed assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the tangible fixed assets and are recognised in the
statement of profit and loss when the tangible fixed asset is
derecognised.
c) Depreciation on tangible fixed assets
Depreciation on tangible fixed assets is calculated on a straight-line
basis using the rates arrived at based on the useful lives estimated by
the management, or those prescribed under the Schedule XIV to the Act,
whichever is higher. The Company has used the following rates to
provide depreciation on its tangible fixed assets.
Asset individually costing Indian Rupees (Rs. ) 5,000 or less, are
fully depreciated in the year of acquisition.
d) Intangible assets
Intangible assets (Computer software) acquired separately are measured
on initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated amortisation and
accumulated impairment losses, if any.
Computer software is amortised based on the useful life of 6 years on a
straight line basis as estimated by the management.
Gains or losses arising from derecognition of intangible assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the intangible assets and are recognised in the
statement of profit and loss when the intangible asset is derecognised.
e) Impairment of tangible/ intangible assets
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Company
estimates the asset''s recoverable amount. An asset''s recoverable
amount is the higher of an asset''s or cash-generating unit''s
(''CGU'') net selling price and its value in use. The recoverable
amount is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other
assets or groups of assets. Where the carrying amount of an asset or
CGU exceeds its recoverable amount, the asset is considered impaired
and is written down to its recoverable amount. In assessing value in
use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the
asset. In determining net selling price, recent market transactions are
taken into account, if available. If no such transactions can be
identified, an appropriate valuation model is used.
The Company bases its impairment calculation on detailed budgets and
forecast calculations which are prepared separately for each of the
Company''s cash-generating units to which the individual assets are
allocated. These budgets and forecast calculations are generally
covering a period of five years. For longer periods, a long-term growth
rate is calculated and applied to project future cash flows after the
fifth year.
Impairment losses of continuing operations, including impairment on
inventories, are recognised in the statement of profit and loss, except
for previously revalued tangible fixed assets, where the revaluation
was taken to revaluation reserve. In this case, the impairment is also
recognised in the revaluation reserve up to the amount of any previous
revaluation.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
An assessment is made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer
exist or may have decreased. If such indication exists, the Company
estimates the asset''s or CGU''s recoverable amount. A previously
recognised impairment loss is reversed only if there has been a change
in the assumptions used to determine the asset''s recoverable amount
since the last impairment loss was recognised. The reversal is limited
so that the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised
for the asset in prior year. 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.
f) Leases
Where the Company is lessee
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to the ownership of the leased
item, are capitalised at the inception of the lease term at the lower
of the fair value of the leased property and present value of the
minimum lease payments. Lease payments are apportioned between the
finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability.
Finance charges are recognised as finance costs in the statement of
profit and loss. Lease management fees, legal charges and other initial
direct costs of lease are capitalised.
A leased asset is depreciated on a straight-line basis over the useful
life of the asset or the useful life envisaged in Schedule XIV to the
Act, whichever is lower. However, if there is no reasonable certainty
that the Company will obtain the ownership by the end of the lease
term, the capitalised asset is depreciated on a straight-line basis
over the shorter of the estimated useful life of the asset, the lease
term or the useful life envisaged in Schedule XIV to the Act.
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 recognised as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
g) Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred in connection with the arrangement of borrowings.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalised as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
h) Investments
Investments, which are readily realisable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties. If an investment is acquired, or
partly acquired, by the issue of shares or other securities, the
acquisition cost is the fair value of the securities issued. If an
investment is acquired in exchange for another asset, the acquisition
is determined by reference to the fair value of the asset given up or
by reference to the fair value of the investment acquired, whichever is
more clearly evident.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis. Long-
term investments are carried at cost. However, provision for diminution
in value is made to recognise a decline other than temporary in the
value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
i) Inventories
Raw materials, components, stores and spares are valued at lower of
cost and net realisable value. However, materials and other items held
for use in the production of inventories are not written down below
cost if the finished products in which they will be incorporated are
expected to be sold at or above cost. Cost of raw materials, components
and stores and spares is determined on a weighted average basis. Net
realisable value is the estimated selling price in the ordinary course
of business, less estimated costs of completion and estimated costs
necessary to make the sale.
