A Oneindia Venture
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Accounting Policies of Rail Vikas Nigam Ltd. Company
Mar 31, 2025
Summary of Material Accounting Policies:
Note 2.
2.1 Basis of Preparation
a) Statement of Compliance
These financial statements have been
prepared in accordance with Indian
Accounting Standards (Ind-AS) notified
under section 133 of the Companies Act
2013 and Companies (Indian
Accounting Standards) Rules 2015 as
amended from time to time.
b) Basis of Measurement
The financial statements have been
prepared under the historical cost
convention and on accrual basis except
for the following items that have been
measured at fair value as required by
relevant Ind-AS.
i. Defined benefit Plan and other
long term employee benefits
ii. Certain financial assets and
liabilities measured at fair value.
c) Use of estimates and judgement
The preparation of financial statements
is in conformity with Ind AS that requires
management to make judgements,
estimates and assumptions that affect
the application of accounting policies
and the reported amounts of assets and
liabilities, disclosure of contingent assets
and liabilities at the date of financial
statements and the reported amount of
income and expenses. Examples of such
estimates include estimates of future
obligations under employee retirement
benefit plans and estimated useful life of
property plant and equipment. Actual
results may differ from these estimates.
Estimates and underlying assumptions
are reviewed on a periodic basis. Future
results could differ due to changes in
these estimates. Difference between the
actual result and the estimates are
recognised in the period in which the
results are known /materialize.
All financial information are presented
in Indian rupees and all values are
rounded to the nearest crore rupees
with two decimal points except where
otherwise stated. Due to rounding off
the numbers presented throughout the
document may not add up precisely to
the totals and percentages may not
precisely reflect the absolute figures.
2.2 Cash Flow Statement
Cash flow statement is reported using the
indirect method whereby profit / (loss) before
tax is adjusted for the effects of transactions
of non-cash nature and any deferrals or
accruals of past or future cash receipts or
payments. The cash flows from operating
investing and financing activities of the
company are segregated based on the
available information.
2.3 Property plant and equipment
a) Property plant and equipment are
measured at cost less accumulated
depreciation and impairment losses if
any.
Cost of asset includes the following
I. Cost directly attributable to the
acquisition of the assets
ii. Incidental expenditure during the
construction period is capitalized as
part of the indirect construction cost
to the extent to which the
expenditure is directly related to
construction or is incidental thereto.
iii. Present value of the estimated
costs of dismantling & removing
the items & restoring the site on
which it is located if recognition
criteria are met.
b) Cost of replacement, major inspection,
repair of significant parts and borrowing
costs for long-term construction projects
are capitalised if the recognition criteria
are met.
c) Upon sale of assets cost and accumulated
depreciation are eliminated from the
financial statements and the resultant
gains or losses are recognized in the
statement of profit and loss.
Depreciation
a) Depreciation on Property plant and
Equipment is provided on Straight Line basis
(SLM) over the useful life of the assets as
specified in Schedule II of the Companies Act,
2013 except in the case of (i) Furniture &
Fixtures and (ii) Mobiles Phones & Tablets. In
both the categories of these assets
Management has estimated the useful life
after taking into consideration the economic
benefits embodied in these assets and other
factors such as technical obsolescence and
wear and tear etc.
The estimated useful life of significant items
of property plant and equipment are as
follows:
(b) Each part of an item of Property Plant and
Equipment is depreciated separately if the
cost of part is significant in relation to the
total cost of the item and useful life of that
part is different from the useful life of
remaining asset.
(c) Leasehold improvements are amortized over
the lower of estimated useful life and lease
term.
(d) Depreciation methods useful lives and
residual values are reviewed at each
reporting date.
(e) Depreciation on individual assets acquired
for Rs. 5000/- or less is depreciated at the rate
of 100% in the year of purchase itself.
2.4 Capital Work-in-Progress
Capital work-in-progress, representing assets
under assembly or expenditure incurred in
respect of assets under development and not
ready for their intended use, are carried at
cost. Cost includes related acquisition
expenses, construction cost, and other
expenditure that are attributable to for
development/ assembly of asset.
2.5 Intangible Assets
Intangible assets are recognized when it is
probable that the future economic benefits
that are attributable to the asset will flow to
the enterprise and the cost of the asset can
be measured reliably. Intangible assets are
stated at historical cost less accumulated
amortization and impairment loss if any.
Intangible assets comprise of license fees
other implementation costs for system
software and other application software
acquired for in-house use. The costs are
capitalized in the year in which the relevant
software is implemented for use. The cost of
an intangible asset comprises its purchase
price including any import duties and other
taxes and any directly attributable
expenditure on making the asset ready for its
intended use, intangible assets not ready for
intended use as on reporting date is
recognised as intangible assets under
development.
Amortization of Intangible Assets
Intangible assets are amortized over their
respective estimated useful lives on a straight¬
line basis from the date that they are
available for use.The estimated useful life of
acquired softwares (other than SAP software)
are finite i.e 3 years and estimated useful life
of SAP software is 6 years. Amortisation
methods useful lives and residual values are
reviewed at each reporting date.
2.6 Impairment of non-financial assets
An asset is treated as impaired when the
carrying cost of assets exceeds its recoverable
value and impairment loss is charged to the
Statement of Profit & Loss in the year in which
an asset is identified as impaired. At each
reporting date company assesses the estimate
amount of impairment loss. The impairment
loss recognized in prior accounting periods is
reversed if there has been a change in the
estimate of recoverable amount. Reversal of
impaired loss is recognized in the Statement
of Profit & Loss.
2.7 Investments in Subsidiaries, Associates and
Joint Arrangements
a) Investment in Subsidiaries and Associates
Investments in subsidiaries and
associates are accounted for at cost less
impairment loss, if any, in standalone
financial statements.
b) Joint Arrangement
Investment in joint arrangement are
classified as either joint operation or joint
ventures. The classification depends on
the contractual rights and obligations
of each investors rather than the legal
structure of the joint arrangement.
i) Joint Operations
Company recognizes its direct right
to the assets, liabilities, revenue
and expenses of joint operations
and its share of any jointly held or
incurred assets, liabilities, revenue
and expenses.
ii) Joint Venture
Investments in Joint Venture are
accounted for at cost less
impairment loss, if any, in separate
financial statements.
2.8 Project Work-in-Progress (PWIP)
Construction Development expenses are
accumulated under Project Work-in-Progress
(PWIP) and the same are valued at cost.
2.9 Lease Receivables
In respect of IRFC Funded Projects of MoR
amount receivable from MoR are shown as
Lease Receivables. Lease receivables are
adjusted periodically on receipt of funds from
MoR based on the demand from IRFC for
repayment of borrowings for these projects.
2.10 Revenue from Contracts with Customers
2.10.1 Company Recognises revenue from
contracts with customers based on a five-
step criteria as set out in Ind AS-115: -
(i) Identification of the contracts with a
customer: - A contract is defined as an
agreement between two or more
parties that creates enforceable rights
and obligations and sets out the criteria
for every contract that must be met.
(ii) Identification of the performance
obligations in the contract: A
performance obligation is a promise in
a contract with a customer to transfer
a good or service to the customer.
(iii) Determination of the transaction price:
The transaction price is the amount of
consideration to which the company
expects to be entitled in exchange for
transferring promised goods or services
to a customer excluding amounts
collected on behalf of third parties.
(iv) Allocation of the transaction price to the
performance obligations in the
contract: For a contract that has more
than one performance obligation the
Company allocates the transaction
price to each performance obligation
in an amount that depicts the amount
of consideration to which the Company
expects to be entitled in exchange for
satisfying each performance obligation.
(v) Recognition of revenue when or as the
Company satisfies a performance
obligation.
2.10.2 The Company satisfies a performance
obligation and recognises revenue over the
period of time when one of the following
criteria is met:
(i) The customer simultaneously receives
and consumes the benefits provided by
the Company''s performance as the
Company performs
(ii) The Company''s performance creates or
enhances an asset that the customer
controls as the asset is created or
enhanced.
(iii) The Company''s performance does not
create an asset with an alternative use
to the company and the company has
an enforceable right to payment for
performance completed to date.
For performance obligations where one of
the above conditions are not met revenue is
recognised at the point in time at which
performance obligation is satisfied.
2.10.3 The company uses the input method to
measure the progress of work. Considering
the current nature of contracts, management
has assessed the use of input method to be
the most suited method to measure the
progress towards complete satisfaction of a
performance obligation satisfied over time.
i) For Cost Plus contracts: Revenue is
recognised based on input method i.e.
cost incurred by including eligible items
of expenditure in the bills raised on the
clients and charging specified margin
thereon.
ii) Fixed Price Contracts: Revenue is
recognised based on input method with
reference to percentage of completion
as at the reporting date i.e contract
revenue are recognised as revenue by
reference to the stage of completion
based on the contract costs incurred for
work performed till the reporting date,
relative to the estimated total Contract
Cost.
In other cases, where the outcome of a
performance obligation is not reasonably
measured, but costs incurred are
expected to be recovered, the revenue
is recognised only to the extent of the costs
incurred upto the end of reporting period.
iii) Unbilled Revenue represents value of
performance obligation performed in
accordance with the contracts terms
but not billed to the Client.
2.10.4 Technical Management & Consultancy fees:
Revenue is accounted when right to receive
the income is established as per terms of
contract.
2.10.5 Claims are accounted as income in the year
of acceptance by client or evidence of
acceptance received.
2.11 Other Revenue Recognition
(i) In case of IRFC funded projects, amount
of interest accrued for the year on the
Loan is shown as finance cost and the
same amount which is receivable from
Ministry of Railways is shown as recovery
from MoR under the head other Income.
(ii) Dividend income is recognized when the
right to receive is established.
(iii) Interest income is recognized using
Effective Interest Rate Method.
(iv) The rental income of the company
mainly arises from leasing of machinery
and investment properties. These rental
incomes are accounted for on straight¬
line basis over the lease terms.
2.12 Employee Benefits
a) Short Term Employee Benefits
All employee benefits payable wholly
within twelve months of rendering the
services are classified as short term
employee benefits. Benefits such as
salaries, wages and short- term
compensated absences, Performance
Related Pay (PRP), etc. are recognized
in the period in which the employee
renders the related service.
b) Long Term Employee Benefits
The obligation for long-term employee
benefits such as Long-term compensated
absences, Half pay leave & LTC is
accounted for on actuarial valuation
made at the end of the year. Actuarial
gains/losses are recognised in the
statement of profit and loss for the year.
c) Post Employment Benefits
(i) Defined contribution plans:The
Company makes defined contribution
to
a. provident fund scheme, CGIS and
employee state insurance scheme.
b. the RVNL Medical and Welfare Trust
in respect of RVNL Medical and
Welfare Scheme.
c. National Plan Scheme by the Govt.
of India (PFRDA) in respect of the
pension scheme.
The contribution paid/payable under the
schemes is recognized during the period
in which the employee renders the
related service.
(ii) Defined benefit plans: Gratuity is a post¬
employment defined benefit plan. The
asset or liability recognized in the
balance sheet is the present value of the
defined benefit obligation at the
balance sheet date less fair value of plan
assets. The defined benefit obligation is
calculated by an independent actuary
using projected unit credit (PUC)
method. Actuarial gains and losses are
recognised immediately in Other
Comprehensive Income.
The gratuity plan provides a lump-sum
payment to vested employees based
on the Employees'' service and last
drawn salary at the time retirement,
death, incapacitation, or on
completion of terms of employment.
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 gratuity is funded by the Company
and is managed by a separate trust
(RVNL Employees Gratuity Trust). The
contributions to the gratuity trust for the
period are recognized as expense and
are charged to statement of profit and
loss.
d) Retirement benefits of the âstaff on
deputation'' have been accounted for
on the basis of the guidelines of the
Ministry of Railways.
e) Re-measurements recognised in Other
Comprehensive Income are comprising
actuarial gains or losses, the return on
plan assets (excluding amount included
in the net interest on the net defined
benefit liability or asset) that are not
reclassified to profit or loss from Other
Comprehensive Income in subsequent
periods.
2.13 Functional and presentation currency
Items included in the financial statements are
measured using the currency of the primary
economic environment in which the
Company operates (Functional Currency).
The financial statements are presented in
Indian rupees which is also the functional and
presentation currency of company.
Foreign Currency Transactions
i. All foreign currency transactions are
translated into functional Currency at the
rate prevalent on the date of transaction.
ii. Non-monetary items are translated at
the rate on the date of initial transaction.
iii. Monetary items denominated in foreign
currency are translated at the prevailing
closing buying rate at each reporting
date.
iv. Foreign exchange gain or losses in
respect of monetary and non-monetary
items is recognised in statement of profit
and loss.
2.14 Borrowing costs
Borrowing costs that are attributable to the
acquisition construction or production of a
qualifying asset are capitalized as part of cost
of such asset till such time as the asset is ready
for its intended use. A qualifying asset is an
asset that necessarily requires a substantial
period of time to get ready for its intended
use. All other borrowing costs are recognized
as an expense in the period in which they are
incurred.
2.15 Tax expenses represents the sum of current
tax and deferred tax
a) Current Income Tax
i. Taxes including current income-tax
are computed using the
applicable tax rates and tax laws.
ii. The tax rates and tax laws used to
compute the amount are those
that are enacted or substantively
enacted at the reporting date in
the countries where the company
operates and generates taxable
income.
iii. Current income tax assets and
liabilities for current and prior
periods are measured at the
amount expected to be recovered
from or paid to the taxation
authorities Liability for additional
taxes if any is provided / paid as and
when assessments are completed.
iv. Current tax related to OCI Item are
recognized in Other Comprehensive
Income (OCI).
b) Deferred tax
i. Deferred income tax is recognized
using balance sheet approach.
ii. Deferred income tax assets and
liabilities are recognized for
temporary differences which is
computed using the tax rates and
tax laws that have been enacted
or substantively enacted at the
reporting date.
iii. Deferred income tax asset are
recognized to the extent that it is
probable that taxable profit will be
available against which the
deductible temporary differences
and the carry forward of unused tax
credits and unused tax losses can
be utilized.
iv. The carrying amount of deferred
income tax assets is reviewed at
each reporting date and reduced
to the extent that it is no longer
probable that sufficient taxable
profit will be available to allow all
or part of the deferred income tax
asset to be utilized.
v. Deferred tax related to OCI Item are
recognized in Other Comprehensive
Income (OCI).
2.16 Leases
The Company''s leased asset primarily consists
of leases for land and buildings. The Company
assesses whether a contract contains a lease
at inception of a contract. The Company
recognizes right-of-use assets at the
commencement date of the lease. Right-of-
use assets are measured at cost less any
accumulated depreciation and impairment
losses and adjusted for any re-measurement
of lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities
recognised, initial direct costs incurred and
lease payments made at or before the
commencement date less any lease
incentives received. Right-of-use assets are
depreciated on a straight-line basis over the
shorter of the lease term and the estimated
useful lives of the assets.
⢠If ownership of the leased asset is
transferred to the Company at the end
of the lease term or the cost reflects the
exercise of a purchase option,
depreciation is calculated using the
estimated useful life of the asset.
⢠The right-of-use assets are also subject
to impairment.
Lease liabilities
⢠The Company recognizes lease liabilities
measured at the present value of future
lease payments less any lease incentives
receivable. In addition, the carrying
amount of lease liabilities is re-measured
if there is a modification, a change in
the lease term or a change in the lease
payments.
⢠The Company applies the lease
recognition exemption to its short-term
leases contracts (i.e., those leases that
have a lease term of 12 months or less
from the commencement date. It also
applies to the recognition exemption to
leases of office equipment that are
considered to be low value. Lease
payments on short-term leases and
leases of low-value assets are
recognised as expense on a straight-line
basis over the lease term.
Mar 31, 2024
1 Corporate Information
a. Rail Vikas Nigam Limited (RVNL) is a public sector construction company domiciled in India (CIN:L74999DL2003GOI118633) incorporated under the provisions of the Companies Act 1956 on 24th January 2003 with an authorized share capital of H 3000 crores. The shares of the Company are listed on National stock exchange and Bombay stock exchange. The Company is a Schedule ''A'' public sector company and a NavRatna Company with effect from 1st May 2023.
The registered office of the Company is located at 1st floor, August Kranti Bhawan, Bhikaji Cama Place, New Delhi - 110066. President of India through Ministry of Railway(MoR) is holding 72.84% equity shares of the Company as on 31 March 2024.
The objectives of the Company include:
(i) Fast track implementation of rail infrastructure projects, diversifying its portfolio to encompass highways, energy, Ports and metro rail projects.
(ii) Raising extra budgetary resources for project execution.
The Company is implementing various types of Rail infrastructure projects assigned by MoR including doubling (including 3rd/4th lines) gauge conversion new lines railway electrification major bridges workshops Production Units and Metro Projects.
The Company has established four subsidiaries, thirteen joint ventures, and one associate.
b. The reporting and functional currency of the Company is Indian Rupees (INR). Figures in financial statements are presented in crore, by rounding off upto two decimals except for per share data and as otherwise stated.
c. The standalone financial statements have been approved for issue by the company''s Board of Directors in their meeting held on 17th May 2024.
