Mar 31, 2018
A. Significant accounting policies
A.1 Statement of compliance
The separate financial statements have been prepared in accordance with Indian Accounting Standards (âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended.
A.2 Basis of preparation and presentation
The financial statements have been prepared on a historical cost basis, except for the following asset and liabilities which have been measured at fair value:
- Derivative financial instruments,
- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments), Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. 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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on this basis.
The Financial statements have been prepared on going concern basis considering the Companyâs ability to raise requisite finance/generate cash flows from strategic initiatives in future to meet its obligations, including finance support to its subsidiary companies.
The principal accounting policies are set out below.
A.3 Investments in subsidiaries, associates and joint ventures
Investment in subsidiaries, associates and joint ventures are measured at cost as per Ind AS 27.
If there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the net investment in a subsidiary, associate or a joint venture (a âloss eventâ) and that loss event (or events) has an impact on the estimated future cash flows from the net investment that can be reliably estimated, then it is necessary to recognize impairment loss with respect to the Companyâs investment in a subsidiary, associate or a joint venture.
When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with Ind AS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognized is reduced from the carrying amount of the investment and recognized in the profit or loss. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases but the increase is restricted to the amounts that would arise had no impairment loss been recognized in previous years.
Investments in subsidiaries, associates and joint venture are an integral part of business of the Company in their surface transportation business.
The Company regularly evaluates the investment portfolio and as part of monetization plan decides to dispose/ sell the investments. Any gain arising out of sale of investments of subsidiary, associates, joint venture are recognized to Statement of Profit and Loss and included as part of Other Operating Income.
In case of losses, it is recognized as other expenses in the Statement of Profit and Loss.
A.4 Fair value measurement
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing 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.
External valuers are involved for valuation of significant assets, such as properties and significant liabilities, such as contingent consideration.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
- Disclosures for valuation methods, significant estimates and assumptions (note 1.C and 32) Quantitative disclosures of fair value measurement hierarchy (note 32)
- Investment property under development (note 3)
- Financial instruments (including those carried at amortised cost) (note 4,5,6,11,12,16,17,20,32)
A.5 Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (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 asset and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Non-current asset or disposal group classified as held for sale are measured at the lower of their carrying amount and fair value and no depreciation is charged after such classification.
A.6 Revenue recognition
A.6.1 Revenue from Advisory, design, engineering and management services
The Companyâs service offerings include advisory and management services, supervisory services (including as lendersâ engineers), operation and maintenance services, toll collection services for toll road projects and rendering assistance to applicant for toll road concessions with the bidding process.
Revenue is recognized when it is realized or realizable and earned. Revenue is considered as realized or realizable and earned when it has persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured
Advisory, Design and Engineering fees are billed as services are rendered, however they are due for payment one year from the date of billing. Disclosure with respect to such Trade Receivables has been made considering above policy.
Revenue in respect of arrangements made for rendering services is recognized over the contractual term of the arrangement. In respect of arrangements, which provide for an upfront payment followed by additional payments as certain conditions are met (milestone payments), the amount of revenue recognized is based on the services delivered in the period as stated in the contract. In respect of arrangements where fees for services rendered are success based (contingent fees), revenue is recognized only when the factor(s) on which the contingent fees is based, actually occur and the collectability is reasonably assured Revenue from development projects under fixed -price contracts, where there is no uncertainty as to measurement or collectability of consideration is recognized based on the milestones reached under the contracts.
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. When calculating the effective interest rate, the group estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension) but does not consider the expected credit losses. Interest income is included in other income in the statement of profit and loss.
Dividend, other than attributable to the period prior to acquisition of investment, is recognized as income when the unconditional right to receive the payment is established.
A.6.2 Revenue from construction contracts
The Company recognizes and measures revenue, costs and margin for providing construction services during the period of construction of the infrastructure in accordance with Ind AS 11 âConstruction Contractsâ.
When the outcome of a construction contract can be estimated reliably and it is probable that it will be profitable, contract revenue and contract costs associated with the construction contract are recognized as revenue and expenses respectively by reference to the percentage of completion of the contract activity at the reporting date. The percentage of completion of a contract is determined considering the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs.
For the purposes of recognizing revenue, contract revenue comprises the initial amount of revenue agreed in the contract, the variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and they are capable of being reliably measured.
The percentage of completion method is applied on a cumulative basis in each accounting period to the current estimates of contract revenue and contract costs. The effect of a change in the estimate of contract revenue or contract costs, or the effect of a change in the estimate of the outcome of a contract is accounted for as a change in accounting estimate and the effect of which are recognized in the Statement of Profit and Loss in the period in which the change is made and in subsequent periods.
When the outcome of a construction contract cannot be estimated reliably, revenue is recognized only to the extent of contract costs incurred of which recovery is probable and the related contract costs are recognized as an expense in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense in the Statement of Profit and Loss in the period in which such probability occurs.
Any excess revenue recognized in accordance with the stage of completion of the project, in comparison to the amounts billed to the clients in accordance with the milestones completed as per the respective development agreements, is carried forward as âUnearned Revenueâ, as the case may be.
A.7 Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
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 lessee
1. Assets held under finance leases are initially recognized as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.
2. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognized immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Companyâs general policy on borrowing costs (see note B.9). Contingent rentals are recognized as expenses in the periods in which they are incurred.
3. 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.
4. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
Company as lessor
1. Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
2. Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Companyâs net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
A.8 Foreign currencies
The Companyâs financial statements are presented in INR, which is also the Companyâs functional currency.
In preparing the financial statements of Company, transactions in currencies other than the Companyâs functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognized in OCI or profit or loss are also recognized in OCI or profit or loss, respectively).
The Company had exercised the option of amortizing / capitalizing the exchange differences arising on long-term foreign currency monetary items as given under Ministry of Corporate Affairs (MCA) Notification No. G.S.R 914(E) dated December 29, 2011.
Exchange differences on monetary items are recognized in profit or loss in the period in which they arise except for:
- exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;
- Exchange differences on transactions entered into in order to hedge certain foreign currency risks (see note B.21 below for hedging accounting policies); these are recognised in OCI until the net investment is disposed of, at which time, the cumulative amount is reclassified to profit or loss.
A.9 Borrowing costs
Borrowing costs are recognised in the period to which they relate, regardless of how the funds have been utilised, except where it relates to the financing of construction of development of assets requiring a substantial period of time to prepare for their intended future use. Interest is capitalised up to the date when the asset is ready for its intended use. The amount of interest capitalised for the period is determined by applying the interest rate applicable to appropriate borrowings outstanding during the period to the average amount of accumulated expenditure for the assets during the period. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are recognized in statement of profit and loss in the period in which they are incurred.
A.10 Employee benefits
A.10.1 Retirement benefit costs and termination benefits
Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions. The Company has no obligation, other than the contribution payable to the provident fund, superannuation fund.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Re- measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service costs are recognised in profit or loss on the earlier of:
The date of the plan amendment or curtailment, and
The date that the Company recognises related restructuring costs
Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
Defined benefit costs are categorized as follows:
- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and
- net interest expense or income; and
- re-measurement
The Company presents the first two components of defined benefit costs in profit or loss in the line item âEmployee benefits expenseâ. Curtailment gains and losses are accounted for as past service costs.
The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.
The retirement benefit obligation recognized in the balance sheet represents the actual deficit or surplus in the Companyâs defined benefit plans.
Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognizes any related restructuring costs.
A.10.2 Short-term and other long-term employee benefits
A liability is recognized for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in in exchange for that service.
Liabilities recognized in respect of shortterm employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognized in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
A.11 Taxation
A.11.1 Current tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. Taxable profit differs from âprofit before taxâ as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Companyâs current tax is calculated using tax rates 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 return with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
A.11.2 Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets (including unused tax credits such as MAT credit and unused tax losses such as carried forward business loss and unabsorbed depreciation) are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
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.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of to recover or settle the carrying amount of its assets and liabilities.
A.12 Property, plant and equipment
Property, plant and equipment acquired by the Company are reported at acquisition cost, with deductions for accumulated depreciation and impairment losses, if any.
The acquisition cost includes the purchase price (excluding refundable taxes) and expenses, such as delivery and handling costs, installation, legal services and consultancy services, directly attributable to bringing the asset to the site and in working condition for its intended use.
Where the construction or development of any asset requiring a substantial period of time to set up for its intended use is funded by borrowings, the corresponding borrowing costs are capitalized up to the date when the asset is ready for its intended use.
All assets are depreciated on a Straight Line Method (SLM) of Depreciation, over the useful life of assets which are estimated by the management and are in line with Schedule II of the Companies Act, 2013 other than assets specified in para below
Following assets are depreciated over a useful life other than the life prescribed under Schedule II of the Companies Act, 2013 based on internal technical evaluation, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes etc.:
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying of the asset and is recognized in profit or loss.
The Company has elected to continue with the carrying value of all of its plant and equipment and intangible assets recognized as of April 1, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
A.13 Investment property under development:
Investment property under development is measured at cost, including transaction costs and are stated at cost less accumulated impairment loss, if any.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes.
Fair values are determined based on an annual evaluation performed by an accredited external independent valuer applying a valuation model recommended by the Royal Institute of Chartered Surveyors.
Investment property is derecognised either when it is being disposed of or when it is permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition.
A.14 Intangible assets
Intangible assets comprise of software and amounts paid for acquisition of commercial rights under an âOperation and Maintenanceâ agreement for a toll road project and are depreciated as follow:
Intangible assets are reported at acquisition cost with deductions for accumulated amortisation and impairment losses, if any. 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.
Acquired intangible assets are reported separately from goodwill if they fulfil the criteria for qualifying as an asset, implying they can be separated or they are based on contractual or other legal rights and that their market value can be established in a reliable manner.
An impairment test of such intangible assets is conducted annually or more often if there is an indication of a decrease in value. The impairment loss, if any, is reported in the Statement of Profit and Loss.
Intangible assets are amortised on a âstraight lineâ basis over their estimated useful lives. The estimated useful life of software is four years. The amount paid for acquisition of the rights under the âOperations and Maintenanceâ agreement is amortised over the minimum balance period (as at the time of acquisition) of the concession agreement relating to the corresponding toll road project.
A.15 Impairment of Property, plant and equipment and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its Property, plant and equipment and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest Company of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, or whenever there is an indication that the asset may be impaired.
In assessing value in use, the estimated future cash flows are discounted to their present value using appropriate discount rate.
Recoverable amount is the higher of fair value less costs of disposal and value in use.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the assetâs recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss.
A.16 Inventories
Stores and spares
Inventories are stated at the cost and net realizable value. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Costs of stores and spares are determined on a first-in- first-out basis.
A.17 Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company 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.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
A.17.1 Onerous contracts
Present obligations arising under onerous contracts are recognized and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.
A.18 Financial instruments
Financial assets and financial liabilities are recognized when a company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured 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 or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss (âFVTPL) are recognized immediately in the statement of profit and loss.
A.18.1 Financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets.
A.18.2 Classifications of financial assets - debt instruments
Debt instruments that meet the following conditions are subsequently measured at amortized cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):
- the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows;
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss.
A.18.3 Amortized cost and Effective interest method
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognized in profit or loss and is included in the âOther incomeâ line item.
A.18.4 Financial assets at FVTPL
Investments in equity instruments (other than group) are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in FVOCI for equity instruments which are not held for trading.
Debt instruments that do not meet the amortized cost or FVOCI criteria are measured at FVTPL. In addition, debt instruments that meet the amortized cost or FVOCI criteria but are designated as at FVTPL are measured at FVTPL.
A debt instrument that meets the amortized cost or FVTOCI criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases. The Company has not designated any debt instrument as at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognized in profit or loss. The net gain or loss recognized in profit or loss is included in the âOther incomeâ line item.
A.18.5 Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost
b) Lease receivables under Ind AS 17
c) Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18
d) Loan commitments which are not measured as at FVTPL
e) Financial guarantee contracts which are not measured as at FVTPL
ECL is the difference between all contractual cash flows that are due to the group in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR.
The Company has followed simplified approach for recognition of ECL. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument.
The Company measures the loss allowance on the basis of estimated realization date for receivables and loans by considering the cash flow model of the respective project SPVâs which in the view of the management is the most realistic and appropriate way for estimating the realization date of the receivables with respect to the project SPVâs. In respect of other than project SPVâs, the management has carried out its internal assessment procedures and accordingly the realization date has been estimated. When estimating the cash flows, the Company is required to consider all contractual terms of the financial instrument (including prepayment, extension, call and similar options) over the expected life of the financial instrument.
ECL allowance (or reversal) recognized during the period is recognized as income/ expense in the statement of profit and loss. This amount is reflected under the head other income/other expenses in the statement of profit and loss.
A.18.6 Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Companyâs senior management determines change in the business model as a result of external or internal changes which are significant to the Companyâs operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations.
If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
A.18.7 Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
A.18.8 De-recognition of financial assets
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. 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 asset 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 collateralized borrowing for the proceeds received.
On de-recognition of a financial asset in its entirety the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset.
On de-recognition of a financial asset other than in its entirety (e.g., when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts.
A.18.9 Foreign Exchange Gain and Losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
- For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in profit or loss except for those which are designated as hedging instruments in a hedging relationship.
- Changes in the carrying amount of investments in equity instruments at FVOCI relating to changes in foreign currency rates are recognised in other comprehensive income.
A.18.10 Modification of Cash Flows of financial assets and revision in estimates of Cash flows
When the contractual cash flows of a financial asset are renegotiated or otherwise modified and the renegotiation or modification does not result in the de-recognition of that financial asset in accordance within AS 109, the Company recalculates the gross carrying amount of the financial asset and recognizes a modification gain or loss in profit or loss. The gross carrying amount of the financial asset is recalculated as the present value of the renegotiated or modified contractual cash flows that are discounted at the financial assetâs original effective interest rate. Any costs or fees incurred are adjusted to the carrying amount of the modified financial asset and are amortized over the remaining term of the modified financial asset.
If the Company revises its estimates of payments or receipts (excluding modifications and changes in estimates of expected credit losses), it adjusts the gross carrying amount of the financial asset or amortized cost of a financial liability to reflect actual and revised estimated contractual cash flows. The Company recalculates the gross carrying amount of the financial asset or amortized cost of the financial liability as the present value of the estimated future contractual cash flows that are discounted at the financial instrumentâs original effective interest rate. The adjustment is recognized in profit or loss as income or expense.
A.19 Financial liabilities and equity instruments-
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
A.19.1 Classifications as debt or equity
Debt and equity instruments issued by a Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
A.19.2 Compound instruments
The components of compound instruments are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. A conversion option that will be settled by issue of fixed number of the Companyâs own equity instruments in exchange of a fixed amount of cash or another financial asset is an equity instrument.
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible instruments. This amount is recognized as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion or at the instrumentâs maturity date.
The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until the conversion option is exercised, in which case, the balance recognized in equity will be transferred to other component of equity. When the conversion option remains unexercised at the maturity date of the convertible note, the balance recognized in equity will be transferred to retained earnings. No gain or loss is recognized in profit or loss upon conversion or expiration of the conversion option.