Costs incurred that relate to future activities on the contract are
recognised as "Contract work in progress".
Contract work in progress comprising construction costs and other
directly attributable overheads is valued at lower of cost and net
realisable value.
j) Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognised:
Revenue from construction activity
Construction revenue and costs are recognised by reference to the stage
of completion of the construction activity at the balance sheet date,
as measured by the proportion that contract costs incurred for work
performed to date bear to the estimated total contract costs. Where the
outcome of the construction cannot be estimated reliably, revenue is
recognised to the extent of the construction costs incurred if it is
probable that they will be recoverable. In the case of contracts with
defined milestones and assigned price for each milestone, it recognises
revenue on transfer of significant risks and rewards which coincides
with achievement of milestone and its acceptance by its customer.
Provision is made for all losses incurred to the balance sheet date.
Any further losses that are foreseen in bringing contracts to
completion are also recognised. Variations in contract work, claims and
incentive payments are recognised to the extent that it is probable
that they will result in revenue and they are capable of being reliably
measured. Contract revenue earned in excess of billing has been
reflected as unbilled revenue and billing in excess of contract revenue
has been reflected as unearned revenue.
Dividends
Dividend income is recognised when the Company''s right to receive
dividend is established by the reporting date.
Income from management/ technical services
Income from management/ technical services is recognised as per the
terms of the agreement on the basis of services rendered.
Interest
Interest on investments and bank deposits are recognised on a time
proportion basis taking into account the amounts invested and the rate
applicable.
k) Foreign currency translation
Foreign currency transactions and balances.
(i) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
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.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
(iii) Exchange differences
The Company accounts for exchange differences arising on
translation/settlement of foreign currency monetary items as below:
1. Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalised and
depreciated over the remaining useful life of the asset.
2. Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortised over the remaining life
of the concerned monetary item.
3. All other exchange differences are recognised as income or as
expenses in the period in which they arise.
For the purpose of (iii)(1) and (iii)(2) above, the Company treats a
foreign monetary item as "long-term foreign currency monetary
item", if it has a term of twelve months or more at the date of its
origination. In accordance with MCA circular dated August 9, 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
differences.
l) Retirement and other employee benefits
(i) Defined contribution plans
Retirement benefit in the form of provident fund, superannuation fund
and pension fund are defined contribution schemes. The Company has no
obligation, other than the contributions payable to the provident fund,
pension fund and superannuation fund. The Company recognises
contribution payable to the provident fund, pension fund and
superannuation fund schemes as an expenditure, when an employee renders
the related service. If the contribution payable to the scheme for
service received before the balance sheet date exceeds the contribution
already paid, the deficit payable to the scheme is recognised as a
liability after deducting the contribution already paid. If the
contribution already paid exceeds the contribution due for services
received before the balance sheet date, then excess is recognised as an
asset to the extent that the pre payment will lead to, for example, a
reduction in future payment or a cash refund.
(ii) Defined benefit plan
Gratuity liability is a defined benefit obligation and is provided on
the basis of actuarial valuation, based on projected unit credit method
at the balance sheet date, carried out by an independent actuary.
Actuarial gains and losses comprise experience adjustments and the
effect of changes in the actuarial assumptions and are recognised in
full in the period in which they occur in the statement of profit and
loss as an income or expense.
(iii) Other long-term employee benefits
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
year end. Actuarial gains/ losses are immediately taken to the
statement of profit and loss and are not deferred. The Company presents
the entire leave as a current liability in the balance sheet, since it
does not have an unconditional right to defer its settlement for twelve
months after the reporting date.
(iv) Short-term employee benefits
Accumulated leave, which is expected to be utilised within the next
twelve months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
m) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events such as bonus issue, bonus element in a rights
issue, share split and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all potential dilutive equity shares.
n) Income taxes
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income tax Act, 1961 (the ''IT Act'') enacted in
India. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognised directly in equity is
recognised in equity and not in the statement of profit and loss.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier year. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date. Deferred income tax
relating to items recognised directly in equity is recognised in equity
and not in the statement of profit and loss.
Deferred tax liabilities are recognised for all taxable timing
differences. Deferred tax assets are recognised for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable
profits.