Summary of Material Accounting Policies:
Note 2:
2.1 Basis of Preparation
a) Statement of Compliance
These financial statements have been prepared in accordance with Indian Accounting Standards
(Ind-AS) notified under section 133 of the Companies Act 2013 and Companies (Indian Accounting Standards) Rules 2015 as amended from time to time.
b) Basis of Measurement
The financial statements have been prepared under the historical cost convention and on accrual basis except for the following items that have been measured at fair value as required by relevant Ind-AS.
i. Defined benefit Plan and other long term employee benefits
ii. Certain financial assets and liabilities measured at fair value.
c) Use of estimates and judgement
The preparation of financial statements is in conformity with Ind AS that requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of financial statements and the reported amount of income and expenses. Examples of such estimates include estimates of future obligations under employee retirement benefit plans and estimated useful life of property plant and equipment. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on a periodic basis. Future results could differ due to changes in these estimates. Difference between the actual result and the estimates are recognised in the period in which the results are known /materialize.
All financial information are presented in Indian rupees and all values are rounded to the nearest crore rupees with two decimal points except where otherwise stated. Due to rounding off the numbers presented throughout the document may not add up precisely to the totals and percentages may not precisely reflect the absolute figures.
2.2 Cash Flow Statement
Cash flow statement is reported using the indirect method whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature
and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating investing and financing activities of the company are segregated based on the available information.
2.3 Property plant and equipment
a) Property plant and equipment are measured at cost less accumulated depreciation and impairment losses if any.
Cost of asset includes the following
I. Cost directly attributable to the
acquisition of the assets
ii. Incidental expenditure during the
construction period is capitalized as part of the indirect construction cost to the extent to which the expenditure is directly related to construction or is incidental thereto.
iii. Present value of the estimated costs of dismantling & removing the items & restoring the site on which it is located if recognition criteria are met.
b) Cost of replacement, major inspection, repair of significant parts and borrowing costs for longterm construction projects are capitalised if the recognition criteria are met.
c) Upon sale of assets cost and accumulated depreciation are eliminated from the financial statements and the resultant gains or losses are recognized in the statement of profit and loss.
d) The cost of property plant and equipment not ready for intended use as of end of reporting period are disclosed under capital work- in-progress.
Depreciation
a) Depreciation on Property plant and Equipment is provided on Straight Line basis (SLM) over the useful life of the assets as specified in Schedule II of the Companies Act, 2013 except in the case of (i) Furniture & Fixtures and (ii) Mobiles Phones & Tablets. In both the categories of these assets Management has estimated the useful life after taking into consideration the economic benefits embodied in these assets and other factors such as technical obsolescence and wear and tear etc.
The estimated useful life of significant items of property plant and equipment are as follows:
|
Particulars |
Estimated Useful Life |
|
Plant & Machinery -Track Machine |
20 years |
|
Plant & Machinery - Others |
8-12 years |
|
Vehicles |
8 years |
|
Furniture and fixtures |
4 years |
|
Computers |
3 years |
|
Mobile phones & Tablets |
2 years |
|
Office Equipments (excluding Mobile Phones & Tablets) |
5 years |
(b) Each part of an item of Property Plant and Equipment is depreciated separately if the cost of part is significant in relation to the total cost of the item and useful life of that part is different from the useful life of remaining asset.
(c) Leasehold improvements are amortized over the lower of estimated useful life and lease term.
(d) Depreciation methods useful lives and residual values are reviewed at each reporting date.
(e) Depreciation on individual assets acquired for H 5000/- or less is depreciated at the rate of 100% in the year of purchase itself.
2.4 Capital Work-in-Progress
Capital work-in-progress, representing assets under assembly or expenditure incurred in respect of assets under development and not ready for their intended use, are carried at cost. Cost includes related acquisition expenses, construction cost, and other expenditure that are attributable to for development/ assembly of asset.
2.5 Intangible Assets
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Intangible assets are stated at historical cost less accumulated amortization and impairment loss if any.
Intangible assets comprise of license fees other implementation costs for system software and other application software acquired for in-house use. The costs are capitalized in the year in which the
relevant software is implemented for use. The cost of an intangible asset comprises its purchase price including any import duties and other taxes and any directly attributable expenditure on making the asset ready for its intended use, intangible assets not ready for intended use as on reporting date is recognised as intangible assets under development.
Amortization of Intangible Assets
Intangible assets are amortized over their respective estimated useful lives on a straight- line basis from the date that they are available for use.The estimated useful life of acquired softwares (other than SAP software) are finite i.e 3 years and estimated useful life of SAP software is 6 years. Amortisation methods useful lives and residual values are reviewed at each reporting date.
2.6 Impairment of non-financial assets
An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value and impairment loss is charged to the Statement of Profit & Loss in the year in which an asset is identified as impaired. At each reporting date company assesses the estimate amount of impairment loss. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount. Reversal of impaired loss is recognized in the Statement of Profit & Loss.
2.7 Investments in Subsidiaries, Associates and Joint Arrangements
a) Investment in Subsidiaries and Associates
Investments in subsidiaries and associates are accounted for at cost less impairment loss, if any, in standalone financial statements.
b) Joint Arrangement
Investment in joint arrangement are classified as either joint operation or joint ventures. The classification depends on the contractual rights and obligations of each investors rather than the legal structure of the joint arrangement.
i) Joint Operations
Company recognizes its direct right to the assets, liabilities, revenue and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenue and expenses.
ii) Joint Venture
Investments in Joint Venture are accounted for at cost less impairment loss, if any, in separate financial statements.
2.8 Project Work-in-Progress (PWIP)
Construction Development expenses are accumulated under Project Work-in-Progress (PWIP) and the same are valued at cost.
2.9 Lease Receivables
In respect of IRFC Funded Projects of MoR amount receivable from MoR are shown as Lease Receivables. Lease receivables are adjusted periodically on receipt of funds from MoR based on the demand from IRFC for repayment of borrowings for these projects.
2.10 Revenue from Contracts with Customers
2.10.1 Company Recognises revenue from contracts
with customers based on a five-step criteria as
set out in Ind AS-115: -
(i) Identification of the contracts with a customer: - A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria for every contract that must be met.
(ii) Identification of the performance obligations in the contract: A performance obligation is a promise in a contract with a customer to transfer a good or service to the customer.
(iii) Determination of the transaction price: The transaction price is the amount of consideration to which the company expects to be entitled in exchange for transferring promised goods or services to a customer excluding amounts collected on behalf of third parties.
(iv) Allocation of the transaction price to the performance obligations in the contract: For a contract that has more than one performance obligation the Company allocates the transaction price to each performance obligation in an amount that depicts the amount of consideration to which the Company expects to be entitled in exchange for satisfying each performance obligation.
(v) Recognition of revenue when or as the Company satisfies a performance obligation.
2.10.2 The Company satisfies a performance obligation and recognises revenue over the period of time when one of the following criteria is met:
(i) The customer simultaneously receives and consumes the benefits provided by the Company''s performance as the Company performs
(ii) The Company''s performance creates or enhances an asset that the customer controls as the asset is created or enhanced.
(iii) The Company''s performance does not create an asset with an alternative use to the company and the company has an enforceable right to payment for performance completed to date.
For performance obligations where one of the above conditions are not met revenue is recognised at the point in time at which performance obligation is satisfied.
2.10.3 The company uses the input method to measure the progress of work. Considering the current nature of contracts, management has assessed the use of input method to be the most suited method to measure the progress towards complete satisfaction of a performance obligation satisfied over time.
i) For Cost Plus contracts: Revenue is recognised based on input method i.e. cost incurred by including eligible items of expenditure in the bills raised on the clients and charging specified margin thereon.
ii) Fixed Price Contracts: Revenue is recognised based on input method with reference to percentage of completion as at the reporting date i.e contract revenue are recognised as revenue by reference to the stage of completion based on the contract costs incurred for work performed till the reporting date, relative to the estimated total Contract Cost.
In other cases, where the outcome of a performance obligation is not reasonably measured, but costs incurred are expected to be recovered, the revenue is recognised only to the extent of the costs incurred upto the end of reporting period.
iii) Unbilled Revenue represents value of performance obligation performed in accordance with the contracts terms but not billed to the Client.
2.10.4 Technical & Management fees: Revenue is accounted when right to receive the income is established as per terms of contract.
2.10.5 Claims are accounted as income in the year of acceptance by client or evidence of acceptance received.
2.11 Other Revenue Recognition
(i) In case of IRFC funded projects, amount of interest accrued for the year on the Loan is shown as finance cost and the same amount which is receivable from Ministry of Railways is shown as recovery from MoR under the head other Income.
(ii) Dividend income is recognized when the right to receive is established.
(iii) Interest income is recognized using Effective Interest Rate Method.
2.12 Employee Benefits
a) Short Term Employee Benefits
All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages and short- term compensated absences, Performance Related Pay (PRP), etc. are recognized in the period in which the employee renders the related service.
b) Long Term Employee Benefits
The obligation for long-term employee benefits such as Long-term compensated absences, Half pay leave & LTC is accounted for on actuarial valuation made at the end of the year. Actuarial gains/losses are recognised in the statement of profit and loss for the year.
c) Post Employment Benefits
(i) Defined contribution plans:The Company
makes defined contribution to
a. provident fund scheme, CGIS and employee state insurance scheme.
b. the RVNL Medical and Welfare Trust in respect of RVNL Medical and Welfare Scheme.
c. National Plan Scheme by the Govt. of India (PFRDA) in respect of the pension scheme.
The contribution paid/payable under the schemes is recognized during the
period in which the employee renders the related service.
(ii) Defined benefit plans: Gratuity is a postemployment defined benefit plan. The asset or liability recognized in the balance sheet is the present value of the defined benefit obligation at the balance sheet date less fair value of plan assets. The defined benefit obligation is calculated by an independent actuary using projected unit credit (PUC) method. Actuarial gains and losses are recognised immediately in Other Comprehensive Income.
The gratuity is funded by the Company and is managed by a separate trust (RVNL Employees Gratuity Trust). The contributions to the gratuity trust for the period are recognized as expense and are charged to statement of profit and loss.
d) Retirement benefits of the ''staff on deputation'' have been accounted for on the basis of the guidelines of the Ministry of Railways.
e) Re-measurements recognised in Other Comprehensive Income are comprising actuarial gains or losses, the return on plan assets (excluding amount included in the net interest on the net defined benefit liability or asset) that are not reclassified to profit or loss from Other Comprehensive Income in subsequent periods.
2.13 Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates (Functional Currency). The financial statements are presented in Indian rupees which is also the functional and presentation currency of company.
Foreign Currency Transactions
i. All foreign currency transactions are translated into functional Currency at the rate prevalent on the date of transaction.
ii. Non-monetary items are translated at the rate on the date of initial transaction.
iii. Monetary items denominated in foreign currency are translated at the prevailing closing buying rate at each reporting date.
iv. Foreign exchange gain or losses in respect of monetary and non-monetary items is recognised in statement of profit and loss.
2.14 Borrowing Cost
Borrowing costs that are attributable to the acquisition construction or production of a qualifying asset are capitalized as part of cost of such asset till such time as the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.
2.15 Tax expenses represents the sum of current tax and deferred tax
a) Current Income Tax
i. Taxes including current income-tax are computed using the applicable tax rates and tax laws.
ii. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the company operates and generates taxable income.
iii. Current income tax assets and liabilities for current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities Liability for additional taxes if any is provided / paid as and when assessments are completed.
iv. Current tax related to OCI Item are recognized in Other Income (OCI).
b) Deferred tax
i. Deferred income tax is recognized using balance sheet approach.
ii. Deferred income tax assets and liabilities are recognized for temporary differences which is computed using the tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
iii. Deferred income tax asset are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized.
iv. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
v. Deferred tax related to OCI Item are recognized in Other Comprehensive Income (OCI).
2.16 Leases
The Company''s leased asset primarily consists of leases for land and buildings. The Company assesses whether a contract contains a lease at inception of a contract. The Company recognizes right-of-use assets at the commencement date of the lease. Right-of-use assets are measured at cost less any accumulated depreciation and impairment losses and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
⢠If ownership of the leased asset is transferred to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
⢠The right-of-use assets are also subject to impairment.
Lease liabilities
⢠The Company recognizes lease liabilities measured at the present value of future lease payments less any lease incentives receivable. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term or a change in the lease payments.
⢠The Company applies the lease recognition exemption to its short-term leases contracts (i.e., those leases that have a lease term of 12 months or less from the commencement date. It also applies to the recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
2.17 Provisions
Provision is recognised when:
i) The Company has a present obligation as a result of a past event
ii) A probable outflow of resources is expected to settle the obligation and
iii) A reliable estimate of the amount of the obligation can be made.
Reimbursement of the expenditure required to settle a provision is recognised as per contract provisions or when it is virtually certain that reimbursement will be received.
Provisions are reviewed at each Balance Sheet date.
a) Discounting of Provisions
Provision which expected to be settled beyond 12 months are measured at the present value by using pre-tax discount rate that reflects the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expenses.
2.18 Contingent Liabilities and Contingent Assets
(a) Contingent Liabilities are disclosed in either of the following cases:
i) A present obligation arising from a past event when it is not probable that an outflow of resources will be required to settle the obligation; or
ii) A reliable estimate of the present obligation cannot be made; or
iii) A possible obligation unless the probability of outflow of resource is remote.
(b) Contingent assets is disclosed where an inflow of economic benefits is probable.
(c) Contingent Liability and Provisions needed against Contingent Liability and Contingent Assets are reviewed at each Reporting date.
(d) Contingent Liability is net of estimated provisions considering possible outflow on settlement.
2.19 Earnings Per Equity Share
In determining earnings per share the Company considers the net profit attributable to equity shareholders. The number of shares used in computing basic and diluted earnings per share is the weighted average number of shares outstanding during the year.
2.20 Liquidated Damages and Penalties
Credit items arising on account of Liquidated Damages and Penalties during execution of contract or due to termination of contract etc. are carried as
"Retained Amount for Damages A/c" under "Other Current Liabilities" until the management has decided either to levy or waive the same before financial closure of the project. Thereafter if these are not levied or waived by the management before financial closure of the project such leftover balances of liquidated damages and penalties etc. are credited to the total cost of the concerned project on financial closure of the project".
2.21 Operating Segment
Operating segments are reported in the manner consistent with the internal reporting provided by the Chief Operating Decision Maker (CODM). Chairman and Managing Director of the company has been identified as CODM. Company has identified only one reportable segment i.e. "Development of Railway Infrastructure".
2.22 Fair Value Measurement
Company measures financial instruments at fair value at each reporting 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 to 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. 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.
2.23 Dividend to equity holders
Dividend paid/payable shall be recognised in the year in which the related dividends are approved by shareholders or board of directors as appropriate.
2.24 Financial instruments:-
(A) Initial recognition and measurement
Financial Instruments are recognized at its fair value plus or minus transaction costs that are directly attributable to the acquisition or issue of the financial instruments.
(B) Subsequent measurement (i) Financial Assets
Financial assets are classified in
following categories:
a) At Amortised Cost
b) Fair value through Other
Comprehensive Income.
c) Fair value through Profit and
loss account.
a. Debt instrument at Amortised Cost
A financial asset shall be measured at amortised cost if both of the following conditions are met:
(a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
(b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets measured at amortised cost using effective interest rate method less impairment if any. The EIR amortisation is included in finance income in the statement of profit and loss.
b. Debt instrument at FVTOCI
A debt instrument is classified at FVTOCI if both of the following criteria are met:
⢠The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets and
⢠The asset''s contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements
are recognized in the Other Comprehensive Income (OCI). However the company recognizes interest income impairment losses & reversals and foreign exchange gain or loss in the P&L. On de-recognition of the asset cumulative gain or loss previously recognised in OCI is reclassified from the equity to P&L. Interest earned is recognised using the EIR method.
c. Debt instrument at FVTPL
FVTPL is a residual category for financial Assets. Any financial assets which does not meet the criteria for categorization as at amortized cost or as FVTOCI is classified at FVTPL.
In addition the Company may elect to designate financial asset which otherwise meets amortized cost or FVTOCI criteria at FVTPL, if doing so reduces or eliminates a measurement or recognition inconsistency. The Company has not designated any financial asset at FVTPL.
Financial assets included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
Investment in Equity instruments are measured through FVTOCI.
d. Equity Instrument at FVTOCI
Financial Assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows and setting financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payment of principal and invest in the principal amount outstanding.
The Company has made an irrevocable election to present
in other comprehensive income subsequent changes in the fair value of equity investments not held for trading.
(ii) Financial liabilities
a) Financial liabilities at Amortised Cost
Financial liabilities at amortised cost represented by trade and other payables security deposits and retention money are initially recognized at fair value and subsequently carried at amortized cost using the effective interest rate method.
b) Financial liabilities at FVTPL
The company has not designated any financial liabilities at FVTPL.
(C) Derecognition Financial Asset
A financial asset (or where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized only when the contractual rights to the cash flows from the asset expires or it transfers the financial assets and substantially all risks and rewards of the ownership of the asset.
Financial Liability
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an existing liability are substantially modified such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability and the difference in the respective carrying amounts is recognised in the income statement.
(D) Impairment of financial assets
Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss. The Company follows simplified approach for recognition of impairment loss allowance on trade receivable. 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
Company assesses on a forward looking basis the expected credit losses associated with its
assets carried at amortised cost and FVTOCI debt instruments. The impairment methodology applies on whether there has been significant increase in credit risk.
2.25 Non-current Assets (or disposal groups) held for Sale
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. The sale is considered highly probable only when the asset or disposal group is available for immediate sale in its present condition it is unlikely that the sale will be withdrawn and sale is expected within one year from the date of the classification. Disposal groups classified as held for sale are stated at the lower of carrying amount and fair value less costs to sell. Property plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale. Assets classified as held for sale are presented separately in the statement of financial position.