Transaction costs that relate to the issue of the convertible notes are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognized directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component and are amortized over the lives of the convertible notes using the effective interest method.
A.19.3 Financial liabilities
All financial liabilities are subsequently measured at amortized cost using the effective interest method or at FVTPL. However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
A.19.3.1 Financial liabilities subsequently measured at amortized cost Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method. Interest expense that is not capitalized as part of costs of an asset is included in the âFinance costsâ line item.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
A.19.3.2 Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms
Financial guarantee contracts issued by the Company are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109;and
- the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS18.
A.19.3.3 Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortized cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortized cost of the instruments and are recognized in âOther income / Other expensesâ in the line-item âNet foreign exchange gains/(losses).
A.19.3.4 Derecognition of financial liabilities
The Company derecognizes financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or have expired.
An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.
A.19.3.5 Commitments to provide a loan at a below-market interest rate
Commitments to provide a loan at a below-market interest rate are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
- the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 18.
A.20 Derivative financial instruments
The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts, interest rate swaps and cross currency swaps. Further details of derivative financial instruments are disclosed in Note 32.
Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.
A.20.1 Embedded derivatives
Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of Ind AS 109 are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at FVTPL.
A.21 Hedge accounting
The Company designates certain hedging instruments, which include derivatives, embedded derivatives and non- derivatives in respect of foreign currency risk, as either fair value hedges, cash flow hedges, or hedges of net investments in foreign operations. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.
At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.
Note 32 sets out details of the fair values of the derivative instruments used for hedging purposes.
A.21.1 Cash flow hedges
The effective portion of changes in the fair value of the designated portion of derivatives that qualify as cash flow hedges is recognized in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss, and is included in the âOther gains and lossesâ line item.
Amounts previously recognized in other comprehensive income and accumulated in equity relating to effective portion as described above are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognized hedged item. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, such gains and losses are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss recognized in other comprehensive income and accumulated in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.
A.22 Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Companyâs cash management.
Mar 31, 2017
1. General Information & Significant Accounting Policies
A. General information
IL&FS Transportation Networks Limited, the Company is a public limited company incorporated in India. Its parent and ultimate holding company is Infrastructure Leasing &Financial Services Limited ("IL&FS")
The addresses of its registered office and principal place of business are The IL&FS Financial Center, Plot C-22, ''G'' Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ITNL is a developer, operator and facilitator of surface transportation infrastructure projects, taking projects from conceptualization through commissioning to operations and maintenance under public to private partnership on build-operate transfer ("BOT") basis in India
B. Significant accounting policies
B.1 Statement of compliance
The separate financial statements have been prepared in accordance with Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended
Upto the year ended March 31, 2016, the Company prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP) as amended.These are Company''s first Ind AS financial statements. The date of transition to Ind AS is April 1, 2015. Refer Note D for the details of first-time adoption exemptions availed by the Company. (refer note 38)
B.2 Basis of preparation and presentation
The financial statements have been prepared on a historical cost basis, except for the following asset and liabilities which have been measured at fair value:
- Derivative financial instruments,
- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments), Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. 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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosure purposes in these financial statements is determined on this basis.
The principal accounting policies are set out below.
B.3 Investments in subsidiaries, associates and joint ventures
Investment in subsidiaries, associates and joint ventures are measured at cost as per Ind AS 27.
If there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the net investment in a subsidiary, associate or a joint venture (a ''loss event'') and that loss event (or events) has an impact on the estimated future cash flows from the net investment that can be reliably estimated, then it is necessary to recognize impairment loss with respect to the Company''s investment in a subsidiary, associate or a joint venture.
When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with Ind AS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognized is reduced from the carrying amount of the investment and recognized in the profit or loss. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases but the increase is restricted to the amounts that would arise had no impairment loss been recognized in previous years.
B.4 Fair value measurement
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing 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.
External valuers are involved for valuation of significant assets, such as properties and significant liabilities, such as contingent consideration.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarizes accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
- Disclosures for valuation methods, significant estimates and assumptions (note 1.C and 30) Quantitative disclosures of fair value measurement hierarchy (note 30)
- Investment property under development (note 3)
- Financial instruments (including those carried at amortized cost) (note 4,5,6,11,12,15,16,19,30)
B.5 Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (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 asset and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Non-current asset or disposal group classified as held for sale are measured at the lower of their carrying amount and fair value and no depreciation is charged after such classification.
B.6 Revenue recognition
B.6.1Revenue from Advisory, design, engineering and management services
The Company''s service offerings include advisory and management services, supervisory services, operation and maintenance services, toll collection services for toll road projects and rendering assistance to applicant for toll road concessions with the bidding process.
Revenue is recognized when it is realized or realizable and earned. Revenue is considered as realized or realizable and earned when it has persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured
Advisory, Design and Engineering fees are billed as services are rendered, however they are due for payment one year from the date of billing. Disclosure with respect to such Trade Receivables has been made considering above policy.
Revenue in respect of arrangements made for rendering services is recognized over the contractual term of the arrangement. In respect of arrangements, which provide for an upfront payment followed by additional payments as certain conditions are met (milestone payments), the amount of revenue recognized is based on the services delivered in the period as stated in the contract. In respect of arrangements where fees for services rendered are success based (contingent fees), revenue is recognized only when the factor(s) on which the contingent fees is based, actually occur and the collectability is reasonably assured. Revenue from development projects under fixed -price contracts, where there is no uncertainty as to measurement or collectability of consideration is recognized based on the milestones reached under the contracts.
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. When calculating the effective interest rate, the group estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension) but does not consider the expected credit losses. Interest income is included in other income in the statement of profit and loss.
Dividend, other than attributable to the period prior to acquisition of investment, is recognized as income when the unconditional right to receive the payment is established.
B.6.2 Revenue from construction contracts
The Company recognizes and measures revenue, costs and margin for providing construction services during the period of construction of the infrastructure in accordance with Ind AS 11 ''Construction Contracts''.
When the outcome of a construction contract can be estimated reliably and it is probable that it will be profitable, contract revenue and contract costs associated with the construction contract are recognized as revenue and expenses respectively by reference to the percentage of completion of the contract activity at the reporting date. The percentage of completion of a contract is determined considering the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs.
For the purposes of recognizing revenue, contract revenue comprises the initial amount of revenue agreed in the contract, the variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and they are capable of being reliably measured.
The percentage of completion method is applied on a cumulative basis in each accounting period to the current estimates of contract revenue and contract costs. The effect of a change in the estimate of contract revenue or contract costs, or the effect of a change in the estimate of the outcome of a contract is accounted for as a change in accounting estimate and the effect of which are recognized in the Statement of Profit and Loss in the period in which the change is made and in subsequent periods.
When the outcome of a construction contract cannot be estimated reliably, revenue is recognized only to the extent of contract costs incurred of which recovery is probable and the related contract costs are recognized as an expense in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense in the Statement of Profit and Loss in the period in which such probability occurs.
Any excess / short revenue recognized in accordance with the stage of completion of the project, in comparison to the amounts billed to the clients in accordance with the milestones completed as per the respective development agreements, is carried forward as "Unearned Revenue" or "Unbilled Revenue" as the case may be
B.7 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.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
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 lessee
1. Assets held under finance leases are initially recognized as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.
2. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognized immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company''s general policy on borrowing costs (see note B.9). Contingent rentals are recognized as expenses in the periods in which they are incurred.
3. 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.
4. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
Company as lessor
1. Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned
2. 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 from 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.
B.8 Foreign currencies
The Company''s financial statements are presented in INR, which is also the Company''s functional currency.
In preparing the financial statements of Company, transactions in currencies other than the Company''s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognized in OCI or profit or loss are also recognized in OCI or profit or loss, respectively).
The Company had exercised the option of amortizing / capitalizing the exchange differences arising on long-term foreign currency monetary items as given under Ministry of Corporate Affairs (MCA) Notification No. G.S.R 914(E) dated December 29, 2011.
Exchange differences on monetary items are recognized in profit or loss in the period in which they arise except for:
- exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;
- Exchange differences on transactions entered into in order to hedge certain foreign currency risks (see note B.21 below for hedging accounting policies); these are recognized in OCI until the net investment is disposed of, at which time, the cumulative amount is reclassified to profit or loss.
B.9 Borrowing costs
Borrowing costs are recognized in the period to which they relate, regardless of how the funds have been utilized, except where it relates to the financing of construction of development of assets requiring a substantial period of time to prepare for their intended future use. Interest is capitalized up to the date when the asset is ready for its intended use. The amount of interest capitalized for the period is determined by applying the interest rate applicable to appropriate borrowings outstanding during the period to the average amount of accumulated expenditure for the assets during the period. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are recognized in statement of profit and loss in the period in which they are incurred.
B.10 Employee benefits
B.10.1 Retirement benefit costs and termination benefits
Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions. The Company has no obligation, other than the contribution payable to the provident fund, superannuation fund
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Re- measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service costs are recognized in profit or loss on the earlier of:
The date of the plan amendment or curtailment, and
The date that the Company recognizes related restructuring costs
Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
Defined benefit costs are categorized as follows:
- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and
- net interest expense or income; and
- re-measurement
The Company presents the first two components of defined benefit costs in profit or loss in the line item ''Employee benefits expense''. Curtailment gains and losses are accounted for as past service costs.
The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.
The retirement benefit obligation recognized in the balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans.
Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognizes any related restructuring costs.
B.10.2 Short-term and other long-term employee benefits
A liability is recognized for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognized in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
B.11 Taxation
B.11.1 Current tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. Taxable profit differs from ''profit before tax'' as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates 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 return with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
B.11.2 Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets (including unused tax credits such as MAT credit and unused tax losses such as carried forward business loss and unabsorbed depreciation) are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
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.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of to recover or settle the carrying amount of its assets and liabilities.
B.12 Property, plant and equipment
Property, plant and equipment acquired by the Company are reported at acquisition cost, with deductions for accumulated depreciation and impairment losses, if any.
The acquisition cost includes the purchase price (excluding refundable taxes) and expenses, such as delivery and handling costs, installation, legal services and consultancy services, directly attributable to bringing the asset to the site and in working condition for its intended use.
Where the construction or development of any asset requiring a substantial period of time to set up for its intended use is funded by borrowings, the corresponding borrowing costs are capitalized up to the date when the asset is ready for its intended use.
All assets are depreciated on a Straight Line Method (SLM) of Depreciation, over the useful life of assets which are estimated by the management and are in line with Schedule II of the Companies Act, 2013 other than assets specified in para below
Following assets are depreciated over a useful life other than the life prescribed under Schedule II of the Companies Act, 2013 based on internal technical evaluation, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes etc.:
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying of the asset and is recognized in profit or loss.
The Company has elected to continue with the carrying value of all of its plant and equipment and intangible assets recognized as of April 1, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
B.13 Investment property under development:
Investment property under development is measured at cost, including transaction costs and are stated at cost less accumulated impairment loss, if any.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer applying a valuation model recommended by the Royal Institute of Chartered Surveyors.
Investment property is derecognized either when it is being disposed of or when it is permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of derecognition.
B.14 Intangible assets
Intangible assets comprise of software and amounts paid for acquisition of commercial rights under an "Operation and Maintenance" agreement for a toll road project and are depreciated as follow:
Intangible assets are reported at acquisition cost with deductions for accumulated amortization and impairment losses, if any. 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.
Acquired intangible assets are reported separately from goodwill if they fulfill the criteria for qualifying as an asset, implying they can be separated or they are based on contractual or other legal rights and that their market value can be established in a reliable manner.
An impairment test of such intangible assets is conducted annually or more often if there is an indication of a decrease in value. The impairment loss, if any, is reported in the Statement of Profit and Loss.
Intangible assets are amortized on a "straight line" basis over their estimated useful lives. The estimated useful life of software is four years. The amount paid for acquisition of the rights under the "Operations and Maintenance" agreement is amortized over the minimum balance period (as at the time of acquisition) of the concession agreement relating to the corresponding toll road project.
B.15 Impairment of Property, plant and equipment and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its Property, plant and equipment and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest Company of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, or whenever there is an indication that the asset may be impaired.
In assessing value in use, the estimated future cash flows are discounted to their present value using appropriate discount rate.
Recoverable amount is the higher of fair value less costs of disposal and value in use.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.
A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit or loss.
B.16 Inventories
B.16.A. Raw material
Raw materials are valued at cost. Cost of raw material includes purchase price, non-refundable taxes and other costs incurred in bringing the inventories to their present location and condition. Costs of raw material are determined on a first-in-first-out basis.
B.16B. Stores and spares
Inventories are stated at the cost and net realizable value. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Costs of stores and spares are determined on a first-in- first-out basis.
B.17 Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company 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.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
B.17.1 Onerous contracts
Present obligations arising under onerous contracts are recognized and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.
B.18 Financial instruments
Financial assets and financial liabilities are recognized when a company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured 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 or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss ("FVTPL") are recognized immediately in the statement of profit and loss.
B.18.1 Financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets.
B.18.2 Classifications of financial assets - debt instruments
Debt instruments that meet the following conditions are subsequently measured at amortized cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):
- the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows;
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss.
B.18.3 Amortized cost and Effective interest method
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.
B.18.4 Financial assets at FVTPL
Investments in equity instruments (other than group) are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in FVOCI for equity instruments which are not held for trading.
Debt instruments that do not meet the amortized cost or FVOCI criteria are measured at FVTPL. In addition, debt instruments that meet the amortized cost or FVOCI criteria but are designated as at FVTPL are measured at FVTPL.
A debt instrument that meets the amortized cost or FVTOCI criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases. The Company has not designated any debt instrument as at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognized in profit or loss.
B.18.5 Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortized cost
b) Lease receivables under Ind AS 17
c) Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18
d) Loan commitments which are not measured as at FVTPL
e) Financial guarantee contracts which are not measured as at FVTPL
ECL is the difference between all contractual cash flows that are due to the group in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR.
The Company has followed simplified approach for recognition of ECL. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument.
The Company measures the loss allowance on the basis of estimated realization date for receivables and loans by considering the cash flow model of the respective project SPV''s which in the view of the management is the most realistic and appropriate way for estimating the realization date of the receivables with respect to the project SPV''s. In respect of other than project SPV''s, the management has carried out its internal assessment procedures and accordingly the realization date has been estimated. When estimating the cash flows, the Company is required to consider all contractual terms of the financial instrument (including prepayment, extension, call and similar options) over the expected life of the financial instrument.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement of profit and loss.
B.18.6 Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company''s senior management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations.
If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognized gains / losses (including impairment gains or losses) or interest.
B.18.7 Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
B.18.8 De-recognition of financial assets
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. 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 asset 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 collateralized borrowing for the proceeds received.
On de-recognition of a financial asset in its entirety the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset.
On de-recognition of a financial asset other than in its entirety (e.g., when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts.
B.18.9 Foreign Exchange Gain and Losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
- For foreign currency denominated financial assets measured at amortized cost and FVTPL, the exchange differences are recognized in profit or loss except for those which are designated as hedging instruments in a hedging relationship.