At each reporting date, the Company re-assesses unrecognised deferred
tax assets. It recognises unrecognised deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
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 same taxable entity and the same taxation
authority.
Minimum Alternate Tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognises MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the Company recognises MAT
credit as an asset in accordance with the Guidance Note on Accounting
for credit available in respect of MAT under the IT Act, the said asset
is created by way of credit to the statement of profit and loss and
shown as "MAT credit entitlement." The Company reviews the "MAT
credit entitlement" asset at each reporting date and writes down the
asset to the extent the Company does not have convincing evidence that
it will pay normal tax during the specified period.
o) Segment reporting
Identification of segments
The Company''s operating businesses are organised and managed
separately according to the nature of products and services provided,
with each segment representing a strategic business unit that offers
different products and serves different markets. The analysis of
geographical segments is based on the areas in which major operating
divisions of the Company operate.
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statement of the Company as a whole.
p) Shares/debentures issue expenses and premium redemption
Equity shares issue expenses incurred are expensed in the year of issue
and preference share/debenture issue expenses and redemption premium
payable on preference shares/ debentures are expensed over the term of
preference shares/debentures. These are adjusted to the securities
premium account as permitted by Section 78(2) of the Act to the extent
of balance available in such securities premium account.
q) Provisions
A provision is recognised when the Company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting date and
adjusted to reflect the current best estimates.
Where the Company expects some or all of a provision to be reimbursed,
for example under an insurance contract, the reimbursement is
recognised as a separate asset but only when the reimbursement is
virtually certain. The expense relating to any provision is presented
in the statement of profit and loss net of any reimbursement.
r) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or non-
occurrence of one or more uncertain future events beyond the control of
the Company or a present obligation that is not recognised because it
is not probable that an outflow of resources will be required to settle
the obligation. A contingent liability also arises in extremely rare
cases where there is a liability that cannot be recognised because it
cannot be measured reliably. The Company does not recognise a
contingent liability but discloses its existence in the financial
statements.
s) Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and cash/ cheques/ drafts on hand and short-term
investments with an original maturity of three months or less.
Mar 31, 2012
A. Change in accounting policies
Presentation and disclosure of financial statements During the year
March 31, 2012, the revised Schedule VI notified under the Act, has
become applicable to the Company, for preparation and presentation of
its financial statements. The adoption of revised Schedule VI does not
impact recognition and measurement principles followed for preparation
of financial statements. However, it has significant impact on
presentation and disclosures made in the financial statements. The
Company has also reclassified the previous year figures in accordance
with the requirements applicable in the current year.
b. Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make judgments, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent liabilities, at the end of
reporting period. Although these estimates are based upon 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 assets
Fixed assets are stated at cost, net of accumulated depreciation and
accumulated impairment losses, if any. The cost comprises purchase
price, borrowing costs if capitalisation criteria are met and directly
attributable cost of bringing the asset to its working condition for
the intended use. Any trade discounts and rebates are deducted in
arriving at the purchase price.
Subsequent expenditure related to an item of 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 repairs and
maintenance expenditure and cost of replacing parts, are charged to the
statement of profit and loss for the period during which such expenses
are incurred.
Gains or losses arising from de-recognition of fixed assets 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.
d. Depreciation on tangible assets
Depreciation on fixed assets is calculated on a straight-line basis
using the rates arrived at based on the useful lives estimated by the
management, or those prescribed under the Schedule XIV to the Act,
whichever is higher. The Company has used the following rates to
provide depreciation on its fixed assets.
e. Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortisation and accumulated
impairment losses, if any.
Software is amortised based on the useful life of 6 years on a straight
line basis as estimated by the management.
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.
f. Impairment of tangible and intangible assets
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Company
estimates the asset's recoverable amount. An asset's recoverable amount
is the higher of an asset's or cash-generating unit's (CGU) net selling
price and its value in use. The recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. In determining net
selling price, recent market transactions are taken into account, if
available. If no such transactions can be identified, an appropriate
valuation model is used.
The Company bases its impairment calculation on detailed budgets and
forecast calculations which are prepared separately for each of the
Company's cash-generating units to which the individual assets are
allocated. These budgets and forecast calculations are generally
covering a period of five years. For longer periods, a long term growth
rate is calculated and applied to project future cash flows after the
fifth year.