If the criteria stated by IND AS 105 "Non-current Assets Held for Sale and Discontinued Operationsâ are no longer met, the disposal group ceases to be classified as held for sale. Non-current asset that ceases to be classified as held for sale are measured at the lower of (i) its carrying amount before the asset was classified as held for sale adjusted for depreciation that would have been recognised had that asset not been classified as held for sale and (ii) its recoverable amount at the date when the disposal group ceases to be classified as held for sale.
2.26 Cash and cash equivalents
Cash and cash equivalent comprise cash at bank and on hand. It includes term deposits and short term money market deposits with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
2.27 Prepaid Expenses
Prepaid expenses up to INR 5,00,000/- in each case are treated as expenditure/income of the year and accounted for to the natural head of accounts.
2.28 Prior period errors
Material prior period errors are corrected retrospectively by restating the comparative amounts for the prior periods presented in which
the error occurred. If the error occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented, are restated.
2.29 NEW STANDARDS/ AMENDMENTS AND OTHER CHANGES EFFECTIVE APRIL 1,2023 OR THEREAFTER
Ministry of Corporate Affairs notifies new standard or amendments to the existing standards. On 31st March 2023, vide Notification G.S.R. 242(E) dated 31st March 2023, modifications in existing standards have been notified which will be applicable from April 1, 2023, as below:
(a) Ind AS 1 - Presentation of Financial Statements:
The Company has adopted the amendment wherein the company was required to disclose the material accounting policy in its Financial Statements instead of the significant accounting policy. Accordingly, the company is disclosing material accounting policies as Note-2.
(b) Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors:
The Company has adopted the amendments w.e.f. April 1, 2023. The impact of this
amendment is not material.
(c) Ind AS 12 - Income Taxes:
The Company has adopted the amendments w.e.f. April 1, 2023. The impact of this
amendment is not material.
2.30 NEW STANDARDS/ AMENDMENTS ISSUED BUT NOT YET EFFECTIVE
Recent Accounting Pronouncements Ministry of Corporate Affairs ("MCAâ) notifies new standard or amendments to the existing standards. There is no such notification which would have been applicable from April 1st, 2024.
Mar 31, 2023
1 Corporate Information
Rail Vikas Nigam Limited (RVNL) is a public sector construction company domiciled in India (CIN:L74999DL2003GOI118633) incorporated under the provisions of the Companies Act 1956 on 24th January 2003 with an authorized share capital of H 3000 crores. The shares of the Company are listed on National stock exchange and Bombay stock exchange. The Company is a Schedule âAâ public sector company and a Navratna Company with effect from 1st May 2023. The registered office of the Company is located at 1st floor, August Kranti Bhawan, Bhikaji Cama Place, New Delhi - 110066. President of India through Ministry of Railway(MoR) is holding 78.20% equity shares of the Company as on 31 March 2023.
The objectives of the Company includes:
(i) Fast track implementation of rail infrastructure projects
(ii) Raising extra budgetary resources for project execution.
The Company is implementing various types of Rail infrastructure projects assigned by MoR including doubling (including 3rd/4th lines) gauge conversion new lines railway electrification major bridges workshops Production Units and Metro Projects. The Company has also formed Eleven JVs.
2. The reporting and functional currency of the Company is Indian Rupees (INR). Figures in financial statements are presented in crore, by rounding off upto two decimals except for per share data and as otherwise stated.
3. The standalone financial statements have been approved for issue by the company''s Board of Directors in their meeting held on 29th May 2023.
Summary of Significant Accounting PoliciesNote 2 :-
2.1 Basis of Preparation
a) Statement of Compliance
The financial statements as at and for the year ended 31 March 2023 have been prepared in accordance with Indian Accounting Standards (Ind-AS) notified under section 133 of the Companies Act 2013 and Companies (Indian Accounting Standards) Rules 2015 as amended from time to time.
b) Basis of Measurement
The financial statements have been prepared under the historical cost convention and on an accrual basis except for the following items that have been measured at fair value as required by relevant Ind-AS.
i. Defined benefit Plan and other long term employee benefits
ii. Certain financial assets and liabilities measured at fair value.
c) Use of estimates and judgment
The preparation of financial statements is in conformity with Ind AS that requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of financial statements and the reported amount of income and expenses. Examples of such estimates include estimates of future obligations under employee retirement benefit plans and estimated useful life of property plant and equipment. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on a periodic basis. Future results could differ due to changes in these estimates. Difference between the actual result and the estimates are recognised in the period in which the results are known /materialize.
All financial information are presented in Indian rupees and all values are rounded to the nearest crore rupees with two decimal points except where otherwise stated. Due to rounding off the numbers presented throughout the document may not add up precisely to the totals and percentages may not precisely reflect the absolute figures.
2.2 Cash Flow Statement
Cash flow statement is reported using the indirect method whereby profit / (loss) before tax is adjusted for the effects of transactions of noncash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating investing and financing activities of the company are segregated based on the available information.
2.3 Property plant and equipment
a) Property plant and equipment are measured at cost less accumulated depreciation and impairment losses if any.
Cost of asset includes the following
I. Cost directly attributable to the acquisition of the assets
ii. Incidental expenditure during the construction period is capitalized as part of the indirect construction cost to the extent to which the expenditure is directly related to construction or is incidental thereto.
iii. Present value of the estimated costs of dismantling & removing the items & restoring the site on which it is located if recognition criteria are met.
b) Cost of replacement, major inspection, repair of significant parts and borrowing costs for long-term construction projects are capitalised if the recognition criteria are met.
c) Upon sale of assets cost and accumulated depreciation are eliminated from the financial statements and the resultant gains or losses are recognized in the statement of profit and loss.
d) Amounts paid towards the acquisition of property plant and equipment outstanding as of each reporting date and the cost of property plant and equipment not ready for intended use before such date are disclosed under capital work- in-progress.
Depreciation
a) Depreciation on Property plant and Equipment is provided on Straight Line basis (SLM) over the useful life of the assets as specified in Schedule II of the Companies Act, 2013 except in the case of (i) Furniture & Fixtures and (ii) Mobiles Phones & Tablets. In both the categories of these assets Management has estimated the useful life after taking into consideration the economic benefits embodied in these assets and other factors such as technical obsolescence and wear and tear etc.
The estimated useful life of assets for current and comparative period of significant items of property plant and equipment are as follows:
|
Particulars |
Useful Life |
|
Plant & Machinery - Track Machine |
20 year |
|
Plant & Machinery - Others |
8 year |
|
Furniture and fixtures |
4 year |
|
Computers |
3 year |
|
Mobile phones & Tablets |
2 year |
|
Office Equipments (excluding Mobile Phones & Tablets) |
5 year |
(b) Each part of an item of Property Plant and Equipment is depreciated separately if the cost of part is significant in relation to the total cost of the item and useful life of that part is different from the useful life of remaining asset.
(c) Leasehold improvements are amortized over the lower of estimated useful life and lease term.
(d) Depreciation methods useful lives and residual values are reviewed at each reporting date.
(e) Depreciation on individual assets acquired for H 5000/- or less is depreciated at the rate of 100% taking into consideration the commercial life in the year of purchase itself.
2.4 Intangible Assets
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Intangible assets are stated at historical cost less accumulated amortization and impairment loss if any. Intangible assets comprise of license fees other implementation costs for system software and other application software acquired for in-house use. The costs are capitalized in the year in which the relevant software is implemented for use. The cost of an intangible asset comprises its purchase price including any import duties and other taxes and any directly attributable expenditure on making the asset ready for its intended use, intangible assets not ready for intended use as on reporting date is recognised as intangible assets under development.
Amortization of Intangible Assets
Intangible assets are amortized over their respective estimated useful lives on a straight- line basis from the date that they are available for use.The estimated useful life of acquired softwares are finite (3 years) estimated useful life of SAP software is estimated at 6 year. Amortisation methods useful lives and residual values are reviewed at each reporting date.â
2.5 Impairment of non-financial assets
An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value and impairment loss is charged to the Statement of Profit & Loss in the year in which an asset is identified as impaired. At each reporting date company assesses the estimate amount of impairment loss. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount and such losses either no longer exists or has decreased. Reversal of impaired loss is recognized in the Statement of Profit & Loss.
2.6 Investments in Subsidiaries and Joint Arrangements
a) Investment in Subsidiaries
Investments in subsidiaries are accounted for at cost less impairment loss, if any, in separate financial statements.
b) Joint Arrangement
Investment in joint arrangement are classified as either joint operation or joint ventures. The classification depends on the contractual rights and obligations of each investors rather than the legal structure of the joint arrangement.
i) Joint Operations
Company recognizes its direct right to the assets, liabilities, revenue and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenue and expenses.
ii) Joint Venture
Investments in Joint Venture are accounted for at cost less impairment loss, if any, in separate financial statements.
2.7 Inventories & Project Accounting
(a) Project Work-in-Progress is valued at the contract rates and construction material at site is stated at cost. Payments made to Zonal Railways for acquiring land included in project Work-inProgress is stated at cost.
(b) IRFC Funded Projects: In accordance with revised Procedure Order dt. 30.12.2016 of MoR, PWIP of IRFC funded projects are shown as Lease Receivables. The amount of expenditure for the period including opening balance on IRFC funded projects are transferred from PWIP to Lease Receivables and from the subsequent
financial year adjustments will be carried out periodically.
(c) The value of projects which are transferred from the Project Work in Progress (PWIP) is determined by adding direct expenditure plus management fee as agreed with MoR.
(d) MoR Funded Projects: In accordance with revised Procedure Order dt. 30.12.2016 of MoR, PWIP of MoR funded projects are adjusted against fund received from MoR. The amount of expenditure on MoR funded projects recognised during the year including opening balances of PWIP for MoR funded project are being adjusted as at 31.03.2017 from the fund received from MoR and from the subsequent financial year adjustments will be carried out periodically.â
2.8 Revenue from Contracts with Customers
2.8.1 Company Recognises revenue from contracts
with customers based on a five-step criteria
as set out in Ind AS-115:-
(i) Identification of the contracts with a customer:- A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria for every contract that must be met.
(ii) Identification of the performance obligations in the contract: A performance obligation is a promise in a contract with a customer to transfer a good or service to the customer.
(iii) Determination of the transaction price: The transaction price is the amount of consideration to which the company expects to be entitled in exchange for transferring promised goods or services to a customer excluding amounts collected on behalf of third parties.
(iv) Allocation of the transaction price to the performance obligations in the contract: For a contract that has more than one performance obligation the Company allocates the transaction price to each performance obligation in an amount that depicts the amount of consideration to which the Company expects to be entitled in exchange for satisfying each performance obligation.
(v) Recognition of revenue when or as the Company satisfies a performance obligation.
2.8.2 The Company satisfies a performance obligation and recognises revenue over the period of time when one of the following criteria is met:
(i) The customer simultaneously receives and consumes the benefits provided by the Companyâs performance as the Company performs
(ii) The Companyâs performance creates or enhances an asset that the customer controls as the asset is created or enhanced.
(iii) The Companyâs performance does not create an asset with an alternative use to the company and the company has an enforceable right to payment for performance completed to date. For performance obligations where one of the above conditions are not met revenue is recognised at the point in time at which performance obligation is satisfied.
2.8.3 The Company assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent. Revenue is recognized based on the nature of activity when consideration can be reasonably measured and there exits reasonable certainty of its recovery. Revenue from construction/project related activity is measured at the amount company expects to be entitled taking into account contractually defined terms of payment and excluding taxes and duty as given below:-
(a) Projects executed for Ministry of Railways (MoR): Revenue from project execution is determined by adding aggregate cost plus margin agreed with MoR and any subsequent clarifications received in this respect.
(b) Works Executed by Zonal Railways on behalf of RVNL - Revenue from works executed by Zonal Railways on RVNL projects is determined on the basis of statement of Expenditure submitted by the respective Zonal Railways.
(c) Deposit works (cost plus contract) related to JCEs (Jointly Controlled Entities) in the form of Special Purpose Vehicles and others). Contract revenue is determined by adding the aggregate cost plus proportionate margin (Direction & General Charges) based on fixed percentage as agreed with the customer.
(d) In case of IRFC funded projects, amount of interest accrued for the year on the Loan is shown as finance cost and the same amount which is receivable from Ministry of Railways is shown as recovery from MoR under the head other Income.
(e) Claims are accounted as income in the year of acceptance by client or evidence of acceptance received.
(f) In case of Construction projects that do not follow the Cost-plus margin model, the recognition of revenue is based on, to the extent of work completed / milestone achieved as per the agreement with the contractee or customer.
2.8.4 The revenue generated from technical consultancy services is recognized upon the attainment of milestones as stipulated in the contractual agreement.
2.9 Other Revenue Recognition
i. Dividend income is recognized when the right to receive is established.
ii. Interest income is recognized using Effective Interest Rate Method.
2.10 Employee Benefits
a) Short Term Employee Benefits
All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages and short- term compensated absences LTC etc. are recognized in the period in which the employee renders the related service.
b) Long Term Employee Benefits
The obligation for long-term employee benefits such as long-term compensated absences & half pay leave is recognized in the same manner as in the case of defined benefit plans as mentioned in (c)(ii) below
c) Post Employment Benefits
(i) Defined contribution plans:
The Company makes defined contribution to
a. the Regional Provident Fund Commissioner in respect of provident fund scheme CGIS and employee state insurance scheme.
b. the RVNL Medical and Welfare Trust in respect of RVNL Medical and Welfare Scheme.
c. National Plan Scheme by the Govt. of India (PFRDA) in respect of the pension scheme.
The contribution paid/payable under the schemes is recognized during the period in which the employee renders the related service.
(ii) Defined benefit plans:
Gratuity is a post employment defined benefit plan. The liability recognized in the balance sheet is the present value of the defined benefit obligation at the balance sheet date less fair value ofplan assets. The defined benefit obligation is calculated by an independent actuary using projected unit credit (PUC) method. Actuarial gains and losses are recognised immediately in the Statement of Profit & Loss.
d) Retirement benefits of the âstaff on deputationâ have been accounted for on the basis of the guidelines of the Ministry of Railways.
e) Actuarial gains or losses are recognized in Other Comprehensive Income.
f) Re-measurements recognised in Other Comprehensive Income are comprising actuarial gains or losses that are not reclassified to profit or loss from Other Comprehensive Income in subsequent periods.
2.H Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates. (Functional Currency). The financial statements are presented in Indian rupees which is the presentation currency of company.
Foreign Currency Transactions
i. All foreign currency transactions are translated into functional Currency at the rate prevalent on the date of transaction.
ii. Non-monetary items are translated at the rate on the date of initial transaction.
iii. Monetary items denominated in foreign currency are translated at the prevailing closing buying rate at each reporting date.
iv. Foreign exchange gain or losses in respect of
monetary and non-monetary items is recognised
in statement of profit and loss.
Borrowing costs that are attributable to the acquisition construction or production of a qualifying asset are capitalized as part of cost of such asset till such time as the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.
2.13 Tax expenses represents the sum of current tax and deferred tax
a) Current Income Tax
i. Taxes including current income-tax are computed using the applicable tax rates and tax laws.
ii. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the company operates and generates taxable income.
iii. Current income tax assets and liabilities for current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities Liability for additional taxes if any is provided / paid as and when assessments are completed.
iv. Current tax related to OCI Item are recognized in Other Comprehensive Income (OCI).
b) Deferred tax
i. Deferred income tax is recognized using balance sheet approach.
ii. Deferred income tax assets and liabilities are recognized for temporary differences which is computed using the tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
iii. Deferred income tax asset are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized.
iv. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
v. Deferred tax related to OCI Item are recognized in Other Comprehensive Income (OCI).
The Companyâs leased asset primarily consists of leases for land and buildings. The Company assesses whether a contract contains a lease at inception of a contract. The Company recognizes right-of-use assets at the commencement date of the lease. Right-of-use assets are measured at cost less any accumulated depreciation and impairment losses and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
⢠If ownership of the leased asset is transferred to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
⢠The right-of-use assets are also subject to impairment.
Lease liabilities
⢠The Company recognizes lease liabilities
measured at the present value of future lease payments less any lease incentives receivable. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term or a change in the lease payments.
⢠The Company applies the lease recognition exemption to its short-term leases contracts (i.e., those leases that have a lease term of 12 months or less from the commencement date. It also applies to the recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Provision is recognised when:
i) The Company has a present obligation as a result of a past event
ii) A probable outflow of resources is expected to settle the obligation and
iii) A reliable estimate of the amount of the obligation can be made.
Reimbursement of the expenditure required to settle a provision is recognised as per contract provisions or when it is virtually certain that reimbursement will be received.
Provisions are reviewed at each Balance Sheet date.
a) Discounting of Provisions
Provision which expected to be settled beyond 12 months are measured at the present value by using pre-tax discount rate that reflects the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expenses.
2.16 Contingent Liabilities and Contingent Assets
(a) Contingent Liabilities are disclosed in either of the following cases:
i) A present obligation arising from a past event when it is not probable that an outflow of resources will be required to settle the obligation; or
ii) A reliable estimate of the present obligation cannot be made; or
iii) A possible obligation unless the probability of outflow of resource is remote.
(b) Contingent assets is disclosed where an inflow of economic benefits is probable.
(c) Contingent Liability and Provisions needed against Contingent Liability and Contingent Assets are reviewed at each Reporting date.
(d) Contingent Liability is net of estimated provisions considering possible outflow on settlement.