- Changes in the carrying amount of investments in equity instruments at FVOCI relating to changes in foreign currency rates are recognized in other comprehensive income.
B.18.10 Modification of Cash Flows of financial assets and revision in estimates of Cash flows
When the contractual cash flows of a financial asset are renegotiated or otherwise modified and the renegotiation or modification does not result in the de-recognition of that financial asset in accordance within AS 109, the Company recalculates the gross carrying amount of the financial asset and recognizes a modification gain or loss in profit or loss. The gross carrying amount of the financial asset is recalculated as the present value of the renegotiated or modified contractual cash flows that are discounted at the financial asset''s original effective interest rate. Any costs or fees incurred are adjusted to the carrying amount of the modified financial asset and are amortized over the remaining term of the modified financial asset.
If the Company revises its estimates of payments or receipts (excluding modifications and changes in estimates of expected credit losses), it adjusts the gross carrying amount of the financial asset or amortized cost of a financial liability to reflect actual and revised estimated contractual cash flows. The Company recalculates the gross carrying amount of the financial asset or amortized cost of the financial liability as the present value of the estimated future contractual cash flows that are discounted at the financial instrument''s original effective interest rate. The adjustment is recognized in profit or loss as income or expense.
B.19 Financial liabilities and equity instruments-
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
B.19.1 Classifications as debt or equity
Debt and equity instruments issued by a Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
B.19.2 Compound instruments
The components of compound instruments are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. A conversion option that will be settled by issue of fixed number of the Company''s own equity instruments in exchange of a fixed amount of cash or another financial asset is an equity instrument.
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible instruments. This amount is recognized as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion or at the instrument''s maturity date.
The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until the conversion option is exercised, in which case, the balance recognized in equity will be transferred to other component of equity. When the conversion option remains unexercised at the maturity date of the convertible note, the balance recognized in equity will be transferred to retained earnings. No gain or loss is recognized in profit or loss upon conversion or expiration of the conversion option.
Transaction costs that relate to the issue of the convertible notes are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognized directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component and are amortized over the lives of the convertible notes using the effective interest method.
B.19.3 Financial liabilities
All financial liabilities are subsequently measured at amortized cost using the effective interest method or at FVTPL. However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
B.19.3.1 Financial liabilities subsequently measured at amortized cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method. Interest expense that is not capitalized as part of costs of an asset is included in the ''Finance costs'' line item.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
B.19.3.2 Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms
Financial guarantee contracts issued by the Company are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109;and
- the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS18.
B.19.3.3 Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortized cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortized cost of the instruments and are recognized in ''Other income / Other expenses'' in the line-item ''Net foreign exchange gains/(losses)''.
B.19.3.4 Derecognition of financial liabilities
The Company derecognizes financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired.
An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.
B.19.3.5 Commitments to provide a loan at a below-market interest rate
Commitments to provide a loan at a below-market interest rate are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
- the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS 18.
B.20 Derivative financial instruments
The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts, interest rate swaps and cross currency swaps. Further details of derivative financial instruments are disclosed in Note 30.
Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.
B.20.1 Embedded derivatives
Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of Ind AS 109 are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at FVTPL.
B.21 Hedge accounting
The Company designates certain hedging instruments, which include derivatives, embedded derivatives and non- derivatives in respect of foreign currency risk, as either fair value hedges, cash flow hedges, or hedges of net investments in foreign operations. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.
At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.
Note 30 sets out details of the fair values of the derivative instruments used for hedging purposes.
B.21.1 Cash flow hedges
The effective portion of changes in the fair value of the designated portion of derivatives that qualify as cash flow hedges is recognized in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss, and is included in the ''Other gains and losses'' line item.
Amounts previously recognized in other comprehensive income and accumulated in equity relating to effective portion as described above are reclassified to profit or loss in the periods when
the hedged item affects profit or loss, in the same line as the recognized hedged item. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, such gains and losses are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss recognized in other comprehensive income and accumulated in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.
B.22 Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
C. Critical accounting judgments and key sources of estimation uncertainty
C.1 Critical accounting judgments
The preparation of Financial Statements in conformity with the recognition and measurement principles of Ind AS requires management to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures of contingent liabilities at the date of the Financial Statements and the reported amounts of income and expenses for the periods presented.
Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates. In case the actual results are different those from estimates, the effect thereof is given in the financial statements of the period in which the events materialize. Any change in such estimates is accounted prospectively.
The matters to be disclosed will be dictated by the circumstances of the individual entity, and by the significance of judgments and estimates made to the performance and financial position of the entity. Instead of disclosing this information in a separate note, it may be more appropriate to include such disclosures in the relevant asset.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and future periods are affected.
C.2 Key sources of estimation uncertainty
Key source of estimation of uncertainty at the date of Financial Statements, which may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of fair value measurement of financial instruments, receivables, loans and advances, valuation of deferred tax assets, useful life of assets, cash flow models for impairment and ECL.
Key estimations in relation to fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model. The inputs to these models and the discount rates are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Refer Note 30 for further disclosures.
Key estimations in relation to fair value measurement of receivables, loans and interest accrued thereon
The Company has performed valuation for its receivables, loans and interest accrued thereon as to whether there is any ECL. When the fair value of receivables, loans and interest accrued thereon cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model. The inputs to these models and the discount rates are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgements include considerations of inputs such as expected earnings in future years, liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of these receivables, loans and interest accrued thereon.
Key estimations in relation to fair value measurement investments
The Company has performed valuation for its investment as to whether there is any impairment in their fair values. When the fair value of investments cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model. The inputs to these models and the discount rates are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgements include considerations of inputs such as expected earnings in future years, liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of these investments.
Key estimations in relation to Construction revenue and cost
The Company, being a part of construction industry major components of contract estimate are budgeted costs and revenue to complete the contract. While estimating these components various assumptions are considered by the management such as (i) Work will be executed in the manner expected so that the project is completed timely (ii) consumption norms will remain same (iii) Assets will operate at the same level of productivity as determined (iv) Wastage will not exceed the normal % as determined etc. (v) Estimates for contingencies (vi) There will be no change in design and the geological factors will be same as communicated and (vii) price escalations etc. Due to such complexities involved in the budgeting process, contract estimates are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
Mar 31, 2015
Background
IL&FS Transportation Networks Limited ("ITNL") is a surface
transportation infrastructure company incorporated in the year 2000
under the provisions of the Companies Act, 1956, by Infrastructure
Leasing & Financial Services Limited, a promoter company, in order to
consolidate their existing road infrastructure projects and to pursue
various new project initiatives in the area of surface transportation
infrastructure.
ITNL is a developer, operator and facilitator of surface transportation
infrastructure projects, taking projects from conceptualisation through
commissioning to operations and maintenance under public to private
partnership on build-operate transfer ("BOT") basis in India
I Basis for preparation of Financial Statements
The financial statements of the Company have been prepared accordance
with the Generally Accepted Accounting Principles in India(Indian GAAP)
to comply with the Accounting Standards specified under Section 133 of
the Companies Act, 2013, read with Rule 7 of the Companies (Accounts)
Rules, 2014 and the relevant provisions of the Companies Act, 2013("the
2013 Act") / Companies Act, 1956 ("the 1956 Act"), as applicable. The
financial statements have been prepared on accrual basis under the
historical cost convention. The accounting policies adopted in the
preparation of the financial statements are consistent with those
followed in the previous year except for change in the accounting
policy for depreciation as more fully described in Note 1 III below
II Use of estimates
The preparation of financial statements requires the Management to make
estimates and assumptions considered in the reported amounts of Assets
and Liabilities (including Contingent Liabilities)as of the date of the
Financial Statements and the reported Income and Expenses during the
reporting period. Management believes that the estimates used in the
preparation of the financial statements are prudent and reasonable.
Actual results could differ from these estimates. In case the actual
results are different those from estimates, the effect thereof is given
in the financial statements of the period in which the events
materialise. Any change in such estimates is accounted prospectively
III Fixed Assets and Depreciation/Amortisation
(a) Tangible assets
Tangible fixed assets acquired by the Company are reported at
acquisition cost, with deductions for accumulated depreciation and
impairment losses, if any
The acquisition cost includes the purchase price (excluding refundable
taxes) and expenses such as delivery and handling costs, installation,
legal services and consultancy services, directly attributable to
bringing the asset to the site and in working condition for its
intended use
Where the construction or development of any asset requiring a
substantial period of time to set up for its intended use is funded by
borrowings, the corresponding borrowing costs are capitalised up to the
date when the asset is ready for its intended use
(b) Change in Accounting Policy and Accounting Estimates
Pursuant to the notification of Schedule II to the Companies Act, 2013
with effect from April 1, 2014, the Company changed its method of
depreciation from Written Down Value ('WDV') method to Straight Line
Method ('SLM'). Consequent to this change, all assets are now being
depreciated under SLM. The Company also revised the estimated useful
life of some of its assets to align the useful life with those
specified in Schedule II based on internal technical advice, taking
into account the nature of the asset, the estimate usage of the asset,
operating conditions of the asset, past history of replacement,
anticipated technological changes etc. The details of previously
applied depreciation method, rates / useful life are as follows:
(i) Assets purchased are depreciated on Straight Line Method, over the
useful life of assets as prescribed under Schedule II of the Companies
Act 2013 other than assets specified in para (d) below w.e.f. April 1,
2014
The details of previously applied depreciation method, rates / useful
life and revised method and lives are given below:
Previous
Asset
depreciation method
Premises SLM
Computers and Data Processing Equipment (other SLM
than Server & Networking)
Office Equipments WDV
Furniture and Fixtures WDV
Plant & Machinery WDV
Electrical Installation WDV
Data Processing Equipment (Server & Networking) SLM
Mobile Phones and I pad / Tablets SLM
year of purchase year of purchase
Specialised office equipment's SLM
Vehicles SLM
Assets provided to employees SLM
Leasehold improvement costs SLM
All categories of assets costing less than SLM
Rs. 5,000/- each
Previous depreciation Revised useful life
Asset
rate/useful life based on SLM
Premises 1.63% / 61 Years 60 Years
Computers and Data
Processing 25% / 4 Years 3 Years
Equipment (other
than Server & Networking)
Office Equipments 13.91% / 20 Years 5 Years
Furniture and Fixtures 18.10% / 15 Years 10 Years
Plant & Machinery 13.91% / 20 Years 15 Years
Electrical Installation 13.91% / 20 Years 10 Years
Data Processing Equipment 4 4
(Server & Networkin
Mobile Phones and I pad / Fully depreciated Fully depreciated
Tablets in the year of in the year of
purchase purchase
Specialised office 3 3
equipment's
Vehicles 5 5
Assets provided to 3 3
employees
Leasehold improvement Amortised over Amortised over
costs Primary period of Primary period of
Lease Lease
All categories of
assets costing less Fully depreciated Fully depreciated
than Rs. 5,000/- in the year of in the year of
each purchase purchase
The residual value of all the assets is retained at Rs. 1/- each
Pursuant to the transition provisions prescribed in Schedule II to the
Companies Act, 2013,
(i) the Company has fully depreciated the carrying value of assets
(determined after considering the change in the method of depreciation
from WDV to SLM), net of residual value, where the remaining useful
life of the asset was determined to be nil as on April 1, 2014 and
adjusted an amount of Rs. 6.30 Million against the opening Surplus
balance in the Statement of Profit and Loss under Reserves and Surplus
(ii) The depreciation expense in the Statement of Profit and Loss for
the year is lower by Rs. 30.17 Million consequent to the above change
in the method of depreciation
(iii) The depreciation expense in the Statement of Profit and Loss for
the year is higher by Rs. 20.42 Million consequent to the change in
the useful life of the assets
(c) Leased Assets
Type of Capitalisation Depreciation Policy
Operating Lease At Cost including incidental Straight Line Method at
expenses to bring the asset the rates provided
to its working condition for under Schedule II to
its intended use the Companies Act, 2013
Capital At Cost Amortised over the
Expenditure primary period of the
on renovation / Lease
Improvements to
Lease-hold
Premises
Premises
(d) Intangible assets and amortisation
Intangible assets comprise of software and amounts paid for acquisition
of commercial rights under an "Operation and Maintenance" agreement of
a toll road project
Intangible assets are reported at acquisition cost with deductions for
accumulated amortisation and impairment losses, if any
Intangible assets are amortised on a "straight line" basis over their
estimated useful lives. The estimated useful life of software is four
years. The amount paid for the Commercial Rights acquired under the
"Operations and Maintenance" agreement, is amortised over the minimum
balance period of the concession agreement relating to the
corresponding toll road project as it existed at the time of
acquisition
IV Impairment of Assets
The carrying values of assets of the Company's cash-generating unit are
reviewed for impairment annually or more often if there is an
indication of decline in value. If any indication of such impairment
exists, the recoverable amounts of those assets are estimated and
impairment loss is recognised, if the carrying amount of those assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the estimated future cash flows to their
present value based on appropriate discount factor
V Investments
(a) Investments are capitalised at actual cost including costs
incidental to acquisition. Dividend received attributable to the period
prior to acquisition of investment is reduced from the cost of
investment in the year of receipt
(b) Cost of investment property acquired in exchange for an asset is
determined by reference to the fair value of the asset given up
(c) Investments are classified as long-term or current at the time of
making such investments
(d) Long-term investments are individually valued at cost, less
provision for diminution that is other than temporary
(e) Current investments are valued at the lower of cost and fair value
VI Revenue Recognition
(a) The Company's service offerings include advisory and management
services, supervisory services (including as lenders' engineers),
operation and maintenance services, toll collection services for toll
road projects and rendering assistance to applicant for toll road
concessions with the bidding process
Revenue is recognised when it is realised or realisable and earned.