Impairment losses of continuing operations, including impairment on
inventories, are recognised in the statement of profit and loss, except
for previously revalued tangible fixed assets, where the revaluation
was taken to revaluation reserve. In this case, the impairment is also
recognised in the revaluation reserve up to the amount of any previous
revaluation.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
An assessment is made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer
exist or may have decreased. If such indication exists, the Company
estimates the asset's or cash-generating unit'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.
g. Leases
Where the Company is lessee
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to the ownership of the leased
item, are capitalised at the inception of the lease term at the lower
of the fair value of the leased property and present value of the
minimum lease payments. Lease payments are apportioned between the
finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability.
Finance charges are recognised as finance costs in the statement of
profit and loss. Lease management fees, legal charges and other
initial direct costs of lease are capitalised.
A leased asset is depreciated on a straight-line basis over the useful
life of the asset or the useful life envisaged in Schedule XIV to the
Act, whichever is lower. However, if there is no reasonable certainty
that the Company will obtain the ownership by the end of the lease
term, the capitalised asset is depreciated on a straight-line basis
over the shorter of the estimated useful life of the asset, the lease
term or the useful life envisaged in Schedule XIV to the Act.
Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
h. Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalised as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
i. Investments
Investments, which are readily realisable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties. If an investment is acquired, or
partly acquired, by the issue of shares or other securities, the
acquisition cost is the fair value of the securities issued. If an
investment is acquired in exchange for another asset, the acquisition
is determined by reference to the fair value of the asset given up or
by reference to the fair value of the investment acquired, whichever is
more clearly evident.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis. Long-
term investments are carried at cost. However, provision for diminution
in value is made to recognise a decline other than temporary in the
value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
j. Inventories
Raw materials, components, stores and spares are valued at lower of
cost and net realisable value. However, materials and other items held
for use in the production of inventories are not written down below
cost if the finished products in which they will be incorporated are
expected to be sold at or above cost. Cost of raw materials, components
and stores and spares is determined on a weighted average basis.
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
Costs incurred that relate to future activities on the contract are
recognised as "Contract work in progress".
Contract work in progress comprising construction costs and other
directly attributable overheads are valued at cost.
k. Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognised:
Revenue from construction activity
Construction revenue and costs are recognised by reference to the stage
of completion of the construction activity at the balance sheet date,
as measured by the proportion that contract costs incurred for work
performed to date bear to the estimated total contract costs. Where
the outcome of the construction cannot be estimated reliably, revenue
is recognised to the extent of the construction costs incurred if it is
probable that they will be recoverable. In the case of contracts with
defined milestones and assigned price for each milestone, it recognises
revenue on transfer of significant risks and rewards which coincides
with achievement of milestone and its acceptance by its customer.
Provision is made for all losses incurred to the balance sheet date.
Any further losses that are foreseen in bringing contracts to
completion are also recognised. Variations in contract work, claims and
incentive payments are recognised to the extent that it is probable
that they will result in revenue and they are capable of being reliably
measured. Contract revenue earned in excess of billing has been
reflected as unbilled revenue and billing in excess of contract revenue
has been reflected as unearned revenue.
Dividends
Dividend income is recognised when the Company's right to receive
dividend is established by the reporting date.
Income from management/ technical services
Income from management/ technical services is recognised as per the
terms of the agreement on the basis of services rendered.
Interest
Interest on investments and bank deposits are recognised on a time
proportion basis taking into account the amounts invested and the rate
applicable.
l. Foreign currency translation
Foreign currency transactions and balances
(i) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
(ii) Conversion
Foreign currency monetary items are translated using the exchange rate
prevailing at the reporting date. Non-monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
(iii) Exchange differences
From accounting periods commencing on or after December 7, 2006, the
Company accounts for exchange differences arising on translation/
settlement of foreign currency monetary items as below:
1. Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalised and
depreciated over the remaining useful life of the asset. For this
purpose, 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.
2. Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortised over the remaining life
of the concerned monetary item but not beyond accounting period ending
on or before March 31, 2020.