2.17 Earnings Per Equity Share
In determining earnings per share the Company considers the net profit attributable to equity shareholders. The number of shares used in computing basic and diluted earnings per share is the weighted average number of shares outstanding during the year.
2.18Liquidated Damages and Penalties
Credit items arising on account of Liquidated Damages and Penalties during execution of contract or due to termination of contract etc. are carried as â"Retained Amount for Damages A/cââ under â"Other Current Liabilitiesââ until the management has decided either to levy or waive the same before financial closure of the project. Thereafter if these are not levied or waived by the management before financial closure of the project such leftover balances of liquidated damages and penalties etc. are credited to the total cost of the concerned project on financial closure of the projectââ.
Operating segments are reported in the manner consistent with the internal reporting provided by the Chief Operating Decision Maker (CODM). Chairman and Managing Director of the company has been identified as CODM. Company has identified only one reportable segment i.e. âââDevelopment of Railway Infrastructureââ.
Company measures financial instruments at fair value at each reporting 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 to 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. 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.
2.21 Dividend to equity holders
Dividend paid/payable shall be recognised in the year in which the related dividends are approved by shareholders or board of directors as appropriate.
(A) Initial recognition and measurement
Financial Instruments are recognized at its fair value plus or minus transaction costs that are directly attributable to the acquisition or issue of the financial instruments.
(B) Subsequent measurement
(i) Financial Assets
Financial assets are classified in following
categories:
a) At Amortised Cost
b) Fair value through Other Comprehensive Income.
c) Fair value through Profit and loss account.
a. Debt instrument at Amortised Cost
A financial asset shall be measured at amortised cost if both of the following conditions are met:
(a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
(b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets measured at amortised cost using effective interest rate method less impairment if any. The EIR amortisation is included in finance income in the statement of profit and loss.
b. Debt instrument at FVTOCI
A debt instrument is classified at FVTOCI if both of the following criteria are met:
⢠The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets and
⢠The assetâs contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the Other Comprehensive Income (OCI). However the company recognizes interest income impairment losses & reversals and foreign exchange gain or loss in the P&L. On de-recognition of the asset cumulative gain or loss previously recognised in OCI is reclassified from the equity to P&L. Interest earned is recognised using the EIR method.
c. Debt instrument at FVTPL
FVTPL is a residual category for financial Assets. Any financial assets which does not meet the criteria for categorization as at amortized cost or as FVTOCI is classified at FVTPL.
In addition the Company may elect to designate financial asset which otherwise meets amortized cost or FVTOCI criteria at FVTPL,
if doing so reduces or eliminates a measurement or recognition inconsistency. The Company has not designated any financial asset at FVTPL.
Financial assets included within the FVTPL category are measured at fair value with all changes recognized in the P&L. Investment in Equity instruments are measured through FVTOCI.
d. Equity Instrument at FVTOCI
Financial Assets are measured at fair value through other comprehensive
income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows and setting financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payment of principal and invest in the principal amount outstanding. The Company has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of equity investments not held for trading.
(ii) Financial liabilities
a) Financial liabilities at Amortised Cost Financial liabilities at amortised cost represented by trade and other payables security deposits and retention money are initially recognized at fair value and subsequently carried at amortized cost using the effective interest rate method.
b) Financial liabilities at FVTPL The company has not designated any financial liabilities at FVTPL.
(C) Derecognition
Financial Asset
A financial asset (or where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized only when the contractual rights to the cash flows from the asset expires or it transfers the financial assets and substantially all risks and rewards of the ownership of the asset.
Financial Liability
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an existing liability are substantially modified such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability and the difference in the respective carrying amounts is recognised in the income statement.
(D) Impairment of financial assets:
Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss. The Company follows simplified approach for recognition of impairment loss allowance on trade receivable. 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 Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVTOCI debt instruments. The impairment methodology applies on whether there has been significant increase in credit risk.
2.23 Non-current Assets (or disposal groups) held for Sale
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. The sale is considered highly probable only when the asset or disposal group is available for immediate sale in its present condition it is unlikely that the sale will be withdrawn and sale is expected within one year from the date ofthe classification. Disposal groups classified as held for sale are stated at the lower of carrying amount and fair value less costs to sell. Property plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale. Assets classified as held for sale are presented separately in the statement of financial position.
If the criteria stated by IND AS 105 âNon-current Assets Held for Sale and Discontinued Operationsâ are no longer met, the disposal group ceases to be classified as held for sale. Non-current asset that ceases to be classified as held for sale are measured at the lower of (i) its carrying amount before the asset was classified as held for sale adjusted for depreciation that would have been recognised had that asset not been classified as held for sale and (ii) its recoverable amount at the date when the disposal group ceases to be classified as held for sale.
2.24 Cash and cash equivalent
Cash and cash equivalent comprise cash at bank and on hand. It includes term deposits and short term money market deposits with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
2.25 Prior period errors
Material prior period errors are corrected retrospectively by restating the comparative amounts for the prior periods presented in which the error occurred. If the error occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented, are restated.
Mar 31, 2022
1 Corporate Information
Rail Vikas Nigam Limited (RVNL) is a public sector construction company domiciled in India (CIN:L74999DL2003GOI118633) and is incorporated under the provisions of the Companies Act 1956 on 24th January 2003 with an authorized share capital of Rs. 3000 crores. The shares of the Company are listed on National stock exchange and Bombay stock exchange. The Company is a Schedule ''A'' public sector company and a Mini Ratna-Category I. The registered office of the company is located at 1st floor August Kranti Bhawan Bhikaji Cama Place New Delhi- 110066. President of India through Ministry of Railway(MOR) is holding 78.20% equity shares of the Company (refer note no. 48) as on 31 March 2022).
The objectives of the Company include:
(i) Fast track implementation of rail infrastructure projects
(ii) Raising extra budgetary resources for project execution.
The Company is implementing various types of Rail infrastructure projects assigned by MoR including doubling (including 3rd/4th lines) gauge conversion new lines railway electrification major bridges workshops Production Units and extension of the Kolkata Metro Rail System.The Company has also formed six SPVs with equity participant shareholders for port and last mile connectivity projects.
2. The reporting and functional currency of the company is Indian Rupees (INR). Figures in financial statements are presented in crore, by rounding off upto two decimals except for per share data and as otherwise stated.
3. The standalone financial statements have been approved for issue by the company''s Board of Directors in their meeting held on 30th May, 2022
Summary of Significant Accounting Policies
Note 2 :-
2.1 Basis of Preparation
a) Statement of Compliance
The financial statements as at and for the year ended 31 March 2022 have been prepared in accordance with Indian Accounting Standards (Ind-AS) notified under section 133 of the Companies Act 2013 as Companies (Indian Accounting Standards) Rules 2015 and amended rules from time to time.
b) Basis of Measurement
The financial statements have been prepared under the historical cost convention and on an accrual basis except for the following items that have been measured at fair value as required by relevant Ind-AS.
i. Defined benefit Plan and other long term employee benefits
ii. Certain financial assets and liabilities measured at fair value.
c) Use of estimates and judgment
The preparation of financial statements is in conformity with Ind AS that requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of financial statements and the reported amount of income and expenses. Examples of such estimates include estimates of future obligations under employee retirement benefit plans and estimated useful life of property plant and equipment actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on a periodic basis. Future results could differ due to changes in these estimates and difference between the actual result and the estimates are recognised in the period in which the results are known /materialize.
All financial information presented in Indian rupees and all values are rounded to the nearest crore rupees with two decimal points except where otherwise stated. Due to rounding off the numbers presented throughout the document may not add up precisely to the totals and percentages may not precisely reflect the absolute figures.
Cash flow statement is reported using the indirect method whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating investing and financing activities of the company are segregated based on the available information.
2.3 Property plant and equipment
a) Property plant and equipment are measured at
cost less accumulated depreciation and impairment losses if any. Cost of asset includes the following
I. Cost directly attributable to the acquisition of the assets
ii. Incidental expenditure during the construction period is capitalized as part of the indirect construction cost to the extent to which the expenditure is directly related to construction or is incidental thereto.
iii. Present value of the estimated costs of dismantling & removing the items & restoring the site on which it is located if recognition criteria are met.
b) Cost of replacement major inspection repair of significant parts and borrowing costs for long-term construction projects are capitalised if the recognition criteria are met.
c) Upon sale of assets cost and accumulated depreciation are eliminated from the financial statements and the resultant gains or losses are recognized in the statement of profit and loss.
d) Amounts paid towards the acquisition of property plant and equipment outstanding as of each reporting date and the cost of property plant and equipment not ready for intended use before such date are disclosed under capital work- in-progress.
Depreciation
a) Depreciation on Property plant and Equipment is provided on Straight Line basis (SLM) over the useful life of the assets as specified in Schedule II of the Companies Act 2013 except in the case of
(i) Furniture & Fixtures and
(ii) Mobiles Phones & Tablets.
In both the categories of these assets Management has estimated the useful life after taking into consideration the economic benefits embodied in these assets and other factors such as technical obsolescence and wear and tear etc.
The estimated useful life of assets for current and comparative period of significant items of property plant and equipment are as follows:
Particulars Useful Life
Plant & Machinery 8 year
Furniture and fixtures 4 year
Computers 3 year
Mobile phones & Tablets 2 year
Office Equipments 5 year
(excluding Mobile Phones & Tablets)
(b) Each part of an item of Property Plant and Equipment is depreciated separately if the cost of part is significant in relation to the total cost of the item and useful life of that part is different from the useful life of remaining asset.
(c) Leasehold improvements are amortized over the lower of estimated useful life and lease term.
(d) Depreciation methods useful lives and residual values are reviewed at each reporting date.
(e) Depreciation on individual assets acquired for Rs. 5000/- or less is depreciated at the rate of 100% taking in to consideration the commercial life in the year of purchase itself.
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Intangible assets are stated at historical cost less accumulated amortization and impairment loss if any.
Intangible assets comprise of license fees other implementation costs for system software and other application software acquired for in-house use. The costs are capitalized in the year in which the relevant software is implemented for use. The cost of an intangible asset comprises its purchase price including any import duties and other taxes and any directly attributable expenditure on making the asset ready for its intended use, intangible assets not ready for intended use as on reporting date is recognised as intangible assets under development.
Amortization of Intangible Assets
Intangible assets are amortized over their respective estimated useful lives on a straight- line basis from the date that they are available for use.The estimated useful life of acquired software''s are finite (3 years) estimated useful life of SAP software is estimated at 6 year. Amortisation methods useful lives and residual values are reviewed at each reporting date.
2.5 Impairment of non-financial assets
An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value and impairment loss is charged to the Statement of Profit & Loss in the year in which an asset is identified as impaired. At each reporting date company assesses the estimate amount of impairment loss. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount and such losses either no longer exists or has decreased. Reversal of impaired loss is recognized in the Statement of Profit & Loss.
2.6 Investments in subsidiaries and Joint
Arrangements
a) Investment in Subsidiaries
Investments in subsidiaries are accounted for at cost less impairment loss, if any, in separate financial statements.
b) Joint Arrangement
Investment in joint arrangement are classified as either joint operation or joint ventures. The classification depends on the contractual rights and obligations of each investors rather than the legal structure of thejoint arrangement. Company has both joint ventures and joint operations.
i) Joint Operations
Company recognizes its direct right to the assets, liabilities, revenue and expenses of joint operations and its share of any jointly held or incurred assets liabilities revenue and expenses.
ii) Joint Venture
Investments in Joint Venture are accounted for at cost less impairment loss, if any, in separate financial statements.
2.7 Inventories & Project Accounting
(a) Project Work-in-Progress is valued at the contract
rates and construction material at site is stated at cost. Payments made to Zonal Railways for acquiring land included in project Work-inProgress is stated at cost.
(b) IRFC Funded Projects: In accordance with revised Procedure Order dt. 30.12.2016 of MoR PWIP of IRFC funded projects are shown as Lease Receivable. The amount of expenditure for the period including opening balance on IRFC funded projects are transferred from PWIP to Lease Receivable and from the subsequent financial year adjustments will be carried out periodically.
(c) The value of projects which are transferred from the Project Work in Progress (PWIP) is determined by adding direct expenditure plus management fee as agreed with MoR.
(d) MoR Funded Projects: In accordance with revised Procedure Order dt. 30.12.2016 of MoR PWIP of MoR funded projects are adjusted against fund received from MoR . The amount of expenditure on MoR funded projects recognised during the year including opening balances of PWIP for MoR funded project are being adjusted as at 31.03.2017 from the fund received from MoR and from the subsequent financial year adjustments will be carried out periodically.
2.8 Revenue from Contracts with Customers
2.8.1 Company Recognises revenue from contracts with customers based on a five-step as set out in Ind AS-115:-
(i) Identify contracts with a customer:- A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria for every contract that must be met.
(ii) Identify performance obligations in the contract: A performance obligation is a promise in a contract with a customer to transfer a good or service to the customer.
(iii) Determine the transaction price: The transaction price is the amount of consideration to which the company expects to be entitled in exchange for transferring promised goods or services to a customer excluding amounts collected on behalf of third parties.
(iv) Allocate the transaction price to the performance obligations in the contract: For a contract that has more than one performance obligation the Company allocates the transaction price to each performance obligation in an amount that depicts the amount of consideration to which the Company expects to be entitled in exchange for satisfying each performance obligation.
(v) Recognise revenue when or as the Company satisfies a performance obligation.
2.8.2 The Company satisfies a performance obligation and recognises revenue over time of one of the following criteria is met:
(i) The customer simultaneously receives and consumes the benefits provided by the company''s performance as the company performs.
(ii) The Company''s performance creates or enhances an asset that the customer controls as the asset is created or enhanced.
(iii) The Company''s performance does not create an asset with an alternative use to the company and the company has an enforceable right to payment for performance completed to date.
For performance obligations where one of the above conditions are not met revenue is recognised at the point in time at which performance obligation is satisfied.
2.8.3 The Company assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent. Revenue is recognized based on the nature of activity when consideration can be reasonably measured and there exits reasonable certainty of its recovery. Revenue from construction/project related
activity is measured at the amount company expects to
be entitled taking into account contractually defined terms
of payment and excluding taxes and duty as given below:-
(a) Projects executed for Ministry of Railways (MOR): Revenue from project execution is determined by adding aggregate cost plus margin agreed with MOR and any subsequent clarifications received in this respect.
(b) Works Executed by Zonal Railways on behalf of RVNL - Revenue from works executed by Zonal Railways on RVNL projects is determined on the basis of statement of Expenditure submitted by the respective Zonal Railways.
(c) Deposit works (cost plus contract) related to JCEs (Jointly Controlled Entities) in the form of Special Purpose Vehicles and others): Contract revenue is determined by adding the aggregate cost plus proportionate margin (Direction & General Charges) based on fixed percentage as agreed with the customer.
(d) In case of IRFC funded projects, amount of interest accrued for the year on the Loan is shown as finance cost and the same amount which is receivable from Ministry of Railway''s is shown as recovery from MoR under the head other Income.
(e) Claims are accounted as income in the year of acceptance by client or evidence of acceptance received.
i. Dividend income is recognized when the right to receive is established.
ii. Interest income is recognized on a time proportion basis taking into account the amount outstanding and the interest rate applicable using Effective Interest Rate Method.
a) Short Term Employee Benefits
All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits. Benefits such as salaries wages and short- term compensated absences LTC etc. are recognized in the period in which the employee renders the related service.
b) Long Term Employee Benefits :
The obligation for long-term employee benefits such as long-term compensated absences& half pay leave is recognized in the same manner as in the case of defined benefit plans as mentioned in (c)(ii) below
c) Post Employment Benefits
(i) Defined contribution plans:
The Company makes defined contribution to
a. the Regional Provident Fund Commissioner in respect of provident fund scheme CGIS and employee state insurance scheme.
b. the RVNL Medical and Welfare Trust in respect of RVNL Medical and Welfare Scheme.
c. National Plan Scheme by the Govt. of India
(PFRDA) in respect of the pension scheme.
The contribution paid/payable under the schemes is recognized during the period in which the employee renders the related service.
(ii) Defined benefit plans: Gratuity is a post employment defined benefit plan. The liability recognized in the balance sheet is the present value of the defined benefit obligation at the balance sheet date less fair value of plan assets. The defined benefit obligation is calculated by an independent actuary using projected unit credit (PUC) method. Actuarial gains and losses are recognised immediately in the Statement of Profit & Loss.
d) Retirement benefits of the ''staff on deputation'' have been accounted for on the basis of the guidelines of the Ministry of Railways.
e) Actuarial gains or losses are recognized in Other Comprehensive Income.
f) Re-measurements recognised in Other Comprehensive Income are comprising actuarial gains or losses that are not reclassified to profit or loss from Other Comprehensive Income in subsequent periods.
2.11 Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates. (Functional Currency) The financial statements are presented in Indian rupees which is the presentation currency of company.
Foreign Currency Transactions
i. All foreign currency transactions are translated into functional Currency at the rate prevalent on the date of transaction.
ii. Non-monetary items are translated at the rate on the date of initial transaction.
iii. Monetary items denominated in foreign currency are translated at the prevailing closing buying rate at each reporting date.
iv. Foreign exchange gain or losses in respect of monetary and non-monetary items is recognised in statement of profit and loss.
2.12 Borrowing Cost
Borrowing costs that are attributable to the acquisition construction or production of a qualifying asset are capitalized as part of cost of such asset till such time as the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.