Revenue is considered as realised or realisable and earned when it has
persuasive evidence of an arrangement, delivery has occurred, the sales
price is fixed or determinable and collectability is reasonably assured
Advisory, Design and Engineering fees are billed as services are
rendered, however they are due for payment one year from the date of
billing. Disclosure with respect to such Trade Receivables as been made
considering above policy
Revenue in respect of arrangements made for rendering services is
recognised over the contractual term of the arrangement. In respect of
arrangements, which provide for an upfront payment followed by
additional payments as certain conditions are met (milestone payments),
the amount of revenue recognised is based on the services delivered in
the period as stated in the contract. In respect of arrangements where
fees for services rendered are success based (contingent fees), revenue
is recognised only when the factor(s) on which the contingent fees is
based, actually occur and the collectibility is reasonably assured
Revenue from development projects under fixed - price contracts, where
there is no uncertainty as to measurement or collectability of
consideration is recognised based on the milestones reached under the
contracts
(b) Interest income is recognised on a time proportion basis taking
into account the amount outstanding and the rate applicable provided it
is not unreasonable to expect ultimate collection
(c) Dividend, other than attributable to the period prior to
acquisition of investment, is recognised as income when the
unconditional right to receive the payment is established
(d) Revenue from construction contracts:
When the outcome of a construction contract can be estimated reliably,
contract revenue and contract costs associated with the construction
contract are recognised as revenue and expenses respectively by
reference to the percentage of completion of the contract activity at
the reporting date. The percentage of completion of a contract is
determined considering the proportion that contract costs incurred for
work performed upto the reporting date bear to the estimated total
contract costs
For the purposes of recognising revenue, contract revenue comprises the
initial amount of revenue agreed in the contract, the variations in
contract work, claims and incentive payments to the extent that it is
probable that they will result in revenue and they are capable of being
reliably measured
The percentage of completion method is applied on a cumulative basis in
each accounting period to the current estimates of contract revenue and
contract costs. The effect of a change in the estimate of contract
revenue or contract costs, or the effect of a change in the estimate of
the outcome of a contract, is accounted for as a change in accounting
estimate and the effect of which are recognised in the Statement of
Profit and Loss in the period in which the change is made and in
subsequent periods
When the outcome of a construction contract cannot be estimated
reliably, revenue is recognised only to the extent of contract costs
incurred of which recovery is probable and the related contract costs
are recognised as an expense in the period in which they are incurred
When it is probable that total contract costs will exceed total
contract revenue, the expected loss is recognised as an expense in the
Statement of Profit and Loss in the period in which such probability
occurs
Any excess revenue recognised accordance with the stage of completion
of the project, in comparison to the amounts billed to the clients in
accordance with the milestones completed as per the respective
development agreements, is carried forward as "Unearned Revenue"
Any short revenue recognised in accordance with the stage of completion
of the project, in comparison to the amounts billed to the clients in
accordance with the milestones completed as per the respective
development agreements, is carried forward as "Unbilled Revenue"
VII Foreign Currency Transactions
Transactions in foreign currencies are translated to the reporting
currency based on the exchange rate on the date of the transaction.
Exchange difference arising on settlement thereof during the period is
recognised as income or expense in the Statement of Profit and Loss
Foreign currency denominated cash and cash equivalents, assets (other
than those that are in substance the Company's net investment in a non
integral foreign operation), and liabilities (monetary items)
outstanding as at the period end are valued at closing-date rates, and
unrealised translation differences are included in the Statement of
Profit and Loss
Non monetary items (such as equity investments) denominated in foreign
currencies are reported using the exchange rate as at the date of the
transaction. Where such items are carried at fair value, these are
reported using exchange rates that existed on dates when the fair
values were determined
Inter-company receivables or payables for which settlement is neither
planned nor likely to occur in the foreseeable future and are in
substance an extension to or a deduction from the Company's net
investments in a non - integral foreign operations are also translated
at closing rates but the exchange differences arising are accumulated
in the foreign currency translation reserve until disposal of the net
investment, at which time they are recognised as income or expense in
the Statement of Profit and Loss. Any repayment of receivables or
payables forming part of net investment in foreign operations is
considered as partial disposal of investments in foreign operations and
amounts previously recognised in the foreign currency translation
reserve is adjusted on such recovery
The Company has exercised the option of amortising / capitalising the
exchange differences arising on long-term foreign currency monetary
items as given under Ministry of Corporate Affairs (MCA) Notification
No. G.S.R 914(E) dated December 29, 2011
VIII Employee Benefits
(a) Short term
Short term employee benefits are recognised as an expense at the
undiscounted amount expected to be paid over the period of services
rendered by the employees to the Company
(b) Long term
The Company has both defined-contribution and defined-benefit plans, of
which some have assets in special funds or securities. The plans are
financed by the Company and in the case of some defined contribution
plans by the Company along with its employees
(i) Defined-contribution plans
These are plans in which the Company pays pre-defined amounts to
separate funds and does not have any legal or informal obligation to
pay additional sums. These comprise of contributions to the employees'
provident fund, family pension fund and superannuation fund. The
Company's payments to the defined- contribution plans are reported as
expenses in period in which the employees perform the services that the
payment covers
(ii) Defined-benefit plans
Expenses for defined-benefit gratuity plans are calculated as at the
balance sheet date by independent actuaries in a manner that
distributes expenses over the employee's working life. These
commitments are valued at the present value of expected future
payments, with consideration for calculated future salary increases,
using a discount rate corresponding to the interest rate estimated by
the actuary having regard to the interest rate on government bonds with
a remaining term that is almost equivalent to the average balance
working period of employees
The actuarial gains and losses are recognised immediately in the
Statement of Profit and Loss
(c) Others
Compensated absences which accrue to employees and which can be carried
to future periods but are expected to be encashed or availed in twelve
months immediately following the period end are reported as expenses in
the period in which the employees perform the services that the benefit
covers at the undiscounted amount of the benefits after deducting
amounts already paid. Where there are restrictions on availment or
encashment of such accrued benefit or where the availment or encashment
is otherwise not expected to wholly occur in the next twelve months,
the liability on account of the benefit is actuarially determined using
the projected unit credit method
IX Taxes on Income
Taxes include taxes on the Company's taxable profits, adjustment
attributable to earlier periods and changes in deferred taxes. Current
tax is the amount of income tax determined to be payable in respect of
the taxable income for the year as determined in accordance with the
applicable tax rates and the provisions of the Income Tax Act, 1961
Deferred tax is calculated to correspond to the tax effect arising when
final tax is determined. Deferred tax corresponds to the net effect of
tax on all timing differences which occur as a result of items being
allowed for income tax purposes during a period different from when
they are recognised in the financial statements
Deferred tax assets are recognised with regard to all deductible timing
differences to the extent that it is probable that taxable profit will
be available in future against which deductible timing differences can
be utilised
When the Company carries forward unused tax losses and unabsorbed
depreciation, deferred tax assets are recognised only to the extent
there is virtual certainty backed by convincing evidence that
sufficient future taxable income will be available against which
deferred tax assets can be realised
The carrying amount of deferred tax assets is reviewed at each balance
sheet date and reduced by the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or a part of
the aggregate deferred tax asset to be utilised
X Lease Accounting
Leases of assets where the lessor retains substantially all the risks
and benefits of ownership of the assets 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. Any compensation, according to agreement, that the lessee is
obliged to pay to the lessor if the leasing contract is terminated
prematurely is expensed during the period in which the contract is
terminated
XI Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a present obligation as
a result of a past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provision for final dividend
payable (including dividend tax thereon) is made in the financial
statements of the period to which the dividend relates when the same is
proposed by the Board of Directors after the Balance Sheet date but
before the approval of financial statements of the period to which the
dividend relates. Provisions (excluding employee benefits) are not
discounted to their present value and are determined based on best
estimates 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. Contingent liabilities are not recognised
but are disclosed in the notes to the financial statement. A contingent
asset is neither recognised nor disclosed
XII Borrowing Costs
Borrowing costs are recognised in the period to which they relate,
regardless of how the funds have been utilised, except where it relates
to the financing of construction or development of assets requiring a
substantial period of time to prepare for their intended future use.
Borrowing Costs are capitalised up to the date when the asset is ready
for its intended use. The amount of borrowing costs capitalised (gross
of tax) for the period is determined by applying the interest rate
applicable to appropriate borrowings outstanding during the period to
the average amount of accumulated expenditure for the assets during the
period
XIII Cash and Cash Equivalents
Cash comprises of Cash on Hand, Cheques on Hand, current account and
demand deposits with Banks. Cash Equivalents are short term, highly
liquid investments that are readily convertible into known amounts of
cash and which are subject to insignificant risks of changes in value
XIV Cash Flow Statement
The Cash Flow Statement is prepared in accordance with the "Indirect
Method" as explained in the Accounting Standard (AS) 3 on Cash Flow
Statements
XV Earnings per Share
Basic earnings per share is calculated by dividing the net profit after
tax for the period attributable to equity shareholders of the Company
(after deducting preference share dividend, attributable tax thereon
and related redemption premium) by the weighted average number of
equity shares in issue during the period
Diluted earnings per share is calculated by dividing the net profit
after tax for the period attributable to equity shareholders of the
Company (after deducting preference share dividend, attributable tax
thereon and related redemption premium) by the weighted average number
of equity shares determined by assuming conversion on exercise of
conversion rights for all potential dilutive securities
XVI Derivative
(a) Premium paid on option contracts acquired is treated as an asset
until maturity. Premium received on option contracts written is treated
as liability until maturity.In case of Forward exchange contracts which
are not intended for trading or speculation purposes, the premium or
discount arising at the inception of such a forward exchange contract
amortised as expense or income over the life of the contract. Exchange
differences on such contract are recognised in the Statement of Profit
and Loss in the reporting period in which the exchange rates change.Any
profit or loss arising on cancellation or renewal of such a forward
exchange contract is recognised as income or as expense for the period
(b) The Company uses foreign currency derivative contracts to hedge its
risks associated with foreign currency fluctuations relating to highly
probable forecast transactions.The Company designates such contracts in
a cash flow hedging relationship by applying the hedge accounting
principles set out in "Accounting Standard 30 Financial Instruments:
Recognition and Measurement" issued by the ICAI. These contracts are
stated at fair value at each reporting date. Changes in the fair value
of these contracts that are designated and effective as hedge of future
cash flows are recognised directly in "Cash flow hedge reserve" under
Reserves and surplus, net of applicable deferred income taxes and the
ineffective portion is recognised immediately in the Statement Profit
and Loss. Hedge accounting is discontinued when the hedging instrument
expires or is sold, terminated, or exercised,or no longer qualifies for
hedge accounting.
XVII Redemption Premium on Preference Shares
Fixed premium on redemption of Preference Shares, is recognised by the
Company out of Securities Premium Account prior to the contractual date
of redemption of the Preference Shares
Premium on redemption which is contractually accruing annually to the
preference shareholders is accrued by way of appropriation out of
Securities Premium Account as is permissible within the Companies Act,
2013 as may be amended from time to time
Mar 31, 2014
I Basis for preparation of Financial Statements
The financial statements have been prepared under the historical cost
convention in accordance with the generally accepted accounting
principles in India, and the applicable accounting standards notified
under Companies Act, 1956 (which continue to be applicable in respect
of section 133 of the Companies Act, 2013 in terms of general circular
15/2013 dated September 13, 2013 of Ministry of Corporate Affairs). All
income and expenditure having a material bearing on the financial
statements are recognised on an accrual basis
II Use of estimates
The preparation of financial statements requires the Management to make
estimates and assumptions considered in the reported amounts of Assets
and Liabilities (including Contingent Liabilities) as of the date of
the Financial Statements and the reported Income and Expenses during
the reporting period Management believes that the estimates used in the
preparation of the financial statements are prudent and reasonable.
Actual results could differ from these estimates. In case the actual
results are different those from estimates, the effect thereof is given
in the financial statements of the period in which the events
materialise any change in such estimates is accounted
III Fixed Assets and Depreciation/Amortisation (a) Tangible assets and
depreciation
Tangible fixed assets acquired by the Company are reported at
acquisition cost, with deductions for accumulated depreciation and
impairment losses, if any
The acquisition cost includes the purchase price (excluding refundable
taxes) and expenses such as delivery and handling costs, installation,
legal services and consultancy services, directly attributable to
bringing the asset to the site and in working condition for its
intended use
Where the construction or development of any asset requiring a
substantial period of time to set up for its intended use is funded by
borrowings, the corresponding borrowing costs are capitalised up to the
date when the asset is ready for its intended use
Depreciation on tangible fixed assets is computed as under:
i) In respect of premises, depreciation is computed on the Straight
Line Method at the rates provided under Schedule XIV of the Companies
Act, 1956
ii) The Company has adopted the Straight Line Method of depreciation so
as to depreciate 100% of the cost of the following type of assets at
rates higher than those prescribed under Schedule XIV to the Companies
Act, 1956, based on the Management''s estimate of useful life of such
assets:
iii) Leasehold improvement costs are capitalised and amortised on a
straight-line basis over the period of lease agreement
iv) All categories of assets costing less than Rs. 5,000 each and mobile
phones are fully depreciated in the year of purchase
v) Depreciation on fixed assets, other than on assets specified in
Notes lll(a) (i), (ii), (iii) and (iv) above, is provided for on the
Written Down Value Method at the rates provided under Schedule XIV to
the Companies Act, 1956. Depreciation is computed pro-rata from the
date of acquisition of and up to the date of disposal
(b) Intangible assets and amortisation
Intangible assets comprise of software and amounts paid for acquisition
of commercial rights under an "Operation and Maintenance" agreement of
a toll road project
Intangible assets are reported at acquisition cost with deductions for
accumulated amortisation and impairment losses, if any
Intangible assets are amortised on a "straight line" basis over their
estimated useful lives. The estimated useful life of software is four
years. The amount paid for the Commercial Rights acquired under the
"Operations and Maintenance" agreement, is amortised over the minimum
balance period of the concession agreement relating to the
corresponding toll road project as it existed at the time of
acquisition
IV Impairment of Assets
The carrying values of assets of the Company''s cash- generating unit
are reviewed for impairment annually or more often if there is an
indication of decline in value. If any indication of such impairment
exists, the recoverable a mounts of those assets are estimated and
impairment loss is recognised, if the carrying amount of those assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the estimated future cash flows to their
present value based on appropriate discount factor
V Investments
(a) Investments are capitalised at actual cost including costs
incidental to acquisition. Dividend received attributable to the period
prior to acquisition of investment is reduced from the cost of
investment in the year of receipt
(b) Cost of investment property acquired in exchange for an asset is
determined by reference to the fair value of the asset given up
(c) Investments are classified as long-term or current at the time of
making such investments
(d) Long-term investments are individually valued at cost, less
provision for diminution that is other than temporary
(e) Current investments are valued at the lower of cost and fair value
VI Revenue Recognition
The Company''s service offerings include advisory and management
services, supervisory services (including as lenders'' engineers),
operation and maintenance services, toll collection services for toll
road projects and rendering assistance to applicant for toll road
concessions with the bidding process
Revenue is recognised when it is realised or realisable and earned.
Revenue is considered as realised or realisable and earned when it has
persuasive evidence of an arrangement, delivery has occurred, the sales
price is fixed or determinable and collectability is reasonably assured
Revenue in respect of arrangements made for rendering services is
recognised over the contractual term of the arrangement. In respect of
arrangements, which provide for an upfront payment followed by
additional payments as certain conditions are met (milestone payments),
the amount of revenue recognised is based on the services delivered in
the period as stated in the contract. In respect of arrangements where
fees for services rendered are success based (contingent fees), revenue
is recognised only when the factor(s) on which the contingent fees is
based, actually occur and the collectability is reasonably assured
Revenue from development projects under fixed - price contracts, where
there is no uncertaintyas to measurement or collectability of
consideration is recognised based on the milestones reached under the
contracts
Contract revenue and costs associated with the construction of roads is
recognised as by reference to the stage of completion of the projects
at the Balance Sheet date. The stage of completion of a project is
determined by the proportion that the contract cost incurred for work
performed up to the Balance Sheet date bears to the estimated total
contract costs
Any excess revenue recognised in accordance with the stage of
completion of the project, in comparison to the amounts billed to the
clients in accordance with the milestones completed as per the
respective development agreements, is carried forward as "Unearned
Revenue"
Any short revenue recognised in accordance with the stage of completion
of the project, in comparison to the amounts billed to the clients in
accordance with the milestones completed as per the respective
development agreements, is carried forward as "Unbilled Revenue"
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable provided it is
not unreasonable to expect ultimate collection
Dividend, other than attributable to the period prior to acquisition of
investment, is recognised as income when the unconditional right to
receive the payment is established
VII Foreign Currency Transactions
Transactions in foreign currencies are translated to the reporting
currency based on the exchange rate on the date of the transaction.