3. All other exchange differences are recognised as income or as
expenses in the period in which they arise.
m. Retirement and other employee benefits
(i) Defined contribution plans
Retirement benefit in the form of provident fund, superannuation fund
and pension fund is a defined contribution scheme. The contributions to
these respective funds are charged to the statement of profit and loss
for the year when the contributions are due. The Company has no
obligation, other than the monthly contribution payable to these
respective funds.
(ii) Defined benefit plan
The Company has gratuity liability which is a defined benefit plan for
its employees. The cost of providing gratuity under the plan is
determined on the basis of actuarial valuation at each year-end.
Actuarial valuation is carried out using the projected unit credit
method. Actuarial gain and loss of plan is recognised in full in the
period in which they occur in the statement of profit and loss.
(iii) Other long term employee benefits
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
period end. Actuarial gains/ losses are immediately taken to the
statement of profit and loss and are not deferred. The Company presents
the entire leave as a current liability in the balance sheet, since it
does not have an unconditional right to defer its settlement for 12
months after the reporting date.
(iv) Short term employee benefits
Accumulated leave, which is expected to be utilised within the next 12
months, is treated as short-term employee benefit. The Company measures
the expected cost of such absences as the additional amount that it
expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
n. Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they are entitled to participate in dividends relative to a
fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
o. Income taxes
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income tax Act, 1961 enacted in India. The tax
rates and tax laws used to compute the amount are those that are
enacted or substantively enacted, at the reporting date. Current income
tax relating to items recognised directly in equity is recognised in
equity and not in the statement of profit and loss.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date. Deferred income tax
relating to items recognised directly in equity is recognised in equity
and not in the statement of profit and loss.
Deferred tax liabilities are recognised for all taxable timing
differences. Deferred tax assets are recognised for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable
profits.
At each reporting date, the Company re-assesses unrecognised deferred
tax assets. It recognises unrecognised deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
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 taxes
relate to the same taxable entity and the same taxation authority.
Minimum Alternate Tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognises MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the Company recognises MAT
credit as an asset in accordance with the Guidance Note on Accounting
for credit available in respect of MAT under the 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. Segment reporting
Identification of segments
The Company's operating businesses are organised and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statement of the Company as a whole.
q. Shares/ debentures issue expenses and premium redemption
Shares issue expenses incurred are expensed in the year of issue and
debenture/ preference share issue expenses and redemption premium
payable on preference shares/ debentures are expensed over the term of
preference shares/ debentures. These are adjusted to the securities
premium account as permitted by Section 78(2) of the Act to the extent
of balance available in such securities premium account.
r. Provisions
A provision is recognised when the Company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting date and
adjusted to reflect the current best estimates.
Where the Company expects some or all of a provision to be reimbursed,
for example under an insurance contract, the reimbursement is
recognised as a separate asset but only when the reimbursement is
virtually certain. The expense relating to any provision is presented
in the statement of profit and loss net of any reimbursement.
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 recognised
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognised because it cannot be measured reliably. The Company does not
recognise a contingent liability but discloses its existence in the
financial statements.
t. Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and cash/ cheques/ drafts on hand and short- term
investments with an original maturity of three months or less.
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
as 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 management's best
knowledge of current events and actions, actual results could differ
from these estimates.
c. 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) Revenue from construction activity
Construction revenue and costs are recognized by reference to the stage
of completion of the construction activity at the balance sheet date,
as measured by the proportion that contract costs incurred for work
performed to date bear to the estimated total contract costs. Where the
outcome of the construction cannot be estimated reliably, revenue is
recognized to the extent of the construction costs incurred if it is
probable that they will be recoverable. In the case of contracts with
defined milestones and assigned price for each milestone, it recognizes
revenue on transfer of significant risks and rewards which coincides
with achievement of milestone and its acceptance by its customer.
Provision is made for all losses incurred to the balance sheet date.
Any further losses that are foreseen in bringing contracts to
completion are also recognised. 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.
(ii) Dividends
Revenue is recognized when the shareholders' right to receive payment
is established by the balance sheet date. Dividend from subsidiaries
is recognized even if same are declared after the balance sheet date
but pertains to period on or before the date of balance sheet as per
the requirements of schedule VI of the Companies Act, 1956.