2.13 Tax expenses represents the sum of current tax and deferred tax
a) Current Income Tax
i. Taxes including current income-tax are computed using the applicable tax rates and tax laws.
ii. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the company operates and generates taxable income.
iii. Current income tax assets and liabilities for current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities Liability for additional taxes if any is provided / paid as and when assessments are completed.
iv. Current tax related to OCI Item are recognized in Other Comprehensive Income (OCI).
b) Deferred tax
i. Deferred income tax is recognized using balance sheet approach.
ii. Deferred income tax assets and liabilities are recognized for temporary differences which is computed using the tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
iii. Deferred income tax asset are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized.i
iv. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
v. Deferred tax related to OCI Item are recognized in Other Comprehensive Income (OCI).
The Company''s leased asset primarily consists of leases for land and buildings. The Company assesses whether a contract contains a lease, at inception of a contract. The Company recognizes right-of-use assets at the commencement date of the lease Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
⢠If ownership of the leased asset is transferred to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
⢠The right-of-use assets are also subject to impairment.
Lease liabilities
⢠The Company recognizes lease liabilities measured at the present value of future lease payments less any lease incentives receivable, In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the lease payments, short term lease and leases of low value assets
⢠The Company applies the short-term lease recognition exemption to its short-term leases contracts (i.e., those leases that have a lease term of 12 months or less from the commencement date.It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
the same before financial closure of the project. Thereafter i.e. if these are not levied or waived by the management before financial closure of the project such leftover balances of liquidated damages and penalties etc. are credited to the total cost of the concerned project on financial closure of the project".
2.19 Operating Segment
Operating segments are reported in the manner consistent with the internal reporting provided by the Chief Operating Decision Maker (CODM). Chairman and Managing Director of the company has been identified as CODM. Company has identified only one reportable segment i.e. "Development of Railway Infrastructure".
2.20 Fair Value Measurement
Company measures financial instruments at fair value at each reporting 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 to 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. 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.
2.21 Dividend to equity holders
Dividend paid/payable shall be recognised in the year in which the related dividends are approved by shareholders or board of directors as appropriate.
2.22 Financial instruments:-
(A) Initial recognition and measurement
Financial Instruments are recognized at its fair value plus or minus transaction costs that are directly attributable to the acquisition or issue of the financial instruments.
(B) Subsequent measurement
(i) Financial Assets
Financial assets are classified in following categories:
a) At Amortised Cost
Provision is recognised when:
i) The Company has a present obligation as a result of a past event
ii) A probable outflow of resources is expected to settle the obligation and
iii) A reliable estimate of the amount of the obligation can be made.
Reimbursement of the expenditure required to settle a provision is recognised as per contract provisions or when it is virtually certain that reimbursement will be received.
Provisions are reviewed at each Balance Sheet date.
a) Discounting of Provisions
Provision which expected to be settled beyond 12 months are measured at the present value by using pretax discount rate that reflects the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expenses.
2.16 Contingent Liabilities and contingent Assets
(a) Contingent Liabilities are disclosed in either of the following cases:
i) A present obligation arising from a past event when it is not probable that an outflow of resources will be required to settle the obligation; or
ii) A reliable estimate of the present obligation cannot be made; or
iii) A possible obligation unless the probability of outflow of resource is remote.
(b) Contingent assets is disclosed where an inflow of economic benefits is probable.
(c) Contingent Liability and Provisions needed against Contingent Liability and Contingent Assets are reviewed at each Reporting date.
(d) Contingent Liability is net of estimated provisions considering possible outflow on settlement.
2.17 Earnings Per Equity Share
In determining earnings per share the Company considers the net profit attributable to equity shareholders. The number of shares used in computing basic and diluted earnings per share is the weighted average number of shares outstanding during the year.
2.18 Liquidated Damages and Penalties
"Credit items arising on account of Liquidated Damages and Penalties during execution of contract or due to termination of contract etc. are carried as "Retained Amount for Damages A/c" under "Other Current Liabilities" until the management has decided either to levy or waive
b) Fair value through Other Comprehensive Income.
c) Fair value through Profit and loss account.
a. Debt instrument at Amortised Cost
A financial asset shall be measured at amortised cost if both of the following conditions are met:
(a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
(b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets measured at amortised cost using effective interest rate method less impairment if any. The EIR amortisation is included in finance income in the statement of profit and loss.
b. Debt instrument at FVTOCI
A debt instrument is classified as at the FVTOCI if both of the following criteria are met:
⢠The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets and
⢠The asset''s contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the Other Comprehensive Income (OCI). However the company recognizes interest income impairment losses & reversals and foreign exchange gain or loss in the P&L. On de-recognition of the asset cumulative gain or loss previously recognised in OCI is reclassified from the equity to P&L. Interest earned is recognised using the EIR method.
c. Debt instrument at FVTPL
FVTPL is a residual category for financial Assets. Any financial assets which does not meet the criteria for categorization as at amortized cost or as FVTOCI is classified as at FVTPL.
In addition the company may elect to designate financial asset which otherwise meets amortized cost or FVTOCI criteria as at FVTPL. If doing so reduces or eliminates a measurement or recognition inconsistency. The company has not designated any financial asset as at FVTPL.
Financial assets included within the FVTPL category are measured at fair value with all changes recognized in the P&L.Investment in Equity instruments are measured through FVTOCI
d. Equity Instrument at Other Comprehensive Income
Financial Assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows and setting financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payment of principal and invest in the principal amount outstanding.
The company has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of equity investments not held for trading.
(ii) Financial liabilities
a) Financial liabilities at Amortised Cost
Financial liabilities at amortised cost represented by trade and other payables security deposits and retention money are initially recognized at fair value and subsequently carried at amortized cost using the effective interest rate method.
b) Financial liabilities at FVTPL
The company has not designated in any financial liabilities at FVTPL.
(C) Derecognition
Financial Asset
A financial asset (or where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized only when the contractual rights to the cash flows from the asset expires or it transfers the financial assets and substantially all risks s and rewards of the ownership of the asset.
Financial Liability A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an existing liability are substantially modified such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability and the difference in the respective carrying amounts is recognised in the income statement.
(D) Impairment of financial assets:
Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss. The Company follows'' simplified approach'' for recognition of impairment loss allowance on trade receivable. 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
recognitionCompany assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVTOCI debt instruments. The impairment methodology applies on whether there has been significant increase in credit risk.
2.23 Non-current Assets (or disposal groups) held for Sale
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. The sale is considered highly probable only when the asset or disposal group is available for immediate sale in its present condition it is unlikely that the sale will be withdrawn and sale is expected within one year from the date of the classification. Disposal groups classified as held for sale are stated at the lower of carrying amount and fair value less costs to sell. Property plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale. Assets classified as held for sale are presented separately in the statement of financial position.
If the criteria stated by IND AS 105 "Non-current Assets Held for Sale and Discontinued Operations" are no longer
met the disposal group ceases to be classified as held for sale. Non-current asset that ceases to be classified as held for sale are measured at the lower of (i) its carrying amount before the asset was classified as held for sale adjusted for depreciation that would have been recognised had that asset not been classified as held for sale and (ii) its recoverable amount at the date when the disposal group ceases to be classified as held for sale.
Cash and cash equivalent comprise cash at bank and on hand. It includes term deposits and short term money market deposits with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Material prior period errors are corrected retrospectively by restating the comparative amounts for the prior periods presented in which the error occurred. If the error occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented, are restated.
Mar 31, 2021
1 Corporate Information
Rail Vikas Nigam Limited (RVNL) is a public sector construction company domiciled in India (CIN:L74999DL2003GOI118633) and is incorporated under the provisions of the Companies Act 1956 on 24th January 2003 with an authorized share capital of Rs. 3000 crores. The shares of the Company are listed on National stock exchange and Bombay stock exchange. The Company is a Schedule âAâ public sector company and a Mini Ratna-Category I.
The registered office of the company is located at 1st floor August Kranti Bhawan Bhikaji Cama Place New Delhi- 110066. President of India through Ministry of Railway is holding 78.21 % equity shares of the Company (refer note no.50) as on 31 March 2021).
The objective of the company include:
(i) Fast track implementation of rail infrastructure projects
(ii) Raising extra budgetary resources for project execution.
The Company is implementing various types of Rail infrastructure projects assigned by MoR including doubling (including 3rd/4th lines) gauge conversion new lines railway electrification major bridges workshops Production Units and extension of the Kolkata Metro Rail System.
The Company has also formed six SPVs with equity participant shareholders for port and last mile connectivity projects.
2. The reporting and functional currency of the company is Indian Rupees (INR). Figures in financial statements are presented in crore, by rounding off upto two decimals except for per share data and as otherwise stated.
3. The standalone financial statements are approved for issue by the companyâs Board of Directors in their meeting held on 29.06.2021
Summary of Significant Accounting Policies
Note 2 :-2.1 Basis of Preparation
a) Statement of Compliance
The financial statements as at and for the year
ended 2021 have been prepared in accordance with Indian Accounting Standards (Ind-AS) notified under section 133 of the Companies Act 2013 as Companies (Indian Accounting Standards) Rules 2015 and amended rules from time to time.
b) Basis of Measurement
The financial statements have been prepared under the historical cost convention and on an accrual basis except for the following items that have been measured at fair value as required by relevant Ind-AS.
i. Defined benefit Plan and other long term employee benefits
ii. Certain financial assets and liabilities measured at fair value.
c) Use of estimates and judgment
The preparation of financial statements is in conformity with Ind AS that requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of financial statements and the reported amount of income and expenses. Examples of such estimates include estimates of future obligations under employee retirement benefit plans and estimated useful life of property plant and equipment actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on a periodic basis. Future results could differ due to changes in these estimates and difference between the actual result and the estimates are recognised in the period in which the results are known /materialize.
All financial information presented in Indian rupees and all values are rounded to the nearest crore rupees with two decimal points except where otherwise stated. Due to rounding off the numbers presented throughout the document may not add up precisely to the totals and percentages may not precisely reflect the absolute figures.
Cash flow statement is reported using the indirect method whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature
and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating investing and financing activities of the company are segregated based on the available information.
2.3 Property plant and equipment
a) Property plant and equipment are measured at cost less accumulated depreciation and impairment losses if any.
Cost of asset includes the following
I. Cost directly attributable to the
acquisition of the assets
ii. Incidental expenditure during the
construction period is capitalized as part of the indirect construction cost to the extent to which the expenditure is directly related to construction or is incidental thereto.
iii. Present value of the estimated costs of dismantling & removing the items & restoring the site on which it is located if recognition criteria are met.
b) Cost of replacement major inspection repair of significant parts and borrowing costs for longterm construction projects are capitalised if the recognition criteria are met.
c) Upon sale of assets cost and accumulated depreciation are eliminated from the financial statements and the resultant gains or losses are recognized in the statement of profit and loss.
d) Amounts paid towards the acquisition of property plant and equipment outstanding as of each reporting date and the cost of property plant and equipment not ready for intended use before such date are disclosed under capital work- in-progress.
Depreciation
a) Depreciation on Property plant and Equipment is provided on Straight Line basis (SLM) over the useful life of the assets as specified in Schedule II of the Companies Act 2013 except in the case of (i) Furniture & Fixtures and (ii) Mobiles Phones & Tablets. In both the categories of these assets Management has estimated the useful life after taking into consideration the economic benefits embodied in these assets and other factors such as technical obsolescence and wear and tear etc.
The estimated useful life of assets for current and comparative period of significant items of property plant and equipment are as follows:
Particulars Useful Life
Furniture and fixtures 4 year
EDP Assets 3 year
Mobile phones 2 year
Office Equipmentâs
(excluding Mobile Phones) 5 year
(b) Each part of an item of Property Plant and Equipment is depreciated separately if the cost of part is significant in relation to the total cost of the item and useful life of that part is different from the useful life of remaining asset.
(c) Leasehold improvements are amortized over the lower of estimated useful life and lease term.
(d) Depreciation methods useful lives and residual values are reviewed at each reporting date.
(e) Depreciation on individual assets acquired for Rs. 5000/- or less is depreciated at the rate of 100% taking in to consideration the commercial life in the year of purchase itself.
2.4 Intangible Assets
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Intangible assets are stated at historical cost less accumulated amortization and impairment loss if any.
Intangible assets comprise of license fees other implementation costs for system software and other application software acquired for in-house use. The costs are capitalized in the year in which the relevant software is implemented for use. The cost of an intangible asset comprises its purchase price including any import duties and other taxes and any directly attributable expenditure on making the asset ready for its intended use. intangible assets not ready for intended use as on reporting date is recognised as intangible assets under development.
Amortization of Intangible Assets Intangible assets are amortized over their respective estimated useful lives on a straight- line basis from the date that they are available for use.
The estimated useful life of acquired softwareâs are finite (3 years) estimated useful life of SAP software is estimated at 6 year. Amortisation methods useful lives and residual values are reviewed at each reporting date.
2.5 Impairment of non-financial assets
An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value and impairment loss is charged to the Statement of Profit & Loss in the year in which an asset is identified as impaired. At each reporting date company assesses the estimate amount of impairment loss. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount and such losses either no longer exists or has decreased. Reversal of impaired loss is recognized in the Statement of Profit & Loss.
2.6 Investments in subsidiaries and Joint Arrangements
a) Investment in Subsidiaries
Investments in subsidiaries are accounted for at cost less impairment loss if any in separate financial statements.
b) Joint Arrangement
Investment in joint arrangement are classified as either joint operation or joint ventures. The classification depends on the contractual rights and obligations of each investors rather than the legal structure of the joint arrangement. Company has both joint ventures and joint operations.
i) Joint Operations
Company recognizes its direct right to the assets liabilities revenue and expenses of joint operations and its share of any jointly held or incurred assets liabilities revenue and expenses.
ii) Joint Venture
Investments in Joint Venture are accounted for at cost less impairment loss if any in separate financial statements.
2.7 Inventories & Project Accounting
(a) Project Work-in-Progress is valued at the contract rates and construction material at site is stated at cost. Payments made to Zonal Railways for acquiring land included in project Work-in-Progress is stated at cost.
(b) IRFC Funded Projects: In accordance with revised Procedure Order dt. 30.12.2016 of MoR PWIP of IRFC funded projects are Shown as Lease Receivable. The amount of expenditure for the period including opening balance on IRFC funded projects are transferred from PWIP to Lease Receivable and from the subsequent financial year adjustments will be carried out periodically.
(c) The value of projects which are transferred from the project Work in Progress (PWIP) is determined by adding direct expenditure plus management fee as agreed with MoR.
(d) MoR Funded Projects: In accordance with revised Procedure Order dt. 30.12.2016 of MoR PWIP of MoR funded projects are adjusted against fund received from MoR. The amount of expenditure on MoR funded projects recognised during the year including opening balances of PWIP for MoR funded project are being adjusted as at 31.03.2017 from the fund received from MoR and from the subsequent financial year adjustments will be carried out periodically.
2.8 Revenue from Contracts with Customers
2.8.1 Company Recognises revenue from contracts
with customers based on a five-step as set out in Ind
AS-115:-
(i) Identify contracts with a customer:- A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria for every contract that must be met.
(ii) Identify performance obligations in the contract: A performance obligation is a promise in a contract with a customer to transfer a good or service to the customer.
(iii) Determine the transaction price: The transaction price is the amount of consideration to which the company expects to be entitled in exchange for transferring promised goods or services to a customer excluding amounts collected on behalf of third parties.
(iv) Allocate the transaction price to the performance obligations in the contract: For a contract that has more than one performance obligation the Company allocates the transaction price to each performance obligation in an amount that depicts the amount of consideration to
which the Company expects to be entitled in exchange for satisfying each performance obligation.
(v) Recognise revenue when or as the Company satisfies a performance obligation.
2.8.2 The Company satisfies a performance obligation and recognises revenue over time of one of the following criteria is met:
(i) The customer simultaneously receives and consumes the benefits provided by the companyâs performance as the company performs
(ii) The Companyâs performance creates or enhances an asset that the customer controls as the asset is created or enhanced.
(iii) The Companyâs performance does not create an asset with an alternative use to the company and the company has an enforceable right to payment for performance completed to date.
For performance obligations where one of the above conditions are not met revenue is recognised at the point in time at which performance obligation is satisfied.
2.8.3 The Company assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent. Revenue is recognized based on the nature of activity when consideration can be reasonably measured and there exits reasonable certainty of its recovery. Revenue from construction/project related activity is measured at the amount company expects to be entitled taking into account contractually defined terms of payment and excluding taxes and duty as given below:-
(a) Projects executed for Ministry of Railways (MOR): Revenue from project execution is determined by adding aggregate cost plus margin agreed with MOR and any subsequent clarifications received in this respect.
(b) Works Executed by Zonal Railways on behalf of RVNL - Revenue from works executed by Zonal Railways on RVNL projects is determined on the basis of statement of Expenditure submitted by the respective Zonal Railways.
(c) Deposit works (cost plus contract) related to JCEs (Jointly Controlled Entities) in the form of Special Purpose Vehicles and others):
Contract revenue is determined by adding the aggregate cost plus proportionate margin (Direction & General Charges) based on fixed percentage as agreed with the customer.
(d) In case of IRFC funded projects interest component on installments received from Ministry of Railwayâs in netted against the interest payable on IRFC borrowings.
(e) Claims are accounted as income in the year of acceptance by client or evidence of acceptance received.
i. Dividend income is recognized when the right to receive is established.
ii. Interest income is recognized on a time proportion basis taking into account the amount outstanding and the interest rate applicable using Effective Interest Rate Method.