Exchange difference arising on settlement thereof during the period is
recognised as income or expense in the Statement of Profit and Loss
Foreign currencydenomina ted cash and cash equivalents, assets (other
than those that are in substance the Company''s net investment in a non
integral foreign operation), and liabilities (monetary items)
outstanding as at the period end are valued at closing-date rates, and
unrealised translation differences are included in the Statement of
Profit and Loss
Non monetary items (such as equity investments) denominated in foreign
currencies are reported using the exchange rate as at the date of the
transaction. Where such items are carried at fair value, these are
reported using exchange rates that existed on dates when the fair
values were determined
Inter-company receivables or payables for which settlement is neither
planned nor likely to occur in the foreseeable future and are in
substance an extension to or a deduction from the Company''s net
investments in a non - integral foreign operations are also translated
at closing rates but the exchange differences arising are accumulated
in the foreign currency translation reserve until disposal of the net
investment, at which time they are recognised as income or expense in
the Statement of Profit and Loss. Any repayment of receivables or
payables forming part of net investment in foreign operations is
considered as partial disposal of investments in foreign operations and
amounts previously recognised in the foreign currency translation
reserve is adjusted on such recovery
VIM Employee Benefits
(a) Short term
Short term employee benefits are recognised as an expense at the
undiscounted amount expected to be paid over the period of services
rendered by the employees to the Company
(b) Long term
The Company has both defined-contribution and defined-benefit plans, of
which some have assets in special funds or securities. The plans are
financed by the Company and in the case of some defined contribution
plans by the Company along with its employees
(i) Defined-contribution plans
These are plans in which the Company pays pre-defined amounts to
separate funds and does not have any legal or informal obligation to
pay additional sums. These comprise of contributions to the employees''
provident fund, family pension fund and superannuation fund. The
Company''s payments to the defined-contribution plans are reported as
expenses in period in which the employees perform the services that the
payment covers
(ii) Defined-benefit plans
Expenses for defined-benefit gratuity plans are calculated as at the
balance sheet date by independent actuaries in a manner that
distributes expenses over the employee''s working life. These
commitments are valued at the present value of expected future
payments, with consideration for calculated future salary increases,
using a discount rate corresponding to the interest rate estimated by
the actuary having regard to the interest rate on government bonds with
a remaining term that is almost equivalent to the average balance
working period of employees
The actuarial gains and losses are recognised immediately in the
Statement of Profit and Loss
(c) Others
Compensated absences which accrue to employees and which can be carried
to future periods but are expected to be encashed or availed in twelve
months immediately following the period end are reported as expenses in
the period in which the employees perform the services that the benefit
covers at the undiscounted amount of the benefits after deducting
amounts already paid. Where there are restrictions on availment or
encashment of such accrued benefit or where the availment or encashment
is otherwise not expected to wholly occur in the next twelve months,
the liability on account of the benefit is actuarially determined using
the projected unit credit method
IX Taxes on Income
Taxes include taxes on the Company''s taxable profits, adjustment
attributable to earlier periods and changes in deferred taxes. Current
tax is the amount of income tax determined to be payable in respect of
the taxable income for the year as per the Income Tax Act, 1961
Deferred tax is calculated to correspond to the tax effect arising when
final tax is determined. Deferred tax corresponds to the net effect of
tax on all timing differences which occur as a result of items being
allowed for income tax purposes during a period different from when
they are recognised in the financial statements
Deferred tax assets are recognised with regard to all deductible timing
differences to the extent that it is probable that taxable profit will
be available in future against which deductible timing differences can
be utilised
When the Company carries forward unused tax losses and unabsorbed
depreciation, deferred tax assets are recognised only to the extent
there is virtual certainty
backed by convincing evidence that sufficient future taxable income
will be available against which deferred tax assets can be realised
The carrying amount of deferred tax assets is reviewed at each balance
sheet date and reduced by the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or a part of
the aggregate deferred tax asset to be utilised
X Lease Accounting
Leases of assets where the lessor retains substantially all the risks
and benefits of ownership of the assets 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. Any compensation, according to agreement, that the lessee is
obliged to pay to the lessor if the leasing contract is terminated
prematurely is expensed during the period in which the contract is
terminated
XI Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a present obligation as
a result of a past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provision for final dividend
payable (including dividend tax thereon) is made in the financial
statements of the period to which the dividend relates when the same is
proposed by the Board of Directors after the Balance Sheet date but
before the approval of financial statements of the period to which the
dividend relates. Provisions (excluding employee benefits) are not
discounted to their present value and are determined based on best
estimates 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. Contingent Liabilities are not recognised
but are disclosed in the notes to the financial statement. A contingent
asset is neither recognised nor disclosed
XII Borrowing Costs
Borrowing costs are recognised in the period to which they relate,
regardless of how the funds have been utilised, except where it relates
to the financing of construction or development of assets requiring a
substantial period of time to prepare for their intended future use.
Borrowing Costs are capitalised up to the date when the asset is ready
for its intended use. The amount of borrowing costs capitalised (gross
of tax) for the period is determined by applying the interest rate
applicable to appropriate borrowings outstanding during the period to
the average amount of accumulated expenditure for the assets during the
period
XIII Cash and Cash Equivalents
Cash comprises of Cash on Hand, Cheques on Hand, current account and
demand deposits with Banks. Cash Equivalents are short term, highly
liquid investments that are readily convertible into known amounts of
cash and which are subject to insignificant risks of changes in value
XIV Cash Flow Statement
The Cash Flow Statement is prepared in accordance with the "Indirect
Method" as explained in the Accounting Standard (AS) 3 on Cash Flow
Statements
XV Earnings per Share
Basic earnings per share is calculated by dividing the net profit after
tax for the period attributable to equity shareholders of the Company
(after deducting preference share dividend, attributable tax thereon
and related redemption premium) by the weighted average number of
equity shares in issue during the period
Diluted earnings per share is calculated by dividing the net profit
after tax for the period attributable to equity shareholders of the
Company (after deducting preference share dividend, attributable tax
thereon and related redemption premium) by the weighted average number
of equity shares determined by assuming conversion on exercise of
conversion rights for all potential dilutive securities
XVI Derivative Transactions
Premium paid on option contracts acquired is treated as an asset until
maturity. Premium received on option contracts written is treated as
liability until maturity In case of Forward exchange contracts which
are not intended for trading or speculation purposes, the premium or
discount arising at the inception of such a forward exchange contract
is amortised as expense or income over the life of the contract.
Exchange differences on such a contract are recognised in the Statement
of Profit and Loss in the reporting period in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of such a
forward exchange contract is recognised as income or as expense for the
period
XVII Redemption Premium on Preference Shares
Fixed premium on redemption of Preference Shares, is recognised by the
Company out of Securities Premium Account prior to the contractual date
of redemption of the Preference Shares
Premium on redemption which is contractually accruing annually to the
preference shareholders is accrued by way of appropriation out of
Statement of Profit and Loss
NOTE 2; SHARE CAPITAL
iv) The Company has one class of equity shares with face value of Rs. 10
each fully paid-up. Each shareholder has a voting right in proportion
to his holding in the paid-up equity share capital of the Company.
Where final dividend is proposed by the Board of Directors, it is
subject to the approval of the shareholders in the Annual General
Meeting
The Company has offered 52,452,288 equity shares on rights basis in the
ratio of 27:100. The record date for this purpose was March 14, 2014.
The offer was open from April 28, 2014 to May 12, 2014 to all eligible
equity shareholders. As at the end of the offer date i.e. May 12, 2014
the Company has received application for 66,313,105 shares aggregatingRs.
6,631.30 million from the eligible shareholders
Rights of CNCRPS holders are as Follows:
The holder(s) CNCRPS shall have no voting rights other than in respect
of matters directly affecting the rights attached to the CNCRPS. In the
event of any due and payable dividends on the CNCRPS remaining unpaid
for a period of two years prior to the start of any General Meeting of
the Equity Shareholders, the holder(s) of CNCRPS shall gain voting
rights in respect of all matters placed by the Company at a General
Meeting of its Equity Shareholders in accordance with the provisions of
the Companies Act and the Articles of Association of the Company. In
the event of winding up or repayment of capital, the holder(s) of the
CNCRPS shall carry a preferential right vis-a-vis equity shareholders
to be repaid the amount of paid up capital, unpaid dividends and fixed
premium, in accordance with the provisions of the Companies Act and the
Articles of Association of the Company. The claims of holder(s) of
CNCRPS shall be subordinated to the claims of all secured and unsecured
creditors of the Company but senior to equity shareholders and pari
passu amongst other preference shareholders
Mar 31, 2013
I Basis for preparation of Financial Statements
The financial statements have been prepared under the historical cost
convention in accordance with the generally accepted accounting
principles in India, and the applicable accounting standards issued
pursuant to the Companies (Accounting Standards) Rules, 2006. All
income and expenditure having a material bearing on the financial
statements are recognised on an accrual basis
II use of estimates
The preparation of financial statements requires the Management to make
estimates and assumptions considered in the reported amounts of Assets
and Liabilities (including Contingent Liabilities) as of the date of
the Financial Statements and the reported Income and Expenses during
the reporting period. Management believes that the estimates used in
the preparation of the financial statements are prudent and reasonable.
Actual results could differ from these estimates. In case the actual
results are different are those from estimates, the effect thereof is
given in the financial statements of the period in which the events
materialise. Any change in such estimates is accounted prospectively
III Fixed Assets and Depreciation/Amortisation
(a) Tangible assets and depreciation
Tangible fixed assets acquired by the Company are reported at
acquisition cost, with deductions for accumulated depreciation and
impairment losses, if any
The acquisition cost includes the purchase price (excluding refundable
taxes) and expenses such as delivery and handling costs, installation,
legal services and consultancy services, directly attributable to
bringing the asset to the site and in working condition for its
intended use
Where the construction or development of any asset requiring a
substantial period of time to set up for its intended use is funded by
borrowings, the corresponding borrowing costs are capitalised up to the
date when the asset is ready for its intended use
Depreciation on tangible fixed assets is computed as under:
(i) In respect of premises, depreciation is computed on the Straight
Line Method at the rates provided under Schedule XIV of the Companies
Act, 1956
(ii) The Company has adopted the Straight Line Method of depreciation
so as to depreciate 100% of the cost of the following type of assets at
rates higher than those prescribed under Schedule XIV to the Companies
Act, 1956, based on the Management''s estimate of useful life of such
assets:
(iii) Leasehold improvement costs are capitalised and amortised on a
straight-line basis over the period of lease agreement
(iv) All categories of assets costing less than Rs. 5,000 each, mobile
phones, etc. are fully depreciated in the year of purchase
(v) Depreciation on fixed assets, other than on assets specified in
Notes III(a) (i), (ii), (iii) and (iv) above, is provided for on the
Written Down Value Method at the rates provided under Schedule XIV to
the Companies Act, 1956. Depreciation is computed pro-rata from the
date of acquisition of and up to the date of disposal
(b) Intangible assets and amortisation
Intangible assets comprise of software and amounts paid for acquisition
of commercial rights under an "Operation and Maintenance" agreement
of a toll road project
Intangible assets are reported at acquisition cost with deductions for
accumulated amortisation and impairment losses, if any
Intangible assets are amortised on a "straight line" basis over
their estimated useful lives. The estimated useful life of software is
four years. The amount paid for the Commercial Rights acquired under
the "Operations and Maintenance" agreement, is amortised over the
minimum balance period of the concession agreement relating to the
corresponding toll road project as it existed at the time of
acquisition
IV Impairment of Assets
The carrying values of assets of the Company''s cash- generating unit
are reviewed for impairment annually or more often if there is an
indication of decline in value. If any indication of such impairment
exists, the recoverable amounts of those assets are estimated and
impairment loss is recognised, if the carrying amount of those assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the estimated future cash flows to their
present value based on appropriate discount factor
V Investments
(a) Investments are capitalised at actual cost including costs
incidental to acquisition. Dividend received attributable to the period
prior to acquisition of investment is reduced from the cost of
investment in the year of receipt
(b) Cost of investment property acquired in exchange for an asset is
determined by reference to the fair value of the asset given up
(c) Investments are classified as long-term or current at the time of
making such investments
(d) Long-term investments are individually valued at cost, less
provision for diminution that is other than temporary
(e) Current investments are valued at the lower of cost and fair value
VI Revenue Recognition
The Company''s service offerings include advisory and management
services, supervisory services (including as lenders'' engineers),
operation and maintenance services, toll collection services for toll
road projects and rendering assistance to applicant for toll road
concessions with the bidding process
Revenue is recognised when it is realised or realisable and earned.
Revenue is considered as realised or realisable and earned when it has
persuasive evidence of an arrangement, delivery has occurred, the sales
price is fixed or determinable and collectability is reasonably assured
Revenue in respect of arrangements made for rendering services is
recognised over the contractual term of the arrangement. In respect of
arrangements, which provide for an upfront payment followed by
additional payments as certain conditions are met (milestone payments),
the amount of revenue recognised is based on the services delivered in
the period as stated in the contract. In respect of arrangements where
fees for services rendered are success based (contingent fees), revenue
is recognised only when the factor(s) on which the contingent fees is
based, actually occur and the collectibility is| reasonably assured
Revenue from development projects under fixed - price contracts, where
there is no uncertainty as to measurement or collectability of
consideration is recognised based on the milestones reached under the
contracts
Contract revenue and costs associated with the construction of roads is
recognised as by reference to the stage of completion of the projects
at the Balance Sheet date. The stage of completion of a project is
determined by the proportion that the contract cost incurred for work
performed up to the Balance Sheet date bears to the estimated total
contract costs
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable provided it is
not unreasonable to expect ultimate collection
Dividend, other than attributable to the period prior to acquisition of
investment, is recognised as income when the unconditional right to
receive the payment is established
VII Foreign currency Transactions
Transactions in foreign currencies are translated to the reporting
currency based on the exchange rate on the date of the transaction.