(iii) Income from management/ technical services
Income from management/technical services is recognized as per the
terms of the agreement on the basis of services rendered.
(iv) Interest
Interest on investment and bank deposits are recognized on a time
proportion basis taking into account the amounts invested and the rate
applicable.
(v) Income from mutual funds
Profit/ loss on sale of mutual funds are recognized when the title to
mutual funds ceases to exist.
d. Fixed assets
Fixed assets are stated at cost (or revalued amounts, as the case may
be), less accumulated depreciation and impairment losses if any. Cost
comprises of purchase price and any attributable cost of bringing the
asset to its working condition for its intended use. Borrowing costs
relating to acquisition of fixed assets which takes 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.
e. Depreciation
Depreciation is provided on straight line method at the rates specified
under Schedule XIV of the Companies Act, 1956 which is estimated by the
management to be the estimated useful lives of the assets. Assets
individually costing less than Rs. 5,000 are fully depreciated in the
year of acquisition.
f. Impairment of assets
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 assessments of the time value of money and risks
specific to the asset.
After impairment, depreciation is provided on the revised carrying
amount of the assets over its remaining useful life.
g. Leases
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to the ownership of the lease
item, are capitalised 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 directly against
income. Lease management fees, legal charges and other initial direct
cost are capitalised.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalised leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight-line basis over the lease
term.
h. 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 computed
category wise. Long-term investments are carried at cost. However,
provision for diminution in value is made to recognise a decline other
than temporary in the value of the investments.
i. Inventories
Inventories of raw materials are valued at lower of cost and net
realisable value. Cost of raw materials is determined on a weighted
average basis and includes all applicable costs incurred in bringing
goods to their present location and condition.
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
Costs incurred that relate to future activities on the contract are
recognised as "Contract work in progress".
Contract work-in-progress comprising construction costs and other
directly attributable overheads are valued at cost.
j. Employee Benefits
(i) Defined contribution plan
Contribution paid/payable to defined contribution plans comprising of
provident fund and pension fund are recognised as expenses during the
period in which the employees perform the services that the payments
cover.
The Company also has a defined contribution superannuation plan (under
a scheme of Life Insurance Corporation of India) covering all its
employees and contributions in respect of such scheme are charged
during the period in which the employees perform the service that the
payments cover.
The Company makes monthly contributions and has no further obligation
under the plan beyond its contribution.
(ii) Defined benefit plan
Gratuity for employees is covered under a scheme of Life Insurance
Corporation of India and contributions in respect of such scheme are
recognized in the Profit and Loss Account. The liability as at the
Balance Sheet date is provided for based on the actuarial valuation,
based on Projected Unit Credit Method at the balance sheet date,
carried out by an independent actuary. Actuarial gains and losses
comprise experience adjustments and the effect of changes in the
actuarial assumptions and are recognized immediately in the Profit and
Loss Account as income or expense.
(iii) Other long term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related services are recognised as a liability at the present value of
the defined benefit obligation at the balance sheet date based on
actuarial valuation method of Projected Unit Credit carried out at each
balance sheet date. Actuarial gains and losses are recognized
immediately in the Profit and Loss Account as income or expense.
(iv) Short term employee benefits
Short term employee benefits including compensated absences as at the
balance sheet date are recognised as an expense as per the Company's
schemes based on the expected obligation on an undiscounted basis.
k. Foreign currency transactions
(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; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
(iii) Exchange differences
Exchange differences arising on a monetary item that, in substance,
form part of the company's net investment in a non-integral foreign
operating is accumulated in a foreign currency translation reserve in
the financial statements until the disposal of the net investment, at
which time they are recognized as income or as expenses.
Exchange differences, in respect of accounting periods commencing on or
after 7th December, 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 enterprise's 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, 2012.
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.
l. Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average numbers of equity shares outstanding during the period are
adjusted for events of bonus issue; bonus element in a rights issue to
existing shareholders; share split; and reverse share split
(consolidation of shares).
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.
m. Income taxes
Tax expense comprise 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 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.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. 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 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.
At each balance sheet date the Company re-assesses unrecognized
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes-down the carrying amount of a deferred
tax asset to the extent that is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that sufficient future taxable income will be available.