2.10 Employee Benefitsa) Short Term Employee Benefits
All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits. Benefits such as salaries wages and shortterm compensated absences LTC etc. are recognized in the period in which the employee renders the related service.
b) Long Term Employee Benefits :
The obligation for long-term employee benefits such as long-term compensated absences& half pay leave is recognized in the same manner as in the case of defined benefit plans as mentioned in (c)(iii) below
c) Post Employment Benefitsi. Defined contribution plans: The
Company makes defined contribution to the Regional Provident Fund
Commissioner in respect of provident fund scheme CGIS and employee state insurance scheme. The contribution paid/payable under the schemes is recognized during the period in which the employee renders the related service.
ii. Defined contribution plans: The
Company makes defined contribution to the RVNL Medical and Welfare Trust in respect of RVNL Medical and Welfare
Scheme. The contribution paid/payable under the schemes is recognized during the period in which the employee renders the related service. iii. Defined benefit plans: Gratuity is a post employment defined benefit plan. The liability recognized in the balance sheet is the present value of the defined benefit obligation at the balance sheet date less fair value of plan assets. The defined benefit obligation is calculated by an independent actuary using projected unit credit (PUC) method. Actuarial gains and losses are recognised immediately in the Profit & Loss Account.
d) Retirement benefits of the âstaff on deputationâ have been accounted for on the basis of the guidelines of the Ministry of Railways.
e) Actuarial gains or losses are recognized in Other Comprehensive Income.
f) Re-measurements recognised in Other Comprehensive Income are comprising actuarial gains or losses that are not reclassified to profit or loss from Other Comprehensive Income in subsequent periods.
2.11 Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates. (Functional Currency) The financial statements are presented in Indian rupees which is the presentation currency of company.
Foreign Currency Transactions
i. All foreign currency transactions are translated into functional Currency at the rate prevalent on the date of transaction.
ii. Non-monetary items are translated at the rate on the date of initial transaction.
iii. Monetary items denominated in foreign currency are translated at the prevailing closing buying rate at each reporting date.
iv. Foreign exchange gain or losses in respect of monetary and non-monetary items is recognised in statement of profit and loss.
Borrowing costs that are attributable to the acquisition construction or production of a qualifying asset are capitalized as part of cost of such asset till such time as the asset is ready
for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.
2.13 Tax expenses represents the sum of current
tax and deferred tax
a) Current Income Tax
i. Taxes including current income-tax are computed using the applicable tax rates and tax laws.
ii. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the company operates and generates taxable income.
iii. Current income tax assets and liabilities for current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities Liability for additional taxes if any is provided / paid as and when assessments are completed.
iv. Current tax related to OCI Item are recognized in Other Comprehensive Income (OCI).
b) Deferred tax
i. Deferred income tax is recognized using balance sheet approach.
ii. Deferred income tax assets and liabilities are recognized for temporary differences which is computed using the tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
iii. Deferred income tax asset are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized.
iv. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
v. Deferred tax related to OCI Item are recognized in Other Comprehensive Income (OCI).
The Companyâs leased asset primarily consists of leases for land and buildings. The Company assesses whether a contract contains a lease, at inception of a contract. The Company recognizes right-of-use assets at the commencement date of the lease Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
⢠If ownership of the leased asset is transferred to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
⢠The right-of-use assets are also subject to impairment.
⢠the Company recognizes lease liabilities measured at the present value of future lease payments less any lease incentives receivable, In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the lease payments
Short term lease and leases of low value assets
⢠The Company applies the short-term lease recognition exemption to its short-term leases contracts (i.e., those leases that have a lease term of 12 months or less from the commencement date It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on shortterm leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Provisions are reviewed at each Balance Sheet
date.a) Discounting of Provisions Provision which
expected to be settled beyond 12 months are measured at the present value by using pretax discount rate that reflects the risks specific to the liability. The increase in the porovision due to the passage of time is recognised as interest expense.
Provision is recognised when:
i) The Company has a present obligation as a result of a past event
ii) A probable outflow of resources is expected to settle the obligation and
iii) A reliable estimate of the amount of the obligation can be made.
Reimbursement of the expenditure required to settle a provision is recognised as per contract provisions or when it is virtually certain that reimbursement will be received.
2.16 Contingent Liabilities and contingent Assets
(a) Contingent Liabilities are disclosed in either of the following cases:
i) A present obligation arising from a past event when it is not probable that an outflow of resources will be required to settle the obligation; or
ii) A reliable estimate of the present obligation cannot be made; or
iii) A possible obligation unless the probability of outflow of resource is remote.
(b) Contingent assets is disclosed where an inflow of economic benefits is probable.
(c) Contingent Liability and Provisions needed against Contingent Liability and Contingent Assets are reviewed at each Reporting date.
(d) Contingent Liability is net of estimated provisions considering possible outflow on settlement.
In determining earnings per share the Company considers the net profit attributable to equity shareholders. The number of shares used in computing basic and diluted earnings per share is the weighted average number of shares outstanding during the year.
2.18 Liquidated Damages and Penalties
âCredit items arising on account of Liquidated Damages and Penalties during execution of contract
or due to termination of contract etc. are carried as âRetained Amount for Damages A/câ under âOther Current Liabilitiesâ until the management has decided either to levy or waive the same before financial closure of the project. Thereafter i.e. if these are not levied or waived by the management before financial closure of the project such leftover balances of liquidated damages and penalties etc. are credited to the total cost of the concerned project on financial closure of the projectâ.
Operating segments are reported in the manner consistent with the internal reporting provided by the Chief Operating Decision Maker (CODM). Chairman and Managing Director of the company has been identified as CODM. Company has identified only one reportable segment i.e. âDevelopment of Railway Infrastructureâ.
Company measures financial instruments at fair value at each reporting 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 to 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. 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.
2.21 Dividend to equity holders
Dividend paid/payable shall be recognised in the year in which the related dividends are approved by shareholders or board of directors as appropriate.
(A) Initial recognition and measurement
Financial Instruments are recognized at its fair value plus or minus transaction costs that are directly attributable to the acquisition or issue of the financial instruments.
(B) Subsequent measurement (i) Financial Assets
financial assets are classified in following categories:
a) At Amortised Cost
b) Fair value through Other Comprehensive Income.
c) Fair value through Profit and loss account.
a. Debt instrument at Amortised Cost
Afinancial asset shall be measured at amortised cost if both of the following conditions are met:
(a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
(b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets measured at amortised cost using effective interest rate method less impairment if any. The EIR amortisation is included in finance income in the statement of profit and loss.
b. Debt instrument at FVTOCI
A debt instrument is classified as at the FVTOCI if both of the following criteria are met:
⢠The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets and
⢠The assetâs contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the Other Comprehensive Income (OCI). However the company recognizes interest income impairment losses & reversals and foreign exchange gain or loss in the P&L. On de-
recognition of the asset cumulative gain or loss previously recognised in OCI is reclassified from the equity to P&L. Interest earned is recognised using the EIR method.
c. Debt instrument at FVTPL
FVTPL is a residual category for financial Assets. Any financial assets which does not meet the criteria for categorization as at amortized cost or as FVTOCI is classified as at FVTPL.
In addition the company may elect to designate financial asset which otherwise meets amortized cost or FVTOCI criteria as at FVTPL. If doing so reduces or eliminates a measurement or recognition inconsistency. The company has not designated any financial asset as at FVTPL.
Financial assets included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
Investment in Equity instruments are measured through FVTOCI
d. Equity Instrument at Other Comprehensive Income
Financial Assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows and setting financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payment of principal and invest in the principal amount outstanding. The company has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of equity investments not held for trading.
(ii) Financial liabilities
a) Financial liabilities at Amortised Cost
Financial liabilities at amortised cost represented by trade and other payables security deposits and retention money are initially recognized at fair value and subsequently carried at amortized cost using the effective interest rate method.
b) Financial liabilities at FVTPL
The company has not designated in any financial liabilities at FVTPL.
b. Derecognition Financial Asset
A financial asset (or where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized only when the contractual rights to the cash flows from the asset expires or it transfers the financial assets and substantially all risks and rewards of the ownership of the asset.
Financial Liability
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an existing liability are substantially modified such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability and the difference in the respective carrying amounts is recognised in the income statement.
c. Impairment of financial assets:
Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss. The Company followsâ simplified approachâ for recognition of impairment loss allowance on trade receivable. 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 Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVTOCI debt instruments. The impairment methodology applies on whether there has been significant increase in credit risk.
2.23 Non-current Assets (or disposal groups) held for Sale
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to
be recovered principally through a sale transaction and a sale is considered highly probable. The sale is considered highly probable only when the asset or disposal group is available for immediate sale in its present condition it is unlikely that the sale will be withdrawn and sale is expected within one year from the date of the classification. Disposal groups classified as held for sale are stated at the lower of carrying amount and fair value less costs to sell. Property plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale. Assets classified as held for sale are presented separately in the statement of financial position.
If the criteria stated by IND AS 105 âNon-current Assets Held for Sale and Discontinued Operationsâ
are no longer met the disposal group ceases to be classified as held for sale. Non-current asset that ceases to be classified as held for sale are measured at the lower of (i) its carrying amount before the asset was classified as held for sale adjusted for depreciation that would have been recognised had that asset not been classified as held for sale and (ii) its recoverable amount at the date when the disposal group ceases to be classified as held for sale.
Cash and cash equivalent comprise cash at bank and on hand. It includes term deposits and short term money market deposits with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Mar 31, 2018
Note 2
2.1 Basis of Preparation
a) Statement of Compliance
The financial statements as at and for year ended March 31,2018 have been prepared in accordance with Indian Accounting Standards (Ind-AS) notified under section 133 of the Companies Act 2013 as Companies (Indian Accounting Standards) Rules, 2015 .Companies (Indian accounting standards) Amendment Rules 2016 and Companies (Indian Accounting Standards) Amendment Rules 2017.
b) Basis of Measurement
The financial statements have been prepared under the historical cost convention and on an accrual basis, except for the following items that have been measured at fair value as required by relevant Ind-AS. (i) Defined benefit Plan and other long term employee benefits (ii) Certain financial assets and liabilities measured affair value."
c) Useof estimates and judgment
The preparation of financial statements is in conformity with Ind AS, requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities at the date of financial statements and the reported amount of income and expenses. Examples of such estimates include estimates of future obligations under employee retirement benefit plans and estimated useful life of property, plant and equipment actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on a periodic basis. Future results could differ due to changes in these estimates and difference between the actual result and the estimates are recognized in the period in which the results are known /materialize.
All financial information presented in Indian rupees and all values are rounded to the nearest lakhs rupees with two decimal points except where otherwise stated. Dueto rounding off, the numbers presented throughout the document may not add up precisely to the totals and percentages may not precisely reflect the absolute figures."
2.2 Cash Flow Statement
Cash flow statement is reported using the indirect method, whereby profit / (loss) before tax is
iii. Present value of the estimated costs of dismantling & removing the items & restoring the site on which it is located if recognition criteria are met.
b) Cost of replacement, major inspection, repair of significant parts and borrowing costs for long-term construction projects are capitalized if the recognition criteria are met.
c) Upon sale of assets cost and accumulated depreciation are eliminated from the financial statements and the resultant gains or losses are recognized in the statement of profit and loss.
d) Amounts paid towards the acquisition of property, plant and equipment outstanding as of each reporting date and the cost of property, plant and equipment not ready for intended use before such date are disclosed under capital work- in-progress."
Depreciation
a) Depreciation on Property, plant and Equipment is provided on Straight Line basis (SLM) over the useful life of the assets as specified in Schedule II of the Companies Act, 2013 except in the case of (i) Furniture & Fixtures and (ii) Mobiles Phones & Tablets. In both the categories of these assets, Management has estimated the useful life after taking into consideration the economic benefits embodied in these assets and other factors such as technical obsolescence and wear and tear etc.
The estimated useful life of assets for current and comparative period of significant items of property plant and equipment are as follows:
Particulars Useful Life
Furniture and fixtures 4 year
Computers 3 year
Mobile phones 2 year Office Equipmentâs
(excluding Mobile Phones) 5 year
adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the company are segregated based on the available information."
Amendment to lnd-AS7
Effective April 1,2017, the company has adopted the amendment to Ind-AS 7, which require the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and noncash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosures requirement. The adoption of amendment did not have any material effect on the financial statements.
2.3 Exceptional Items
On certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities of the Company, is such that its disclosure improves an understanding of the performance of the Company. Such income or expense is classified as an exceptional item and accordingly disclosed in the Notes to Accounts."
2.4 Property, plant and equipment
a) Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. Cost of asset includes the following
i. Cost directly attributable to the acquisition of the assets
ii. Incidental expenditure during the construction period is capitalized as part of the indirect construction cost to the extent to which the expenditure is directly related to construction or is incidental thereto. basis from the date that they are available for use.
The estimated useful life of acquired software''s are finite (3 years). Amortization methods, useful lives and residual values are reviewed at each reporting date."
2.6 Impairment of non-financial assets
An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value and impairment loss is charged to the Statement of Profit & Loss in the year in which an asset is identified as impaired. At each reporting date company assesses the estimate amount of impairment loss. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount and such losses either no longer exists or has decreased. Reversal of impaired loss is recognized in the Statement of Profit & Loss.â
2.7 Investments in subsidiaries, and Joint Arrangements
a) Investment in Subsidiaries
Investments in subsidiaries are accounted for at cost less impairment loss, if any, in separate financial statements.
b) Joint Arrangement
Investment in joint arrangement are classified as either joint operation or joint ventures. The classification depends on the contractual rights and obligations of each investors rather than the legal structure of the joint arrangement. Company has both joint ventures and joint operations.
i) Joint Operations
Company recognizes its direct right to the assets, liabilities, revenue and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenue and expenses.
(b) Each part of an item of Property, Plant and Equipment is depreciated separately if the cost of part is significant in relation to the total cost of the item and useful life of that part is different from the useful life of remaining asset.
(c) Leasehold improvements are amortized over the lower of estimated useful life and lease term.
(d) Depreciation methods, useful lives and residual values are reviewed at each reporting date.
(e) Depreciation on individual assets acquired for Rs, 5000/- or less is depreciated at the rate of 100% taking in to consideration the commercial life in the year of purchase itself.â
2.5 Intangible Assets
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Intangible assets are stated at historical cost less accumulated amortization and impairment loss, if any.
Intangible assets comprise of license fees, other implementation costs for system software and other application software acquired for in-house use. The costs are capitalized in the year in which the relevant software is implemented for use. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes, and any directly attributable expenditure on making the asset ready for its intended use. intangible assets not ready for intended use as on reporting date is recognized as intangible assets under development."
Amortization of Intangible Assets
Intangible assets are amortized over their respective estimated useful lives on a straight-line
(a) Projects executed for Ministry of Railways (MOR): Revenue from project execution is determined by adding aggregate cost plus margin agreed with MOR and any subsequent clarifications received in this respect.
(b) Works Executed by Zonal Railways on behalf of RVNL - Revenue from works executed by Zonal Railways on RVNL projects is determined on the basis of statement of Expenditure submitted by the respective Zonal Railways.
(c) Deposit works (cost plus contract) related to JCEs (Jointly Controlled Entities) in the form of Special Purpose Vehicles and others): Contract revenue is determined by adding the aggregate cost plus proportionate margin (Direction & General Charges) based on fixed percentage as agreed with the customer.
(d) In case of IRFC funded projects, interest component on installments received from Ministry of Railway''s in netted against the interest payable on IRFC borrowings.
(e) Claims are accounted as income in the year of acceptance by client or evidence of acceptance received."
2.10 Other Revenue Recognition
i. Dividend income is recognized when the right to receive is established.
ii. Interest income is recognized on a time proportion basis taking into account the amount outstanding and the interest rate applicable using Effective Interest Rate Method."
2.11 Employee Benefits
a) Short Term Employee Benefits
All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages, and short
ii) Joint Venture
Investments in Joint Venture are accounted for at cost less impairment loss, if any, in separate financial statements."
2.8 Inventories & Project Accounting
(a) Project Work-in-Progress is valued at the contract rates and construction material at site is stated at cost. Payments made to Zonal Railways for acquiring land included in project Work-in-Progress is stated at cost.
(b) IRFC Funded Projects: In accordance with revised Procedure Order dt. 30.12.2016 of MoR, PWIP of IRFC funded projects are Shown as Lease Receivable. The amount of expenditure for the period including opening balance on IRFC funded projects are transferred from PWIP to Lease Receivable and from the subsequent financial year adjustments will be carried out periodically.
(c) The value of projects which are transferred from the project Work in Progress (PWIP) is determined by adding direct expenditure plus management fee as agreed with MoR.
(d) MoR Funded Projects: In accordance with revised Procedure Order dt. 30.12.2016 of MoR, PWIP of MoR funded projects are adjusted against fund received from MoR. The amount of expenditure on MoR funded projects recognized during the year including opening balances of PWIP for MoR funded project are being adjusted as at 31.03.2017 from the fund received from MoR and from the subsequent financial year adjustments will be carried out periodically."
2.9 Revenue Recognition
Revenue is recognized based on the nature of activity, when consideration can be reasonably measured and there exists reasonable certainty of its recovery. Revenue from construction/project related activity is recognized as follows:
f) Re-measurements recognized in Other Comprehensive Income are comprising actuarial gains or losses that are not reclassified to profit or loss from Other Comprehensive Income in subsequent periods.
2.12 Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates. (Functional Currency) The financial statements are presented in Indian rupees, which is the presentation currency of company.