Exchange difference arising on settlement thereof during the period is
recognised as income or expense in the Statement of Profit and Loss
Foreign currency denominated cash and cash equivalents, assets (other
than those that are in substance the Company''s net investment in a non
integral foreign operation), and liabilities (monetary items)
outstanding as at the period end are valued at closing-date rates, and
unrealised translation differences are included in the Statement of
Profit and Loss
Non monetary items (such as equity investments) denominated in foreign
currencies are reported using the exchange rate as at the date of the
transaction. Where such items are carried at fair value, these are
reported using exchange rates that existed on dates when the fair
values were determined
Inter-company receivables or payables for which settlement is neither
planned nor likely to occur in the foreseeable future and are in
substance an extension to or a deduction from the Company''s net
investments in a non - integral foreign operations are also translated
at closing rates but the exchange differences arising are accumulated
in the foreign currency translation reserve until disposal of the net
investment, at which time they are recognised as income or expense in
the Statement of Profit and Loss. Any repayment of receivables or
payables forming part of net investment in foreign operations is
considered as partial disposal of investments in foreign operations and
amounts previously recognised in the foreign currency translation
reserve is adjusted on such recovery
VIII Employee Benefits
(a) Short term
Short term employee benefits are recognised as an expense at the
undiscounted amount expected to be paid over the period of services
rendered by the employees to the Company
(b) Long term
The Company has both defined-contribution and defined-benefit plans, of
which some have assets in special funds or securities. The plans are
financed by the Company and in the case of some defined contribution
plans by the Company along with its employees
(i) Defined-contribution plans
These are plans in which the Company pays pre-defined amounts to
separate funds and does not have any legal or informal obligation to
pay additional sums. These comprise of contributions to the employees''
provident fund, family pension fund and superannuation fund. The
Company''s payments to the defined- contribution plans are reported as
expenses in period in which the employees perform the services that the
payment covers
(ii) Defined-benefit plans
Expenses for defined-benefit gratuity plans are calculated as at the
balance sheet date by independent actuaries in a manner that
distributes expenses over the employee''s working life. These
commitments are valued at the present value of expected future
payments, with consideration for calculated future salary increases,
using a discount rate corresponding to the interest rate estimated by
the actuary having regard to the interest rate on government bonds with
a remaining term that is almost equivalent to the average balance
working period of employees
The actuarial gains and losses arerecognised immediately in the
Statement of Profit and Loss
(c) Others
Compensated absences which accrue to employees and which can be carried
to future periods but are expected to be encashed or availed in twelve
months immediately following the period end are reported as expenses in
the period in which the employees perform the services that the benefit
covers at the undiscounted amount of the benefits after deducting
amounts already paid. Where there are restrictions on availment or
encashment of such accrued benefit or where the availment or encashment
is otherwise not expected to wholly occur in the next twelve months,
the liability on account of the benefit is actuarially determined using
the projected unit credit method
IX Taxes on Income
Taxes include taxes on the Company''s taxable profits, adjustment
attributable to earlier periods and changes in deferred taxes. Current
tax is the amount of income tax determined to be payable (recoverable)
in respect of the taxable income for the year
Deferred tax is calculated to correspond to the tax effect arising when
final tax is determined. Deferred tax corre- sponds to the net effect
of tax on all timing differences which occur as a result of items being
allowed for income tax purposes during a period different from when
they are recognised in the financial statements
Deferred tax assets are recognised with regard to all de- ductible
timing differences to the extent that it is probable that taxable
profit will be available in future against which deductible timing
differences can be utilised
When the Company carries forward unused tax losses and unabsorbed
depreciation, deferred tax assets are rec- ognised only to the extent
there is virtual certainty backed by convincing evidence that
sufficient future taxable in- come will be available against which
deferred tax assets can be realised
The carrying amount of deferred tax assets is reviewed at each balance
sheet date and reduced by the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or a part of
the aggregate deferred tax asset to be utilised
X Lease Accounting
Leases of assets where the lessor retains substantially all the risks
and benefits of ownership of the assets 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. Any compensation, according to agreement, that the lessee is
obliged to pay to the lessor if the leasing contract is termi- nated
prematurely is expensed during the period in which the contract is
terminated
XI Provisions, contingent Liabilities and contingent Assets
A provision is recognised when the Company has a pres- ent obligation
as a result of a past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provision for final dividend
payable (including divi- dend tax thereon) is made in the financial
statements of the period to which the dividend relates when the same is
pro- posed by the Board of Directors after the Balance Sheet date but
before the approval of financial statements of the period to which the
dividend relates. Provisions (excluding employee benefits) are not
discounted to their present val- ue and are determined based on best
estimates 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. Contingent liabilities are not recognised
but are disclosed in the notes to the finan- cial statement. A
contingent asset is neither recognised nor disclosed
XIII Borrowing costs
Borrowing costs are recognised in the period to which they relate,
regardless of how the funds have been utilised, except where it relates
to the financing of construction or development of assets requiring a
substantial period of time to prepare for their intended future use.
Borrowing Costs are capitalised up to the date when the asset is ready
for its intended use. The amount of borrowing costs capitalised (gross
of tax) for the period is determined by applying the interest rate
applicable to appropriate borrowings outstanding during the period to
the average amount of accumulated expenditure for the assets during the
period
XIV cash and cash Equivalents
Cash comprises of Cash on Hand, Cheques on Hand, current account and
demand deposits with Banks. Cash Equivalents are short term, highly
liquid investments that are readily convertible into known amounts of
cash and which are subject to insignificant risks of changes in value
XV cash Flow Statement
The Cash Flow Statement is prepared in accordance with the "Indirect
Method" as explained in the Accounting Standard (AS) 3 on Cash Flow
Statements
XVI Earnings per Share
Basic earnings per share is calculated by dividing the net profit after
tax for the period attributable to equity share- holders of the Company
by the weighted average number of equity shares in issue during the
period
Diluted earnings per share is calculated by dividing the net profit
after tax for the period attributable to equity shareholders of the
Company by the weighted average number of equity shares determined by
assuming conversion on exercise of conversion rights for all potential
dilutive securities
XVII Derivative Transactions
Premium paid on option contracts acquired is treated as an asset until
maturity. Premium received on option con- tracts written is treated as
liability until maturity. In case of Forward exchange contracts which
are not intended for trading or speculation purposes, the premium or
discount arising at the inception of such a forward exchange con- tract
is amortised as expense or income over the life of the contract.
Exchange differences on such a contract are rec- ognised in the
Statement of Profit and Loss in the reporting period in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of such a forward exchange contract is recognised as income or
as expense for the period
Mar 31, 2012
I BASIS FOR PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the historical cost
convention in accordance with the generally accepted accounting
principles in India, and the applicable accounting standards issued
pursuant to the Companies (Accounting Standards) Rules, 2006. All
income and expenditure having a material bearing on the financial
statements are recognized on an accrual basis
II USE OF ESTIMATES
The preparation of financial statements requires the Management to make
estimates and assumptions considered in the reported amounts of Assets
and Liabilities (including Contingent Liabilities) as of the date of
the Financial Statements and the reported income and Expenses during
the reporting period. Management believes that the estimates used in
the preparation of the financial statements are prudent and reasonable.
Actual results could differ from these estimates
iii fixed assets and depreciation/amortization (a) Tangible assets and
depreciation
Tangible fixed assets acquired by the Company are reported at
acquisition cost, with deductions for accumulated depreciation and
impairment losses, if any
The acquisition cost includes the purchase price (excluding refundable
taxes) and expenses such as delivery and handling costs, installation,
legal services and consultancy services, directly attributable to
bringing the asset to the site and in working condition for its
intended use
Where the construction or development of any asset requiring a
substantial period of time to set up for its intended use is funded by
borrowings, the corresponding borrowing costs are capitalised up to the
date when the asset is ready for its intended use
Depreciation on tangible fixed assets is computed as under:
(i) in respect of premises, depreciation is computed on the Straight
Line Method at the rates provided under Schedule XiV of the Companies
Act, 1956
(ii) the Company has adopted the Straight Line Method of depreciation
so as to depreciate 100% of the cost of the following type of assets at
rates higher than those prescribed under Schedule XiV to the Companies
Act, 1956, based on the Management's estimate of useful life of such
assets:
(iii) Depreciation on fixed assets, other than on assets specified in
Notes iii(a) (i) and (ii) above, is provided for on the Written Down
Value Method at the rates provided under Schedule XiV to the Companies
Act, 1956. Depreciation is computed pro-rata from the date of
acquisition of and up to the date of disposal
(iv) Leasehold improvement costs are capitalized and amortized on a
straight-line basis over the period of lease agreement unless the
corresponding rates under Schedule XiV are higher, in which case such
higher rates are used
(v) All categories of assets costing less than Rs 5,000 each, mobile
phones and items of soft furnishings are fully depreciated in the year
of purchase
(b) Intangible assets and amortization intangible assets comprise of
software and amounts paid for acquisition of commercial rights under an
"Operation and Maintenance" agreement of a toll road project intangible
assets are reported at acquisition cost with deductions for accumulated
amortization and impairment losses, if any Acquired intangible assets
are reported separately from goodwill if they fulfill the criteria for
qualifying as an asset, implying they can be separated or they are
based on contractual or other legal rights and that their market value
can be established in a reliable manner
An impairment test of intangible assets is conducted annually or more
often if there is an indication of a decrease in value. The impairment
loss, if any, is reported in the Statement of Profit and Loss
intangible assets are amortized on a "straight line" basis over their
estimated useful lives. The estimated useful life of software is four
years. The amount paid for acquisition of the rights under the
"Operations and Maintenance" agreement, is mortised over the minimum
balance period of the concession agreement relating to the
corresponding toll road project as it existed at the time of
acquisition
IV IMPAIRMENT OF ASSETS
The carrying values of assets of the Company's cash-generating unit are
reviewed for impairment annually or more often if there is an
indication of decline in value. if any indication of such impairment
exists, the recoverable amounts of those assets are estimated and
impairment loss is recognized, if the carrying amount of those assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the estimated future cash flows to their
present value based on appropriate discount factor
v investments
(a) investments are capitalized at actual cost including costs
incidental to acquisition
(b) investments are classified as long term or current at the time of
making such investments
(c) Long-term investments are individually valued at cost, less
provision for diminution that is other than temporary.
(d) Current investments are valued at the lower of cost and market
value
vi revenue recognition
The Company's service offerings include advisory and management
services, supervisory services (including as lenders' engineers),
operation and maintenance services, toll collection services for toll
road projects and rendering assistance to applicant for toll road
concessions with the bidding process
Revenue is recognized when it is realized or realizable and earned.
Revenue is considered as realized or realizable and earned when it has
persuasive evidence of an arrangement, delivery has occurred, the sales
price is fixed or determinable and collectability is reasonably assured
Revenue in respect of arrangements made for rendering services is
recognised over the contractual term of the arrangement. in respect of
arrangements, which provide for an upfront payment followed by
additional payments as certain conditions are met (milestone payments),
the amount of revenue recognized is based on the services delivered in
the period as stated in the contract. in respect of arrangements where
fees for services rendered are success based (contingent fees), revenue
is recognized only when the factor(s) on which the contingent fees is
based, actually occur
Revenue from development projects under fixed - price contracts, where
there is no uncertainty as to measurement or collectability of
consideration is recognized based on the milestones reached under the
contracts
contract revenue and costs associated with the construction of roads is
recognized as by reference to the stage of completion of the projects
at the Balance Sheet date. the stage of completion of a project is
determined by the proportion that the contract cost incurred for work
performed up to the Balance Sheet date bears to the estimated total
contract costs any excess revenue recognised in accordance with the
stage of completion of the project, in comparison to the amounts billed
to the clients in accordance with the milestones completed as per the
respective development agreements, is carried forward as "unearned
revenue" any short revenue recognized in accordance with the stage of
completion of the project, in comparison to the amounts billed to the
clients in accordance with the milestones completed as per the
respective development agreements, is carried forward as "Unbilled
Revenue" interest income is accrued evenly over the period of the
corresponding instrument
Dividend income is recognized when the unconditional right to receive
the payment is established
VII FOREIGN CURRENCY TRANSACTIONS
transactions in foreign currencies are translated to the reporting
currency based on the exchange rate on the date of the transaction.
Exchange difference arising on settlement thereof during the period is
recognized as income or expense in the Statement of Profit and Loss
Foreign currency denominated cash and bank balances, receivables (other
than those that are in substance the company's net investment in a non
integral foreign operation), and liabilities (monetary items)
outstanding as at the period end are valued at closing-date rates, and
unrealized translation differences are included in the Statement of
profit and Loss
Non monetary items (such as equity investments) denominated in foreign
currencies are reported using the exchange rate as at the date of the
transaction. where such items are carried at fair value, these are
reported using exchange rates that existed on dates when the fair
values were determined intercompany receivables or payables for which
settlement is neither planned nor likely to occur in the foreseeable
future and are in substance an extension to or a deduction from the
company's net investments in a non - integral foreign operations are
also translated at closing rates but the exchange differences arising
are accumulated in the foreign currency translation reserve until
disposal of the net investment, at which time they are recognized as
income or expense in the Statement of Profit and Loss. Any repayment of
receivables or payables forming part of net investment in foreign
operations is not considered as partial disposal of investments in
foreign operations and amounts previously recognized in the foreign
currency translation reserve are not adjusted until the disposal of the
ownership interest occurs
VIII EMPLOYEE BENEFITS
(a) Short term
Short term employee benefits are recognized as an expense at the
undiscounted amount expected to be paid over the period of services
rendered by the employees to the company
(b) Long term
the company has both defined-contribution and defined-benefit plans, of
which some have assets in special funds or securities. the plans are
financed by the company and in the case of some defined contribution
plans by the company along with its employees
(i) Defined-contribution plans
these are plans in which the company pays pre-defined amounts to
separate funds and does not have any legal or informal obligation to
pay additional sums. these comprise of contributions to the employees'
provident fund, family pension fund and superannuation fund. The
Company's payments to the defined- contribution plans are reported as
expenses in period in which the employees perform the services that the
payment covers
(ii) Defined-benefit plans
Expenses for defined-benefit gratuity plans are calculated as at the
balance sheet date by independent actuaries in a manner that
distributes expenses over the employee's working life. These
commitments are valued at the present value of expected future
payments, with consideration for calculated future salary increases,
using a discount rate corresponding to the interest rate estimated by
the actuary having regard to the interest rate on government bonds with
a remaining term that is almost equivalent to the average balance
working period of employees
The actuarial gains and losses are recognized immediately in the
Statement of Profit and Loss
(c) Others
Compensated absences which accrue to employees and which can be carried
to future periods but are expected to be encased or availed in twelve
months immediately following the year end are reported as expenses in
the year in which the employees perform the services that the benefit
covers at the undiscounted amount of the benefits after deducting
amounts already paid. Where there are restrictions on a ailment or
encashment of such accrued benefit or where the a ailment or encashment
is otherwise not expected to wholly occur in the next twelve months,
the liability on account of the benefit is actuarially determined using
the projected unit credit method
ix taxes ON INCOME
Taxes include taxes on the Company's taxable profits, adjustment
attributable to earlier periods and changes in deferred taxes. Taxes
are determined in accordance with enacted tax regulations and tax rates
in force and in the case of deferred taxes at rates that have been
substantively enacted
Deferred tax is calculated to correspond to the tax effect arising when
final tax is determined. Deferred tax corresponds to the net effect of
tax on all timing differences which occur as a result of items being
allowed for income tax purposes during a period different from when
they are recognized in the financial statements
Deferred tax assets are recognized with regard to all deductible timing
differences to the extent that it is probable that taxable profit will
be available in future against which deductible timing differences can
be utilized
When the Company carries forward unused tax losses and unabsorbed
depreciation, deferred tax assets are recognized only to the extent
there is virtual certainty backed by convincing evidence that
sufficient future taxable income will be available against which
deferred tax assets can be realized
The carrying amount of deferred tax assets is reviewed at each balance
sheet date and reduced by the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or a part of
the aggregate deferred tax asset to be utilized
x LEASE ACCOUNTING
Leases of assets where the lessor retains substantially all the risks
and benefits of ownership of the assets 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. Any compensation, according to agreement, that the lessee is
obliged to pay to the lessor if the leasing contract is terminated
prematurely is expensed during the period in which the contract is
terminated
xi provisions, contingent liabilities and contingent assets
A provision is recognized when the Company has a present obligation as
a result of a past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions (excluding employee
benefits) are not discounted to their present value and are determined
based on best estimates 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. Contingent liabilities
are not recognized but are disclosed in the notes to the financial
statement. A contingent asset is neither recognized nor disclosed
xii segment reporting
The accounting policies adopted for segment reporting are in accordance
with the accounting policy of the Company. Segment revenue, expenses,
assets and liabilities have been identified to segments on the basis of
their relationship to the operating activities of the Segment.