MAT credit is recognized 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.
n. Segment reporting policies Identification of segments:
The Company's operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Allocation of common costs:
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items
Includes general corporate income and expense items which are not
allocated to any business segment.
Segment policies:
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
0. Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event; 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 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.
p. Cash and cash equivalents
Cash and cash equivalents for the purpose of cash flow statement
comprise cash at bank and in hand and short- term investments with an
original maturity of three months or less.
q. Shares/ debentures issue expenses and premium redemption
Shares/ debentures issue expenses incurred are expensed in the year of
issue and redemption premium payable on preference shares/ debentures
are expensed over the term of preference shares/ debenture. Both are
adjusted to the securities premium account as permitted by Section
78(2) of the Companies Act, 1956.
r. 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 respective asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
of funds.
Mar 31, 2010
A. 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 managementÃs best
knowledge of current events and actions, actual results could differ
from these estimates.
b. 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.
Construction revenue and costs are recognized by reference to the stage
of completion of the construction activity at the Balance Sheet date,
as measured by the proportion that contract costs incurred for work
performed to date bear to the estimated total contract costs. Where the
outcome of the construction cannot be estimated reliably, revenue is
recognized to the extent of the construction costs incurred if it is
probable that they will be recoverable. In the case of contracts with
defined milestones and assigned price for each milestone, it recognizes
revenue on transfer of significant risks and rewards which coincides
with achievement of milestone and its acceptance by its customer.
Provision is made for all losses incurred to the Balance Sheet date.
Any further losses that are foreseen in bringing contracts to
completion are also recognised.
Dividend income on investments is accounted for when the right to
receive the payment is established by the Balance Sheet date. Dividends
from subsidiaries are recognized even if same are declared after the
Balance Sheet date but pertain to period on or before the date of
Balance Sheet as per the requirement of schedule VI of the Companies
Act, 1956.
Income from management/technical services is recognized as per the
terms of the agreement on the basis of services rendered.
Interest on investments and bank deposits are recognised on a time
proportion basis taking into account the amounts invested and the rate
of interest.
c. Fixed Assets
Fixed Assets are stated at cost of acquisition, less accumulated
depreciation and impairment losses, if any. Cost comprises of purchase
price and freight, duties, levies and all other incidentals
attributable to bringing the asset to its working condition for its
intended use.
Assets under installation or under construction and the related
advances as at the Balance Sheet date are shown as capital work in
progress.
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets till the period such assets are ready to be put to use.
A qualifying asset is one that takes substantial period of time to get
ready for its intended use or sale. Other borrowing costs not
attributable to the acquisition of any capital asset or investments are
recognized as expenses in the period in which they are incurred.
d. Leases
Finance leases, 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 directly against income. Lease
management fees, legal charges and other initial direct costs are
capitalised.
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.
e. Depreciation
Depreciation is provided on straight line method at the rates specified
under Schedule XIV to the Act, which is estimated by the management to
be the estimated useful lives of the assets. Assets individually
costing less than Rs. 5,000 are fully depreciated in the year of
acquisition.
f. Impairment of Assets
All the fixed assets are assessed for any indication of impairment at
the end of each financial year based on internal and external factors.
On such indication, the impairment (being the excess of carrying value
over the recoverable value of the asset) is charged to the profit and
loss account in the respective financial year. Recoverable amount is
higher of the net selling price of an asset and its 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.
g. Investments
Investments that are readily realisable 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. Long-term
investments are carried at cost less provision made to recognize any
decline, other than temporary, in the value of such investments.
Current investments are valued at cost or fair value whichever is
lower. Cost of acquisition is inclusive of expenditure incidental to
acquisition.
h. Inventories
Inventories of raw materials are valued at lower of cost and net
realizable value. Cost of raw materials is determined on a weighted
average basis and includes all applicable costs incurred in bringing
goods to their present location and condition.
Costs incurred that relate to future activities on the contract are
recognised as ÃContract work in progressÃ.
Contract work-in-progress comprising construction costs and other
directly attributable overheads are valued at cost.
i. Employee Benefits
a) Defined contribution plans
Contributions paid/payable to defined contribution plans comprising of
provident fund and pension fund are recognised as expenses during the
period in which the employees perform the services that the payments
cover.