Foreign Currency Transactions
I. All foreign currency transactions are translated into functional Currency at the rate prevalent on the date of transaction.
ii. Non-monetary items are translated at the rate on the date of initial transaction.
Hi. Monetary items denominated in foreign currency are translated at the prevailing closing buying rate at each reporting date.
iv. Foreign exchange gain or losses in respect of monetary and non-monetary items is recognized in statement of profit and loss."
2.13 Borrowing Cost
Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of cost of such asset till such time as the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred."
2.14 Tax expenses represents the sum of current tax and deferred tax
a) Current Income Tax
i. Taxes including current income-tax are term compensated absences, LTC etc. are recognized in the period in which the employee renders the related service.
b) Long Term Employee Benefits :
The obligation for long-term employee benefits such as long-term compensated absences& half pay leave is recognized in the same manner as in the case of defined benefit plans as mentioned in (c)(iii) below
c) Post-Employment Benefits
i. Defined contribution plans: The Company makes defined contribution to the Regional Provident Fund Commissioner in respect of provident fund scheme, CGIS and employee state insurance scheme. The contribution paid/payable under the schemes is recognized during the period in which the employee renders the related service.
ii. Defined contribution plans: The Company makes defined contribution to the RVNL Medical and Welfare Trust in respect of RVNL Medical and Welfare Scheme. The contribution paid/payable under the schemes is recognized during the period in which the employee renders the related service.
iii. Defined benefit plans: Gratuity is a post-employment defined benefit plan. The liability recognized in the balance sheet is the present value of the defined benefit obligation at the balance sheet date less fair value of plan assets. The defined benefit obligation is calculated by an independent actuary using projected unit credit (PUC) method. Actuarial gains and losses are recognized immediately in the Profit & Loss Account.
d) Retirement benefits of the âstaff on deputationâ have been accounted for on the basis of the guidelines of the Ministry of Railways.
e) Actuarial gains or losses are recognized in Other Comprehensive Income.
2.15 Leases
a) Company as a lessee Finance Lease:-
(I) that transfers substantially all the risks and rewards incidental to ownership of an asset
(ii) are capitalized at lease inception at lower of fair value or present value of minimum lease payment
(iii) Payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.
(iv) Finance charges are recognized in finance costs in the statement of profit and loss.
(v) Depreciated over the useful life of the asset. However, if there is no reasonable certainty to obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating Lease:-
I. is classified as operating lease when significant portion of the risk and rewards are not transferred to the company.
ii. payment are charged to profit and loss on straight-line basis over the lease term except where lease payment are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increase
b) Company as a lessor
Finance Lease
i. is recognized when substantially all of the risks and rewards of ownership transfer from the company to the lessee.
ii. Payment due are recorded as receivables at the companyâs net investment in the leases.
computed using the applicable tax rates and tax laws.
ii. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the company operates and generates taxable income.
Hi. Current income tax assets and liabilities for current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities Liability for additional taxes, if any, is provided / paid as and when assessments are completed.
iv. Current tax related to OCI Item are recognized in Other Comprehensive Income (OCI).
b) Deferred tax
I. Deferred income tax is recognized using balance sheet approach.
ii. Deferred income tax assets and liabilities are recognized for temporary differences which is computed using the tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
iii. Deferred income tax asset are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
iv. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
v. Deferred tax related to OCI Item are recognized in Other Comprehensive Income (OCI)."
i) A present obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation; or
ii) A reliable estimate of the present obligation cannot be made; or
iii) A possible obligation, unless the probability of outflow of resource is remote.
(b) Contingent assets is disclosed where an inflow of economic benefits is probable.
(c) Contingent Liability and Provisions needed against Contingent Liability and Contingent Assets are reviewed at each Reporting date.
(d) Contingent Liability is net of estimated provisions considering possible outflow on settlement."
2.18 Earnings Per Share
In determining earnings per share, the Company considers the net profit attributable to equity shareholders. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the year. The dilutive earning per share is not computed as there is no dilution involved during the year.
2.19 Liquidated Damages and Penalties
Credit items arising on account of Liquidated Damages and Penalties during execution of contract or due to termination of contract etc. are carried as âRetention Moneyâ under âother Current Liabilitiesâ until the final Closure of the Project. Thereafter, i.e. on financial closure of the Project, such leftover balances of liquidity Damages and Penalties are credited to the total cost of the concerned project.
2.20 Stale Cheques Policy
Cheques which have not been cleared within the validity period of 3 months are credited to the stale
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.
Operating Lease
i. are the leases in which the company does not transfer substantially all the risks and rewards of ownership to the lessee, ii. incomes are recognized as income in the statement of profit & loss on straight-line basis over the lease term except where lease payment are structured to increase in line with expected general inflation expected general inflation to compensate for the expected inflationary cost increase"
2.16 Provisions
Provision is recognized when:
i) The Company has a present obligation as a result of a past event,
ii) A probable outflow of resources is expected to settle the obligation and
iii) A reliable estimate of the amount of the
obligation can be made.
Reimbursement of the expenditure required to settle a provision is recognized as per contract provisions or when it is virtually certain that reimbursement will be received. Provisions are reviewed at each Balance Sheet date,
a) Discounting of Provisions
Provision which expected to be settled beyond 12 months are measured at the present value by using pretax discount rate that reflects the risks specific to the liability. The increase in the provision due to the passage of time is recognized as interest expenses."
2.17 Contingent Liabilities and contingent Assets
(a) Contingent Liabilities are disclosed in either of the following cases:
2.23 Dividend to equity holders
Dividend paid/payable shall be recognized in the year in which the related dividends are approved by shareholders or board of directors as appropriate.
2.24 Financial instruments:-
(A) Initial recognition and measurement
Financial Instruments are recognized at its fair value plus or minus transaction costs that are directly attributable to the acquisition or issue of the financial instruments.
(B) Subsequent measurement
(I) Financial Assets
Financial assets are classified in following categories:
a) At Amortized Cost
b) Fair value through Other Comprehensive Income.
c) Fair value through Profit and loss account.
a. Debt instrument at Amortized Cost
A financial asset shall be measured at amortized cost if both of the following conditions are met:
(a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
(b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets measured at amortized cost using effective interest rate method less impairment if any. The EIR amortization is included in finance income in the statement of profit and loss.
b. Debt instrument at FVTOCI
A debt instrument is classified as at the FVTOCI if both of the following criteria are met:
cheque account. Items which are more than 3 yrs.â old and could not be cleared in stale cheque account are credited to the head which was earlier debited while making payments except deductions made from salary of staff which are credited to misc income."
2.21 Operating Segment
Operating segments are reported in the manner consistent with the internal reporting provided by the Chief Operating Decision Maker (CODM). Chairman and Managing Director of the company has been identified as CODM. Company has identified only one reportable segment i.e. Development of Railway Infrastructure.
2.22 Fair Value Measurement
Company measures financial instruments at fair value at each reporting 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 to 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. 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.
b) Financial liabilities at FVTPL
The company has not designated in any financial liabilities at FVTPL.
b. Derecognition Financial Asset
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized only when the contractual rights to the cash flows from the asset expires or it transfers the financial assets and substantially all risks s and rewards of the ownership of the asset. Financial Liability
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the income statement."
c. Impairment of financial assets:
Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss. The Company follows1 simplified approach1 for recognition of impairment loss allowance on trade receivable. 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 Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost and FVTOCI debt instruments. The impairment methodology applies on whether there has been significant increase in credit risk.
- The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
- The assetâs contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the Other Comprehensive Income (OCI). However, the company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the P&L. On derecognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from the equity to P&L. Interest earned is recognized using the EIR method."
c. Debt instrument at FVTPL
FVTPL is a residual category for financial Assets. Any financial assets, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. In addition, the company may elect to designate financial asset, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. If doing so reduces or eliminates a measurement or recognition inconsistency. The company has not designated any financial asset as at FVTPL. Financial assets included within the FVTPL category are measured at fair value with all changes recognized in the P&L. Investment in Equity instruments are measured through FVTPL.
(ii) Financial liabilities
a) Financial liabilities at Amortized Cost Financial liabilities at amortized cost represented by trade and other payables, security deposits and retention money are initially recognized at fair value, and subsequently carried at amortized cost using the effective interest rate method.
not been classified as held for sale, and (ii) its recoverable amount at the date when the disposal group ceases to be classified as held for sale."
2.26 IND AS 115 Revenue from Contracts with Customers
MCA had notified IND AS 115 on Revenue from Contracts with Customers on dated March 28,
2018. The standard establishes a new five step model that will apply to revenue arising from Contracts with customers. Under IND AS 115, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in IND AS 115 provide a more structured approach to measuring and recognizing revenue. The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under IND AS.
The effective date of IND AS 115 is annual periods beginning on or after 1st April 2018. The Company is required to adopt the standard by the Financial Year commencing 1st April 2018. The Company is currently evaluating the requirements of IND AS 115 and has not yet determined the impact on the financial statements.
2.25 Non-current Assets (or disposal groups) held for Sale
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. The sale is considered highly probable only when the asset or disposal group is available for immediate sale in its present condition, it is unlikely that the sale will be withdrawn and sale is expected within one year from the date of the classification. Disposal groups classified as held for sale are stated at the lower of carrying amount and fair value less costs to sell. Property, plant and equipment and intangible assets are not depreciated or amortized once classified as held for sale. Assets and liabilities classified as held for sale are presented separately in the statement of financial positional the criteria stated by IND AS 105 âNon-current Assets Held for Sale and Discontinued Operationsâ are no longer met, the disposal group ceases to be classified as held for sale. Non-current asset that ceases to be classified as held for sale are measured at the lower of (i) its carrying amount before the asset was classified as held for sale, adjusted for depreciation that would have been recognized had that asset
a. Land cost included in Project Work in Progress represents payments made through various Zonal Railways/ to concerned authority for the purpose of acquisition of land. The payment made amounts to Rs, 89,379.92 Lakhs (2016-17^21,898.56 Lakhs) during the period. The land so acquired is in the name of the concerned Zonal Railway.
b. The Company is executing projects assigned by MOR. In some of the projects, initially transferred to the Company, work was already in progress and some of the Zonal Railways had incurred expenditure on those projects prior to their transfer to the Company. The expenditure made by the concerned Railways prior to the formation of the Company has not been taken into account.
c. In the opinion of the Management, the value of current assets, loans and advances on realization in the ordinary course of business, will not be less than the value at which these have been stated in the Balance Sheet.
d. "Interest on mobilization Advance, recovered from the Contractors as per the terms and conditions of the contract, is being credited to the other income of the company."
Existing Procedure of Recognition of Interest on Mobilization Advance: Interest on Mobilization Advance given to the Contractors is presently being credited to the project in terms of Railway Boardâs guidelines issued vide letter No. 2011/AC-III/34/1 dated 14.02.2013.
Background and overview: In this regard, it may be stated that till 2014-15 funds for execution of projects were being provided to RVNL well in advance by MoR. Accordingly, interest earned on the sum of mobilization advance given to contractors out of the âProject Advance âprovided by MoR, was also logically credited to the project cost, which in turn formed receipt of the MoR and appropriately disclosed in notes to account of Financial Statement.
Reasons for Change:As per Revised Order vide letter No. 2011/AC-II/1/6/RVNL dated 30.12.2016 wherein a new mechanism of periodical reimbursement of project expenditure incurred by RVNL out of its own resources has been set forth .Consequently, MoR is now releasing funds against a demand for reimbursement of project expenditure submitted by RVNL and not extending any âProject Advanceâ. The entire process of actual release of funds by MoR takes around one monthâs time after submission of the demand by RVNL.
Under the revised mechanism, total expenditure against a project including the Mobilization Advance to contractors is met out from RVNLâs own resources. As such, the interest earned on Mobilization Advance should be a receipt of RVNL.
Financial Impact: It may further be pointed out that as per the March accounts of RVNL, interest on Mobilization Advance for the year ending March, 2018 works out to Rs, 3034.55 lakhs.
In view of the position explained above, the interest on Mobilization Advance should now legitimately be part of RVNLâs receipts, against the loss of interest on blocked working capital of RVNL.
e. As per Ministry of Railwayâs letter no. 2004/W-1/RVNL/15 dated 24.4.2006, it was advised that âafter physical completion of the work by RVNL, the asset should be straight away transferred to the concerned Zonal Railway who will add the value of the created asset in their block account.â From 2007-08 onwards, Ministry of Railways was releasing funds to RVNL for execution of projects as a âProject Advanceâ. Accordingly, it was not practical for the Zonal Railways to book the expenditure against projects as and when it occurred. Further, as per Procedure Order issued by Ministry of Railways dated 17.12.2013 for Budgeting, Release/Accountable of funds to/by RVNL and financial transfer of completed projects by RVNL, it was directed that after handing over of the complete project by RVNLfor operation and maintenance to Zonal Railways, RVNL would provide the complete details of booking of expenditure to Railway Board to facilitate the financial transfer of the project to the concerned railway. However, from 2016-17 onwards, in terms of revised Procedure Order dated 30.12.2016, the Ministry of Railways decided that funds will be released to RVNL for project execution on âreimbursementâ basis. At the time of reimbursement the Ministry of Railways is advising the Zonal Railways the project wise actual expenditure incurred by RVNL. This amount is to be accounted for by the Zonal Railways against the specific project directly. At the end of the Financial Year, RVNL is also intimating the total expenditure incurred against the project during the year. As the expenditure is to be accounted for in the Block Account of the respective railways in the same year, the expenditure incurred on projects and accounted for in the books of railways have been adjusted against the fund received from MoR.
f. Total project Work in progress of Rs, 734130.39 lakhs has been transferred during the period out of this ^ 83671.16 lakhs transferred for the IRFC Projects in including opening balance oR 73955.44 lakhs.
g. Other work in progress contains the preliminary expenses incurred on Construction of Flats near Safdarjung Airport under the agreement of sharing with various PSUs. The land used for construction of Flats is related to MoR and MoR will occupy 50% of total flats to be constructed against consideration of land used. The lease period of Land will be 30 years.
h. Work of feasibility study was entrusted to HSRCL through RVNL. Hence, the total actual expenditure incurred on feasibility study of Rs, 4079.84 lakhs has been transferred to RVNL by HSRCL. In the books of RVNL total expenditure was recognized under other project work in progress and now has been adjusted with the fund received from MoR.
(I) On dated 23rd March 2018, the interim dividend of Rs, 0.50 per share was approved and paid for FY 2017-18, on dated 22nd December 2017, the interim dividend of Rs, 0.24 per share was approved and paid for FY 2017-18 (total interim dividend during FY 2017-18 of Rs, 15450.00 lakhs and DDT of Rs, 3145.26 lakhs).
(ii) On dated 22nd September 2017, the final dividend of Rs, 0.06 per share was approved for FY 2016-17, Interim dividend of Rs, 0.68 per share was paid during the F.Y. 2016-17 (total dividend of Rs, 15,450.00 lakhs and DDT ofRs, 3145.26 lakhs).
Terms of Repayment:
(iii) There is a moratorium period of 3 years for each yearâs loan. During the said moratorium period, no amount on account of interest and principal shall be payable. The interest shall be charged on yearly basis and repayment of loan shall be once in a year (for a period of 12 years) after the completion of moratorium period. Ministry of Railways would make available to RVNL the required funds thereafter, to enable them to do the debt servicing. The debt servicing will pass through RVNL books.
(iv) Company has borrowed funds Rs, 9250.00 lakhs amount (Financial year 2016-17:Rs, 3,713.00 Lakhs) during the period from Indian Railway Finance Corporation (IRFC). The outstanding borrowing is Rs, 2,03,795.50 Lakhs (as at 31.03.2017 : Rs, 2,16,403.00 Lakhs, which includes current liability i.e. repayable in next twelve months Rs, 24,132.50 Lakhs (as at 31.03.2017: Rs, 21,857.50 Lakhs).
(v) The Interest Liability has been assessed on the amount disbursed in the F.Y. 2005-06 to 2017-18 by applying the Interest rate as advised by the IRFC for each Financial year (2017-18: 8.75% estimated, 2016-17 :8.19%, 2015-16 :8.68%, 2014-15 :9.56%, 2013-14 :9.60%, 2012-13 :9.41%, 2011-12 :10.12%, 2010-11 :9.12%, 2009-10 :8.92%, 2008-09 :9.96%, 2007-08 :10.24%, 2006-07 :9.73%,2005-06:8.06%)The interest accrued but not due on the IRFC loan amount has been shown in the Balance Sheet as recoverable from MoR under Current Assets & Non-Current assets (for the interest non recoverable in next 12 Months) and the interest payable but not due under the Current Liabilities and Non-Current Liabilities (for the interest not payable in next 12 Months) payable to IRFC.
Sensitivity analysis:
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (projected unit credit method) has been applied as when calculating the defined benefit obligation recognized within the statement of financial position.
Leave Encashment including Half pay Leave is payable to employees on retirement. The amount of Leave Encashment payable is based on past service and salary at time of retirement.
There are no Investment held against the provision for gratuity and leave encashment.
# RVNL Medical and Welfare Scheme
Company has provided contribution of Rs, 256.37 lakhs (Previous year Rs, 163.10 lakhs) in RVNL Medical Scheme and Rs, Nil (Previous Year Rs, Nil) in RVNLWelfare Scheme of RVNL Medical and Welfare Trust.