Revenues, expenses, assets and liabilities, which relate to the
enterprise as a whole and are not allocable to segments on a reasonable
basis, have been included under "Unallocated Revenue / Expenses /
Assets / Liabilities"
xiii borrowing costs
Borrowing costs are recognized in the period to which they relate,
regardless of how the funds have been utilized, except where it relates
to the financing of construction or development of assets requiring a
substantial period of time to prepare for their intended future use.
Borrowing Costs are capitalized up to the date when the asset is ready
for its intended use. The amount of borrowing costs capitalized (gross
of tax) for the period is determined by applying the interest rate
applicable to appropriate borrowings outstanding during the period to
the average amount of accumulated expenditure for the assets during the
period
xiv cash and cash equivalents
Cash comprises of Cash on Hand, Cheques on Hand and demand deposits
with Banks. Cash Equivalents are short term, highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risks of changes in value
xv cash flow statement
The Cash Flow Statement is prepared in accordance with the "indirect
Method" as explained in the Accounting Standard (AS) 3 on Cash Flow
Statements
xvi earnings per share
Basic earnings per share is calculated by dividing the net profit after
tax for the period attributable to equity shareholders of the Company
by the weighted average number of equity shares in issue during the
period
Diluted earnings per share is calculated by dividing the net profit
after tax for the period attributable to equity shareholders of the
Company by the weighted average number of equity shares determined by
assuming conversion on exercise of conversion rights for all potential
dilutive securities
xvi derivative transactions
Premium paid on option contracts acquired is treated as an asset until
maturity. Premium received on option contracts written is treated as
liability until maturity. in case of Forward exchange contracts which
are not intended for trading or speculation purposes, the premium or
discount arising at the inception of such a forward exchange contract
is mortised as expense or income over the life of the contract.
Exchange differences on such a contract are recognized in the Statement
of Profit and Loss in the reporting period in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of such a
forward exchange contract is recognized as income or as expense for the
period
Mar 31, 2011
1. Basis for preparation of Financial Statements
The financial statements have been prepared under the historical cost
convention in accordance with the generally accepted accounting
principles in India, and the applicable accounting standards referred
to in Section 211(3C) of the Companies Act, 1956. All income and
expenditure having a material bearing on the financial statements are
recognised on an accrual basis
2. Use of estimates
The preparation of financial statements in conformity with the
generally accepted accounting principles requires the management to
make estimates and assumptions considered in the reported amounts of
assets and liabilities (including current liabilities) as of the date
of the financial statements, the reported income and expenses during
the reporting period and disclosure of contingent liabilities.
Management believes that the estimates used in the preparation of the
financial statements are prudent and reasonable. Actual results could
differ from these estimates
3. Fixed Assets and Depreciation/Amortisation
(a) Tangible fixed assets and depreciation
Tangible fixed assets acquired by the Company are reported at
acquisition cost, with deductions for accumulated depreciation and
impairment losses, if any
The acquisition cost includes the purchase price (excluding refundable
taxes) and expenses such as delivery and handling costs, installation,
legal services and consultancy services, directly attributable to
bringing the asset to the site and in working condition for its
intended use
Where the construction or development of any asset requiring a
substantial period of time to set up for its intended use is funded by
borrowings, the corresponding borrowing costs are capitalised up to the
date when the asset is ready for its intended use
Depreciation on tangible fixed assets is computed as under:
(i) In respect of premises, depreciation is computed on the Straight
Line Method at the rates provided under Schedule XIV of the Companies
Act, 1956
(ii) The Company has adopted the Straight Line Method of depreciation
so as to depreciate 100% of the cost of the following type of assets at
rates higher than those prescribed under Schedule XIV to the Companies
Act, 1956, based on the Managements estimate of useful life of such
assets:
(iii) Depreciation on fixed assets, other than on assets specified in
Notes 3(a) (i) and (ii) above, is provided for on the Written Down
Value Method at the rates provided under Schedule XIV of the Companies
Act, 1956. Depreciation is computed proÃrata from the date of
acquisition of and up to the date of disposal
(iv) Leasehold improvement costs are capitalised and amortised on a
straightÃline basis over the period of lease agreement unless the
corresponding rates under Schedule XIV are higher, in which case such
higher rates are used
(v) All categories of assets costing less than Rs. 5,000 each, mobile
phones and items of soft furnishing are fully depreciated in the year
of purchase
(b) Intangible assets and amortisation
Intangible assets comprise of software and amounts paid for acquisition
of commercial rights under an "Operation and Maintenanceà agreement of
a toll road project
Intangible assets are reported at acquisition cost with deductions for
accumulated amortisation and impairment losses, if any Acquired
intangible assets are reported separately from goodwill if they fulfil
the criteria for qualifying as an asset, implying they can be separated
or they are based on contractual or other legal rights and that their
market value can be established in a reliable manner
An impairment test of intangible assets is conducted annually or more
often if there is an indication of a decrease in value. The impairment
loss, if any, is reported in the Profit and Loss Account
Intangible assets are amortised on a "straight lineà basis over their
estimated useful lives. The estimated useful life of software is four
years. The amount paid for acquisition of the rights under the
"Operations and Maintenanceà agreement, is amortised over the minimum
balance period of the concession agreement relating to the
corresponding toll road project as it existed at the time of
acquisition
4. Impairment of Assets
The carrying values of assets of the Companys cashÃgenerating unit are
reviewed for impairment annually or more often if there is an
indication of decline in value. If any indication of such impairment
exists, the recoverable amounts of those assets are estimated and
impairment loss is recognised, if the carrying amount of those assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the estimated future cash flows to their
present value based on appropriate discount factor
5. Investments
(a) Investments are capitalised at actual cost including costs
incidental to acquisition
(b) Investments are classified as long term or current at the time of
making such investments
(c) LongÃterm investments are individually valued at cost, less
provision for diminution that is other than temporary
(d) Current investments are valued at the lower of cost and market
value
6. Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs are determined using the annual weighted average principle and
includes purchase price and nonÃrefundable taxes. Net realisable value
is estimated at the expected selling price less estimated selling costs
7. Revenue Recognition
The Companys service offerings include advisory and management
services, supervisory services (including as lenders engineers),
operation and maintenance services, toll collection services for toll
road projects and rendering assistance to applicant for toll road
concessions with the bidding process. The Company also trades in
certain materials used in the maintenance of roads
Revenue is recognised when it is realised or realisable and earned.
Revenue is considered as realised or realisable and earned when it has
persuasive evidence of an arrangement, delivery has occurred, the sales
price is fixed or determinable and collectability is reasonably assured
Revenue in respect of arrangements made for rendering services over a
specific contractual term is recognised on a straightÃline basis over
the contractual term of the arrangement. In respect of arrangements,
which provide for an upfront payment followed by additional payments as
certain conditions are met (milestone payments), the amount of revenue
recognised is based on the services delivered in the period as stated
in the contract. In respect of arrangements where fees for services
rendered are success based (contingent fees), revenue is recognised
only when the factor(s) on which the contingent fees is based, actually
occur. In respect of the Companys trading activities, revenue is
recognised on dispatch of goods, which coincides with the significant
transfer of risks and rewards
Revenue from development projects under fixed à price contracts, where
there is no uncertainty as to measurement or collectability of
consideration is recognised based on the milestones reached under the
contracts. Pending completion of any milestone, revenue recognition is
restricted to the relevant cost which is carried forward as part of
Unbilled Revenue
Contract revenue and costs associated with the construction of roads is
recognised as by reference to the stage of completion of the projects
at the Balance Sheet date. The stage of completion of a project is
determined by the proportion that the contract cost incurred for work
performed up to the Balance Sheet date bears to the estimated total
contract costs
8. Work in Progress (Unbilled Revenue)
Work in progress for projects under execution as at balance sheet date
are valued at cost less provision, if any, for estimated losses. The
costs of projects in respect of which revenue is recognised under the
Companys revenue recognition policies but have not been billed are
adjusted for the proportionate profit recognised. The cost comprises of
expenditure incurred in relation to execution of the project. Provision
for estimated losses, in any, on uncompleted contracts are recorded in
the period in which such losses become probable based on current
estimates
9. Foreign Currency Transactions
Transactions in foreign currencies are translated to the reporting
currency based on the exchange rate on the date of the transaction.
Exchange difference arising on settlement thereof during the period is
recognised as income or expense in the Profit and Loss Account
Foreign currency denominated cash and bank balances, receivables (other
than those that are in substance the Companys net investment in a non
integral foreign operation), and liabilities (monetary items)
outstanding as at the period end are valued at closingÃdate rates, and
unrealised translation differences are included in the Profit and Loss
Account
Non monetary items (such as equity investments) denominated in foreign
currencies are reported using the exchange rate as at the date of the
transaction. Where such items are carried at fair value, these are
reported using exchange rates that existed on dates when the fair
values were determined
Inter company receivables or payables for which settlement is neither
planned nor likely to occur in the foreseeable future and are in
substance an extension to or a deduction from the Companys net
investments in a non à integral foreign operations are also translated
at closing rates but the exchange differences arising are accumulated
in the foreign currency translation reserve until disposal of the net
investment, at which time they are recognised as income or expense in
the Profit and Loss Account. Any repayment of receivables or payables
forming part of net investment in foreign operations is not considered
as partial disposal of investments in foreign operations and amounts
previously recognised in the foreign currency translation reserve are
not adjusted until the disposal of the ownership interest occurs
The Companys forward exchange contracts are not held for trading or
speculation. The premium or discount arising on entering into such
contracts is amortised over the life of the contracts and exchange
difference arising on such contracts is recognised in the Profit and
Loss Account
10. Employee Benefits
(a) Short term
Short term employee benefits are recognised as an expense at the
undiscounted amount expected to be paid over the period of services
rendered by the employees to the Company
(b) Long term
The Company has both definedÃcontribution and definedÃbenefit plans, of
which some have assets in special funds or securities. The plans are
financed by the Company and in the case of some defined contribution
plans by the Company along with its employees
(i) DefinedÃcontribution plans
These are plans in which the Company pays preÃdefined amounts to
separate funds and does not have any legal or informal obligation to
pay additional sums. These comprise of contributions to the employees
provident fund, family pension fund and superannuation fund. The
Companys payments to the definedÃcontribution plans are reported as
expenses in period in which the employees perform the services that the
payment covers
(ii) DefinedÃbenefit plans
Expenses for definedÃbenefit gratuity plans are calculated as at the
balance sheet date by independent actuaries in a manner that
distributes expenses over the employees working life. These
commitments are valued at the present value of expected future
payments, with consideration for calculated future salary increases,
using a discount rate corresponding to the interest rate estimated by
the actuary having regard to the interest rate on government bonds with
a remaining term that is almost equivalent to the average balance
working period of employees
The actuarial gains and losses are recognised immediately in the
Statement of Profit and Loss Account
(c) Others
Compensated absences which accrue to employees and which can be carried
to future periods but are expected to be encashed or availed in twelve
months immediately following the year end are reported as expenses in
the year in which the employees perform the services that the benefit
covers at the undiscounted amount of the benefits after deducting
amounts already paid. Where there are restrictions on availment or
encashment of such accrued benefit or where the availment or encashment
is otherwise not expected to wholly occur in the next twelve months,
the liability on account of the benefit is actuarially determined using
the projected unit credit method
11. Taxes on Income
Taxes include taxes on the Companys taxable profits, adjustment
attributable to earlier periods and changes in deferred taxes. Taxes
are determined in accordance with enacted tax regulations and tax rates
in force and in the case of deferred taxes at rates that have been
substantively enacted
Deferred tax is calculated to correspond to the tax effect arising when
final tax is determined. Deferred tax corresponds to the net effect of
tax on all timing differences which occur as a result of items being
allowed for income tax purposes during a period different from when
they are recognised in the financial statements
Deferred tax assets are recognised with regard to all deductible timing
differences to the extent that it is probable that taxable profit will
be available in future against which deductible timing differences can
be utilised. When the Company carries forward unused tax losses and
unabsorbed depreciation, deferred tax assets are recognised only to the
extent there is virtual certainty backed by convincing evidence that
sufficient future taxable income will be available against which
deferred tax assets can be realised
The carrying amount of deferred tax assets is reviewed at each balance
sheet date and reduced by the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or a part of
the aggregate deferred tax asset to be utilised
12. Lease Accounting
Leases of assets where the lessor retains substantially all the risks
and benefits of ownership of the assets are classified as operating
leases. Operating lease payments are recognised as an expense in the
Profit and Loss Account on a straight line basis over the lease term.
Any compensation, according to agreement, that the lessee is obliged to
pay to the lessor if the leasing contract is terminated prematurely is
expensed during the period in which the contract is terminated
13. Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a present obligation as
a result of a past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on best estimates 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. Contingent liabilities
are not recognised but are disclosed in the notes to the financial
statement. A contingent asset is neither recognised nor disclosed
14. Segment Reporting
The accounting policies adopted for segment reporting are in accordance
with the accounting policy of the Company. Segment revenue, expenses,
assets and liabilities have been identified to segments on the basis of
their relationship to the operating activities of the Segment.
Revenues, expenses, assets and liabilities,
which relate to the enterprise as a whole and are not allocable to
segments on a reasonable basis, have been included under "Unallocated
Revenue / Expenses / Assets / LiabilitiesÃ
15. Financial Income and Borrowing Costs
Financial income and borrowing costs include interest income on bank
deposits and interest expense on loans
Interest income is accrued evenly over the period of the corresponding
instrument Dividend Income is recognised when the right to receive the
payment is established
Borrowing costs are recognised in the period to which they relate,
regardless of how the funds have been utilised, except where it relates
to the financing of construction or development of assets requiring a
substantial period of time to prepare for their intended future use.