The Company also has a defined contribution superannuation plan (under
a scheme of Life Insurance Corporation of India) covering all its
employees and contributions in respect of such scheme are charged
during the period in which the employees perform the services that the
payments cover.
The Company makes monthly contributions and has no further obligations
under the plan beyond its contributions.
b) Defined benefit plan
Gratuity for employees is covered under a scheme of Life Insurance
Corporation of India and contributions in respect of such scheme are
recognized in the Profit and Loss account. The liability as at the
Balance Sheet date is provided for based on the actuarial valuation,
based on Projected Unit Credit Method at the Balance Sheet date,
carried out by an independent actuary. Actuarial gains and losses
comprise experience adjustments and the effect of changes in the
actuarial assumptions and are recognized immediately in the Profit and
Loss account as income or expense.
c) Other long term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related services are recognised as a liability at the present value of
the defined benefit obligation at the Balance Sheet date based on
actuarial valuation method of Projected Unit Credit carried out at each
Balance Sheet date. Actuarial gains and losses are recognized
immediately in the Profit and Loss Account as income or expense.
d) Short term employee benefits
Short term employee benefits including compensated absences as at the
Balance Sheet date are recognized as an expense as per the CompanyÃs
schemes based on the expected obligation on an undiscounted basis.
j. Foreign Currency Transactions
All foreign currency transactions are accounted for at the exchange
rates prevailing on the date of such transactions.
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; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange differences 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 ÃForeign Currency Monetary Item
Translation Difference Accountà in the enterpriseÃs financial
statements and amortized over the balance period of such long-term
asset/liability but not beyond accounting period ending on or before
31st March, 2011.
All other monetary assets and liabilities denominated in foreign
currency are restated at the closing rates at the year end and all
exchange gains/losses arising there from are adjusted to the Profit and
Loss account except, those covered by forward contracted rates, where
the premium or discount arising at the inception of such forward
exchange contract is amortized as expense or income over the life of
the contract.
k. Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average numbers of equity shares outstanding during the period are
adjusted for events of bonus issue; bonus element in a rights issue to
existing shareholders; share split; and reverse share split
(consolidation of shares).
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.
l. Taxes On Income
Tax expense comprises of current and deferred tax. Current tax is
determined based on the amount of tax payable in respect of taxable
income for the year in accordance with the Income Tax Act, 1961 enacted
in India. Deferred tax is recognized on timing differences, being the
difference between the taxable income and the accounting income that
originate in one year and are capable of reversal in one or more
subsequent years.
Deferred tax assets and liabilities are computed on the timing
differences applying the tax rates and tax laws that have been enacted
or substantively enacted by the Balance Sheet date. 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 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 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 realized against future taxable profits.
At each Balance Sheet date the Company re-assesses unrecognized
deferred tax assets. It recognizes unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each Balance
Sheet date. The Company writes-down the carrying amount of a 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.
MAT credit is recognized 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 the
Company will pay normal income tax during the specified period.
m. Segment Reporting Policies
Identification of segments:
The CompanyÃs operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Allocation of common costs:
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Segment Policies:
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
n. Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event; 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 estimate required to
settle the obligation at the Balance Sheet date. These are reviewed at
each Balance Sheet date and adjusted to refect the current best
estimates.
o. Cash and Cash Equivalents
Cash for the purposes of cash flow statement comprise cash in hand and
at Bank (including deposits) and cash equivalents comprise of short
term highly liquid investments that are readily convertible into known
amounts of cash and which are subject to insignificant risk of changes
in value.
p. Shares/ Debentures Issue Expenses and Premium on Redemption
Shares/ Debentures issue expenses incurred are expensed in the year of
issue and redemption premium payable on preference shares/ debentures,
expensed over the term of preference shares/ debentures. Both are
adjusted to the Securities Premium Account as permitted by Section
78(2) of the Companies Act, 1956.
q. Contingencies
Liabilities which are material and whose future outcome cannot be
ascertained with reasonable certainty are treated as contingent and to
the extent not provided for, are disclosed by way of notes on the
accounts.
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article