20.1 In accordance with Railway Boardâs letter No. 2004/W-1/RVNL/15 dated 04.01.2012 RVNL has accounted Consolidated Management fee @ 9.25% in case of Metro Projects and 8.5% in case of Other Plan Heads on the expenditure incurred by RVNL on MoR projects. As per the directions of MoR, all expenditure in the nature of consultancies related to Project Management are being charged directly to project. D&G charges payable to Railway up to 0.25 % of cost of projects are allocated to the projects on actual funds released to the respective Zonal Railway, Expenditure incurred on D&G (Supervision) are being charged to the Statement of Profit & Loss account. The miscellaneous receipts from sale proceeds of Tender and other income has been credited to the Statement Profit & Loss account.
20.2 In respect of SPV projects, construction works have been undertaken by RVNL as per the terms and conditions of the Model Construction agreement for execution of SPV Projects issued by MoR and revenue recognized accordingly. In respect of Kutch Railways Company Limited (KRCL), revenue is recognized based on bills raised and payments received although acceptance of Formal Construction Agreement by KRCL is pending.
20.3 In respect of Deposit Work of Simar Port and Rewas Port Turnover of Rs, 29.26 lakhs has been accounted and adjusted with the outstanding balances of respective parties.
22.1 Expenditure against contracts awarded by the Company is recognized on completion of measurements and testing certified by the Engineer.
22.2 Expenditure of execution of projects done by the Zonal Railways on behalf of the Company on MoR projects is accounted for on the basis of statement of estimated expenditure received from respective Zonal Railways and is adjusted allocation-wise as and when the final expenditure statement is received.
22.3 With the rationalization of the revenue stream of RVNL, the expenses incurred on supervision and monitoring directly allocable to the projects have been reviewed in terms of Railway Board''s letter no 2004/W-1/RVNL/15 dated 04/01/2012, the pattern of booking of expenditure on Zonal Railways and general accounting practices. The expenditure incurred on this account related to execution of Deposit Works (for SPV and others) have been charged to the Statement of Profit and Loss.
26.1 The company has taken offices and residential premises under operating lease. The lease agreement are for period form 11 months to 3 years and are cancellable & renewable by consent. Rent expenses includes Rs, 51.50 lakhs during the year ended 31.03.2018 and Rs, 54.92 Lakhs during the year ended 31.03.2017 for amortization of deferred expense recognized due to fair valuation of security deposits.
26.2 The company has reversed the provision of 7th pay commission ofRs, 635.60 lakhs, Rs, 0.13 lakhs for service tax payable to Statutory Auditor. It has been shown as exceptional item in the Statement of Profit & Loss.
27.1 As per the Companies Act, 2013, an amount equivalent to 2% of Average PBT of immediately preceding 3 Financial Year i.e. Rs, 767.35 Lakhs is required to be spent during the year on Corporate Social Responsibility (CSR) Activities.
Further, company manages its capital structure to make adjustments in light of changes in economic conditions and the requirements of the financial covenants. Company has borrowed the funds form IRFC for railway projects, for repayment of IRFC loan Ministry of Railways would make available to RVNL the required funds thereafter, to enable them to do the debt servicing. The debt servicing will pass through RVNL books.
In order to achieve this overall objective, the Company capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.
No changes were made in the objectives, policies or processes for managing capital during the year ended 31 March 2018.
I) The carrying amounts of trade receivables, trade payables, cash and cash equivalents and other short term trade receivables and payables which are due to be settled within 12 months are considered to the same as their fair values, due to short-term nature.
ii) Long term variable rate borrowings and lease receivables are evaluated by company on parameters such as interest rates, specific country risk factors and other risk factors. Based on this evaluation the fair value of such payables are not materially different from their carrying amount.
iii) The fair value of Security Deposits and Earnest Money Deposit, Performance Security Deposit, Miscellaneous Deposit and Retention Money are calculated based on cash flows discounted using current market rate. Interest rate of fixed deposits as on the beginning of financial year is being considered as discounting rate, for F Y 2017-18 rate used is 6.10%. They are classified as level 3 fair values in fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.
iv) Investment in unquoted equity of subsidiaries and joint ventures are stated at cost as per exemption provided by Para 10 of IND AS 27.
v) Staff loans and advances have been continued at carrying value as measurement implications are immaterial.
Fair Value hierarchy
Level 1- Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2- Inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived form prices)
Level 3- Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs)
(iii) Financial risk management
The Companyâs principal financial liabilities comprise Borrowings from IRFC, trade payables and other payables. The main purpose of these financial liabilities is to finance the companyâs operations. The Companyâs principal financial assets include trade and lease receivables and cash and cash equivalents that derive directly from its operations. The Company''s is expose to market risk, credit risk and liquidity risk. The company financial risk activities are governed by appropriated policies and procedures and that financial risk are identified, measured and managed in accordance with the companies policies and risk objectives. The board of directors reviews and agrees policies for managing each of these risk, which are summarized below:
a) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instruments will fluctuate because of changes in market prices. Market risk comprises Interest rate risk and foreign currency risk. Financial instruments affected by market risk includes loans and borrowing, deposits and other non-derivative financial instruments.
i) Interest Rate Risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instruments will fluctuate because of change in market interest rate and in case of IRFC loan for payment of interest and principal Ministry of Railways would make available to RVNL the required funds therefore the risk related to IRFC loan is nil, debt servicing will pass through RVNL books only.
ii) Foreign Currency Risk
Company has taken services from outside India for project expenses and is exposed to foreign currency risk arising from such foreign currency transactions, due to immateriality of foreign exchange amount company does not hedge any risk.
b) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Companyâs receivables from customers. The company is exposed to credit risk from its financial activities including deposits with banks, financial institutions and other financial instruments. There is negligible risk for receivable from Ministry of railways also company does not have any history of bad debts.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed in accordance with the companies policy. Investment of surplus are made only with approved with counterparty on the basis of the financial quotes received from the counterparty.
c) Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they become due. The company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the company''s reputation. The company''s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The company has no bank borrowings. The company believes that the working capital is sufficient to meet its current operational requirements. Any short term- surplus cash generated, over and above the amount required for working capital management and other operational requirements, are retained as cash and investment in short-term deposits with banks. The said investments are made in instruments with appropriate maturities and sufficient liquidity.
Mar 31, 2011
Basis of Accounting
The financial statements are prepared on accrual basis and under
historical cost convention and in accordance with all applicable
accounting standards specified in Companies (Accounting Standard Rules)
2006 including relevant presentation requirements of the Companies
Act,1956. However, certain escalation and other claims by customers,
which are not ascertainable /acknowledged, are not taken into account.
Management makes estimates and assumptions regarding the amounts of
income and expenses in accordance with Generally Accepted Accounting
Principles (GAAP) in the preparation of the financial statements. The
difference between the actual results and estimates are recognized in
the period in which determined.
The significant accounting policies adopted by the Company are given
below.
1. Fixed Assets
(i) Fixed assets are stated at the cost of acquisition inclusive of
inward freight, duties and taxes and incidental expenses related to
acquisition. The expenses also include applicable borrowing cost if
any.
(ii) Intangible assets comprise of license fees, other implementation
cost for system software and other application software acquired for
in-house use. The costs are capitalized in the year in which the
relevant software is implemented for use.
2. Depreciation
(i) Depreciation on individual assets acquired for Rs 5000/- or less is
depreciated at the rate of 100% in the year of purchase itself.
(ii) Depreciation is provided on pro-rata basis on the straight-line
method over the estimated useful lives of the assets determined as
follows:
Furniture and Fixture 23.75%
Computers 31.67%
Office Equipments 19.00%
(Excluding Mobile Phones)
Mobile Phones 47.50%
(iii) Leasehold improvements are amortized over the period of lease
from the year in which such improvements are capitalized.
(iv) Capitalized software costs are amortized @ 33.33% on pro rata
basis except where the estimated useful life is less than three years.
3. Impairment of assets
All assets other than inventories, investments other than interest in
Jointly Controlled Entities (JCEs) and deferred tax asset are reviewed
for impairment, whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. Assets, whose carrying
amount value exceeds their recoverable amount, are written down to the
recoverable amount.
4. Investments
Long-term investments, including interests in incorporated Jointly
Controlled Entities (JCEs), are carried at cost, after providing for
any diminution in value, if such diminution is of other than temporary
nature. Short-term investments are carried at lower of cost or market
value. The determination of carrying amount of such investments is done
on the basis of specific identification.
5. Inventories
Project Work-in-Progress is valued at the contract rates and
construction material at site is stated at cost. Payments made to Zonal
Railways for acquiring land included in project Work-in-Progress is
stated at cost.
6. Revenue recognition
Revenue is recognized based on the nature of activity, when
consideration can be reasonably measured and there exists reasonable
certainty of its recovery. Revenue from construction/project related
activity is recognized as follows:
(i) Projects executed for Ministry of Railways (MOR): Revenue from
project execution is determined by adding aggregate cost plus margin
agreed with MOR and any subsequent clarification received in this
respect.
(ii) Deposit works (cost plus contract) related to JCEs (Jointly
Controlled Entities in the form of Special Purpose Vehicles and
others): Contract revenue is determined by adding the aggregate cost
plus proportionate margin (Direction & General Charges) based on fixed
percentage as agreed with the customer.
(iii) Claims are accounted as income in the year of acceptance by
client or evidence of acceptance received.
(iv) Interest on investment is accounted on accrual basis, inclusive of
related tax deducted at source.
(v) Other items of income are accounted as and when the right to
receive arises.
7. Employee Benefits
a) Short term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits. Benefits
such as salaries, wages, and short- term compensated absences, etc. are
recognized in the period in which the employee renders the related
service.
b) Post employment benefits
i. Defined contribution plans: The Company makes defined contribution
to Regional Provident Fund Commissioner in respect of provident fund
scheme and employee state insurance scheme. The contribution
paid/payable under the schemes is recognized during the period in which
the employee renders the related service.
ii. Defined benefit plans: Gratuity is a post employment defined
benefit plan. The liability recognized in the balance sheet is the
present value of the defined benefit obligation at the balance sheet
date less fair value of plan assets. The defined benefit obligation is
calculated annually by an independent actuary using projected unit
credit (PUC) method. Actuarial gains and losses are recognized
immediately in the Profit & Loss Account.
c) Long Term Employee Benefits
The obligation for long-term employee benefits such as long-term
compensated absences, is recognized in the same manner as in the case
of defined benefit plans as mentioned in (b) (ii) above
d) Retirement benefits of the ''staff on deputation'' have been accounted
for on the basis of the guidelines of the Ministry of Railways.
8. Foreign currency transaction
Transactions in foreign currency are accounted for at the exchange rate
prevailing on the date of transactions. Gains/ Losses arising out of
settlement are charged/credited to the profit and loss account.
9. Borrowing cost
Borrowing costs that are attributable to the acquisition, construction
or production of a qualifying asset are capitalized as part of cost of
such asset till such time as the asset is ready for its intended use. A
qualifying asset is an asset that necessarily requires a substantial
period of time to get ready for its intended use. All other borrowing
costs are recognized as an expense in the period in which they are
incurred.
10. Taxes on Income
Tax on income for the current year is determined on the basis of
taxable income and tax credits computed in accordance with the
provisions of the Income Tax Act, 1961, and based on the expected
outcome of the assessment/appeals.
Deferred tax is recognized on timing differences between the accounting
income and the taxable income for the year and quantified using the tax
rates and laws substantially enacted as on the balance sheet date.
Deferred tax assets in respect of unabsorbed depreciation/brought
forward losses are recognized to the extent there is virtual certainty
that sufficient future taxable income will be available against which
such deferred tax assets can be realized.
Other deferred tax assets are recognized and carried forward to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized
11. Provisions and contingencies
The company creates a provision when there is present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of obligation. A
disclosure of a contingent liability is made where there is a possible
obligation that probably will not require an outflow of resources or
where a reliable estimate of the obligation can not be made.
12. Lease Rental
Lease rental in respect of operating lease is charged to project work
in progress and administrative expenses in the profit and loss account.
Mar 31, 2010
The financial statements Are prepared on accrual bails and under
historical cost convention and m accordance with all applicable
accounting standards specified in Companies (Accounting Standard Rules)
2006 including relevant presentation requirements Of the Companies Act.
1956. However certain escalation and other claims by customers which
are not ascertains We /acknowledged, are not taken into account
Management makes estimates and assumptions regarding the amounts of
income and expenses in accordance with Generally Accepted Accounting
Principles (GAAP) in the preparation of the financial statements. The
difference between the actual results and estimates are recognized in
the period in which determined
The significant accounting policies adopted by the Company are given
below
1. Fixed Assets
(i) Fined assets are stated at the cost of acquisition inclusive of
inward freight duties and taxes and incidental experience related to
acquisition The expands also include applicable borrows cost if any.
(II) Intangible assets comprise of license fees, other implementation
cost for system software and other application software acquired for
in-house use. The costs are capitalized in the year in which the
relevant software is implemented for use,
2. Depreciation
(I) Depreciation on Individual assets acquired for Rs. 5000/- or less
Is provided at the rate of 100% on pro-rata basis
(ii) Depreciation it provided on pro-rate basis on the straight-line
method over the estimated useful lives of the assets determined at
follows:
(iii) Leasehold Improvements are amortized over the period of lease
from the year In which such improvements are capitalized
(iv) Capitalized software costs are amortized 9,33.33% on proata
basis except where the estimated useful life is less than three years.
3. Impairment of assets
All assets other than inventories, investments and deferred tax asset
are reviewed for Impairment, whenever events or changes In
circumstances Indicate that the carrying amount may not be recoverable
Assets, whose carrying amount value exceeds their recoverable amount
are written down to the recoverable amount.
4. Investments
Long-term Investments. Including interests In Incorporated Jointly
Controlled Entitle* (KET), are carried at cost, after providing for any
diminution in value, If such diminution Is of other than temporary
nature. Short term investments are earned at lower of cost or market
value The determination of carrying amount of such investments is done
on the basis of specific identification.
5. Inventories
Project Work in Progress is valued at the contract rates and
construction material at site is stated at cost, Payments ''node to
Zonal Railways for acquiring land Included in project Work-ln-Progress
is stated at cost.
6. Revenue recognition
Revenue is recognized based on the nature of activity, when
consideration can be reasonably measured and there exists reasonable
certainty of Its recovery, Revenue from construction/project related
activity is recognized as follows:
(i) Protects related to Ministry of Railways (MOR) Revenue from
project execution It determined by adding aggregate cost plus margin
agreed with MOR and any subsequent clarification received n this
respect,
(II) Deposit works (cost plus contract) related to JCEs (Jointly
Controlled Entitles in the form of Special Purpose Vehicles and others)
Contract revenue determined by adding the aggregate cost plus
proportionate margin (Direction & General Charges) based on fixed
percentage as agreed with the customer,
(iii) Claims are accounted at income in the year of acceptance by
client or evidence of acceptance received
(iv) Interest on investment is accounted on accrual basis, inclusive of
retailed tan deducted at source
(v) Other items of income are accounted as and when the right to
receive arises.
7. Employee Benefits
a) Short term employee benefits
Ail employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits. Benefit
such as salaries, wages, and short- term compensated absences, etc are
recognized In the period which the employee renders the related
service.
b) Post employment benefits
i. Defined contribution plans The Company makes defined contribution
to Regional Provident fund Commissioner in respect of provident fund
scheme and employee state insurance scheme. The contribution paid/
payable under the schemes is recognized during the period in which the
employee renders the related service M. Defined benefit plans- Gratuity
It a post employment defined benefit plan, The liability recognized in
the balance sheet is the present value of the defined benefit
obligation at the balance sheet date less fair value of plan assets The
defined benefit obligation is calculated annually by an independent
actuary using protected unit credit (PUC) method Actuarial gains and
losses are recognized immediately in the Profit & loss Account
e) Long Term Employee Benefits
The obligation for long-term employee benefits such as long-term
compensated absences, i recognized In the same manner as In the case of
defined benefit plans as mentioned in (b) (ii) above
d) Retirement benefits of the staff on deputation'' have been accounted
tor on the basis of the guidelines of the Ministry of Railways.
8. Foreign currency transaction
Transactions in foreign currency are accounted for al the exchange rate
prevailing on the data of transactions. Gams / Losses arising out of
settlement ore charged / credited to the profit and loss account
9. Borrowing cost
Borrowing costs that are attributable to the acquisition, construction
or production of a qualifying asset are capitalized as part of cost of
such asset till such time as the asset is ready for its intended use A
qualifying asset Is an asset that necessarily requires a substantial
period of time to get ready (or Its Intended use All other borrowing
costs are recognized as an expense In the period In which they are
incurred.
10. Taxes on Income
Tax on income for the current year is determined on the basis of
taxable income and tax credits corrupted In accordance with the
provisions of the Income Tax Act, 1961. and based on the expected
outcome of the assessment/appeals
Deferred tax is recognized on timing differences between the accounting
income and the taxable income for the yea'' and quantified using the tax
rates and laws substantially enacted as on the balance sheet date Defer
red in respect of unabsorbed depreciation/ brought forward losses and
recognized to extent there Is virtual certainty that sufficient future
taxable Income will be available against the such deferred tax assets
can be realized Other deferred tax assets are recognized and earned
forward to the extent that there Is a reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized
11. Provisions and contingencies
The company creates a provision when there re present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of obligation A
disclosure of a contingent liability Is made where there Is a possible
obligation that probably will not require an outflow of resources or
where a reliable estimate of the obligation can not be made.
12. Miscellaneous Expenditure
Preliminary expenses are amortized over i period of five years from the
year of commencement of Business operations.
13. Lease Rental
Lease rental in respect of operating lease Is charged to project work
in progress and administrative expenses in the profit and loss account.
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