Interest is capitalised up to the date when the asset is ready for its
intended use. The amount of interest capitalised (gross of tax) for the
period is determined by applying the interest rate applicable to
appropriate borrowings outstanding during the period to the average
amount of accumulated expenditure for the assets during the period
16. Cash and Cash Equivalents
Cash and bank balances, and current investments that have insignificant
risk of change in value and original duration of up to three months,
are included in the Companys cash and cash equivalents in the Cash
Flow Statement
17. Cash Flow Statements
The Cash Flow Statement is prepared in accordance with the "Indirect
Methodà as explained in the Accounting Standard (AS) 3 on Cash Flow
Statements
18. Earnings per Share
Basic earnings per share is calculated by dividing the net profit after
tax for the period attributable to equity shareholders of the Company
by the weighted average number of equity shares in issue during the
period
Diluted earnings per share is calculated by dividing the net profit
after tax for the period attributable to equity shareholders of the
company by the weighted average number of equity shares determined by
assuming conversion on exercise of conversion rights for all potential
dilutive securities
19. Derivative Transactions
Premium paid on acquisition of option contracts is treated as current
asset until maturity. If the premium paid exceeds the premium
prevailing as at the date of the balance sheet, the difference charged
to the Profit and Loss Account. If the prevailing premium as at the
balance sheet date exceeds the premium paid for acquiring option
contracts, the difference is not recognised
Premium received on option contracts written is treated as current
liability until maturity. If premium prevailing on the balance sheet
date exceeds the premium received on such options, the difference is
charged to the Profit and Loss Account. If the prevailing premium as at
the balance sheet date falls short of the premium received for writing
option contracts, the difference is not recognised
Mar 31, 2010
1. Basis for preparation of Financial Statements
The fnancial statements have been prepared under the historical cost
convention in accordance with the generally accepted accounting
principles in India, the provisions of the Companies Act, 1956 and the
applicable accounting standards referred to in Section 211(3C) of the
Companies Act, 1956. All income and expenditure having a material
bearing on the fnancial statements are recognised on an accrual basis
2. Use of estimates
The preparation of fnancial statements in conformity with the generally
accepted accounting principles requires the management to make
estimates and assumptions considered in the reported amounts of assets
and liabilities (including current liabilities) as of the date of the
fnancial statements, the reported income and expenses during the
reporting period and disclosure of contingent liabilities. Management
believes that the estimates used in the preparation of the fnancial
statements are prudent and reasonable. Actual results could differ from
these estimates
3. Fixed Assets and Depreciation/Amortisation
(a) Tangible fxed assets and depreciation
Tangible fxed assets acquired by the Company are reported at
acquisition cost, with deductions for accumulated depreciation and
impairment losses, if any
The acquisition cost includes the purchase price (excluding refundable
taxes) and expenses such as delivery and handling costs, installation,
legal services and consultancy services, directly attributable to
bringing the asset to the site and in working condition for its
intended use
Where the construction or development of any asset requiring a
substantial period of time to set up for its intended use is funded by
borrowings, the corresponding borrowing costs are capitalised up to the
date when the asset is ready for its intended use
Depreciation on tangible fxed assets is computed as under:
(i) In respect of premises, depreciation is computed on the Straight
Line Method at the rates provided under Schedule XIV of the Companies
Act, 1956
(ii) The Company has adopted the Straight Line Method of depreciation
so as to depreciate 100% of the cost of the following type of assets at
rates higher than those prescribed under Schedule XIV to the Companies
Act, 1956, based on the ManagementÃs estimate of useful life of such
assets:
Asset Type Useful Life
Computers 4 years
Specialised offce equipment 3 years
Assets provided to employees 3 Years
(iii) Depreciation on fxed assets, other than on assets specifed in
Notes 3(a) (i) and (ii) above, is provided for on the Written Down
Value Method at the rates provided under Schedule XIV of the Companies
Act, 1956. Depreciation is computed pro-rata from the date of
acquisition of and up to the date of disposal
(iv) Leasehold improvement costs are capitalised and amortised on a
straight-line basis over the period of lease agreement unless the
corresponding rates under Schedule XIV are higher, in which case such
higher rates are used
(v) All categories of assets costing less than Rs. 5,000 each, mobile
phones and items of soft furnishing are fully depreciated in the year
of purchase
(b) Intangible assets and amortisation
Intangible assets comprise of software and amounts paid for acquisition
of commercial rights under an ÃOperation and Maintenanceà agreement of
a toll road project Intangible assets are reported at acquisition cost
with deductions for accumulated amortisation and impairment losses, if
any Acquired intangible assets are reported separately from goodwill if
they fulfl the criteria for qualifying as an asset, implying they can
be separated or they are based on contractual or other legal rights and
that their market value can be established in a reliable manner
An impairment test of intangible assets is conducted annually or more
often if there is an indication of a decrease in value. The impairment
loss, if any, is reported in the Proft and Loss Account
Intangible assets are amortised on a Ãstraight lineà basis over their
estimated useful lives. The estimated useful life of software is four
years. The amount paid for acquisition of the rights under the
ÃOperations and Maintenanceà agreement, is amortised over the minimum
balance period of the concession agreement relating to the
corresponding toll road project as it existed at the time of
acquisition
4. Impairment of Assets
The carrying values of assets of the CompanyÃs cash-generating unit are
reviewed for impairment annually or more often if there is an
indication of decline in value. If any indication of such impairment
exists, the recoverable amounts of those assets are estimated and
impairment loss is recognised, if the carrying amount of those assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the estimated future cash fows to their
present value based on appropriate discount factor
5. Investments
(a) Investments are capitalised at actual cost including costs
incidental to acquisition
(b) Investments are classifed as long term or current at the time of
making such investments
(c) Long-term investments are individually valued at cost, less
provision for diminution that is other than temporary
(d) Current investments are valued at the lower of cost and market
value
6. Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs are determined using the annual weighted average principle and
includes purchase price and non-refundable taxes. Net realisable value
is estimated at the expected selling price less estimated selling costs
7. Revenue Recognition
The CompanyÃs service offerings include advisory and management
services, supervisory services (including as lendersà engineers),
operation and maintenance services, toll collection services for toll
road projects and rendering assistance to applicant for toll road
concessions with the bidding process. The Company also trades in
certain materials used in the maintenance of roads
Revenue is recognised when it is realised or realisable and earned.
Revenue is considered as realised or realisable and earned when it has
persuasive evidence of an arrangement, delivery has occurred, the sales
price is fxed or determinable and collectability is reasonably assured
Revenue in respect of arrangements made for rendering services over a
specifc contractual term is recognised on a straight-line basis over
the contractual term of the arrangement. In respect of arrangements,
which provide for an upfront payment followed by additional payments as
certain conditions are met (milestone payments), the amount of revenue
recognised is based on the services delivered in the period as stated
in the contract. In respect of arrangements where fees for services
rendered are success based (contingent fees), revenue is recognised
only when the factor(s) on which the contingent fees is based, actually
occur. In respect of the CompanyÃs trading activities, revenue is
recognised on dispatch of goods, which coincides with the signifcant
transfer of risks and rewards
Revenue from development projects under fxed - price contracts, where
there is no uncertainty as to measurement or collectability of
consideration is recognised based on the milestones reached under the
contracts. Pending completion of any milestone, revenue recognition is
restricted to the relevant cost which is carried forward as part of
Unbilled Revenue
Contract revenue and costs associated with the construction of roads is
recognised as by reference to the stage of completion of the projects
at the Balance Sheet date. The stage of completion of a project is
determined by the proportion that the contract cost incurred for work
performed up to the Balance Sheet date bears to the estimated total
contract costs
8. Work in Progress (Unbilled Revenue)
Work in progress for projects under execution as at balance sheet date
are valued at cost less provision, if any, for estimated losses. The
costs of projects in respect of which revenue is recognised under the
CompanyÃs revenue recognition policies but have not been billed are
adjusted for the proportionate proft recognised. The cost comprises of
expenditure incurred in relation to execution of the project. Provision
for estimated losses, in any, on uncompleted contracts are recorded in
the period in which such losses become probable based on current
estimates
9. Foreign currency Transactions
Transactions in foreign currencies are translated to the reporting
currency based on the exchange rate on the date of the transaction.
Exchange difference arising on settlement thereof during the year is
recognised as income or expense in the Proft and Loss Account
Foreign currency denominated cash and bank balances, receivables (other
than those that are in substance the CompanyÃs net investment in a non
integral foreign operation), and liabilities (monetary items)
outstanding as at the year end are valued at closing-date rates, and
unrealised translation differences are included in the Proft and Loss
Account
Non monetary items (such as equity investments) denominated in foreign
currencies are reported using the exchange rate as at the date of the
transaction. Where such items are carried at fair value, these are
reported using exchange rates that existed on dates when the fair
values were determined
Inter company receivables or payables for which settlement is neither
planned nor likely to occur in the foreseeable future and are in
substance an extension to or a deduction from the CompanyÃs net
investments in a non - integral foreign operations are also translated
at closing rates but the exchange differences arising are accumulated
in the foreign currency translation reserve until disposal of the net
investment, at which time they are recognised as income or expense in
the Proft and Loss Account. Any repayment of receivables or payables
forming part of net investment in foreign operations is not considered
as partial disposal of investments in foreign operations and amounts
previously recognised in the foreign currency translation reserve are
not adjusted until the disposal of the ownership interest occurs
The CompanyÃs forward exchange contracts are not held for trading or
speculation. The premium or discount arising on entering into such
contracts is amortised over the life of the contracts and exchange
difference arising on such contracts is recognised in the Proft and
Loss Account
10. Employee Benefts
(a) Short term
Short term employee benefts are recognised as an expense at the
undiscounted amount expected to be paid over the period of services
rendered by the employees to the Company
(b) Long term
The Company has both defned-contribution and defned-beneft plans, of
which some have assets in special funds or securities. The plans are
fnanced by the Company and in the case of some defned contribution
plans by the Company along with its employees
(i) Defned-contribution plans
These are plans in which the Company pays pre-defned amounts to
separate funds and does not have any legal or informal obligation to
pay additional sums. These comprise of contributions to the employeesÃ
provident fund, family pension fund and superannuation fund. The
CompanyÃs payments to the defned-contribution plans are reported as
expenses in period in which the employees perform the services that the
payment covers
(ii) Defned-beneft plans
Expenses for defned-beneft gratuity plans are calculated as at the
balance sheet date by independent actuaries in a manner that
distributes expenses over the employeeÃs working life. These
commitments are valued at the present value of expected future
payments, with consideration for calculated future salary increases,
using a discount rate corresponding to the interest rate estimated by
the actuary having regard to the interest rate on government bonds with
a remaining term that is almost equivalent to the average balance
working period of employees
(c) Others
Compensated absences which accrue to employees and which can be carried
to future periods but are expected to be encashed or availed in twelve
months immediately following the year end are reported as expenses in
the year in which the employees perform the services that the beneft
covers at the undiscounted amount of the benefts after deducting
amounts already paid. Where there are restrictions on availment or
encashment of such accrued beneft or where the availment or encashment
is otherwise not expected to wholly occur in the next twelve months,
the liability on account of the beneft is actuarially determined using
the projected unit credit method
11. Taxes on Income
Taxes include taxes on the CompanyÃs taxable profts, adjustment
attributable to earlier periods and changes in deferred taxes. Taxes
are determined in accordance with enacted tax regulations and tax rates
in force and in the case of deferred taxes at rates that have been
substantively enacted
Deferred tax is calculated to correspond to the tax effect arising when
fnal tax is determined. Deferred tax corresponds to the net effect of
tax on all timing differences which occur as a result of items being
allowed for income tax purposes during a period different from when
they are recognised in the fnancial statements.
Deferred tax assets are recognised with regard to all deductible timing
differences to the extent that it is probable that taxable proft will
be available in future against which deductible timing differences can
be utilised. When the Company carries forward unused tax losses and
unabsorbed depreciation, deferred tax assets are recognised only to the
extent there is virtual certainty backed by convincing evidence that
suffcient future taxable income will be available against which
deferred tax assets can be realised
The carrying amount of deferred tax assets is reviewed at each balance
sheet date and reduced by the extent that it is no longer probable that
suffcient taxable proft will be available to allow all or a part of the
aggregate deferred tax asset to be utilised
12. Lease Accounting
Leases of assets where the lessor retains substantially all the risks
and benefts of ownership of the assets are classifed as operating
leases. Operating lease payments are recognised as an expense in the
Proft and Loss Account on a straight line basis over the lease term.
Any compensation, according to agreement, that the lessee is obliged to
pay to the lessor if the leasing contract is terminated prematurely is
expensed during the period in which the contract is terminated
13. Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a present obligation as
a result of a past event and it is probable that an outfow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefts) are not discounted to their present value and are determined
based on best estimates 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. Contingent liabilities
are not recognised but are disclosed in the notes to the fnancial
statement. A contingent asset is neither recognised nor disclosed
14. Segment Reporting
The accounting policies adopted for segment reporting are in accordance
with the accounting policy of the Company. Segment revenue, expenses,
assets and liabilities have been identifed to segments on the basis of
their relationship to the operating activities of the Segment. Revenue,
expenses, assets and liabilities, which relate to the enterprise as a
whole and are not allocable to segments on a reasonable basis, have
been included under ÃUnallocated Revenue / Expenses / Assets /
LiabilitiesÃ
15. Financial Income and Borrowing costs
Financial income and borrowing costs include interest income on bank
deposits and interest expense on loans Interest income is accrued
evenly over the period of the corresponding instrument Borrowing costs
are recognised in the period to which they relate, regardless of how
the funds have been utilised, except where it relates to the fnancing
of construction or development of assets requiring a substantial period
of time to prepare for their intended future use. Interest is
capitalised up to the date when the asset is ready for its intended
use. The amount of interest capitalised (gross of tax) for the period
is determined by applying the interest rate applicable to appropriate
borrowings outstanding during the period to the average amount of
accumulated expenditure for the assets during the period
16. cash and cash Equivalents
Cash and bank balances, and current investments that have insignifcant
risk of change in value and original duration of up to three months,
are included in the CompanyÃs cash and cash equivalents in the Cash
Flow Statement
17. cash flow Statements
The Cash Flow Statement is prepared in accordance with the ÃIndirect
Methodà as explained in the Accounting Standard (AS) 3 on Cash Flow
Statements
18. Earnings per Share
Basic earnings per share is calculated by dividing the net proft after
tax for the year attributable to equity shareholders of the Company by
the weighted average number of equity shares in issue during the year
Diluted earnings per share is calculated by dividing the net proft
after tax for the year attributable to equity shareholders of the
company by the weighted average number of equity shares determined by
assuming conversion on exercise of conversion rights for all potential
dilutive securities
19. Derivative Transactions
Premium paid on acquisition of option contracts is treated as current
asset until maturity. If the premium paid exceeds the premium
prevailing as at the date of the balance sheet, the difference charged
to the Proft and Loss Account. If the prevailing premium as at the
balance sheet date exceeds the premium paid for acquiring option
contracts, the difference is not recognised
Premium received on option contracts written is treated as current
liability until maturity. If premium prevailing on the balance sheet
date exceeds the premium received on such options, the difference is
charged to the Proft and Loss Account. If the prevailing premium as at
the balance sheet date falls short of the premium received for writing
option contracts, the difference is not recognised