Accounting Policies of Transport Corporation of India Ltd. Company
Mar 31, 2023
|~ CORPORATE INFORMATION
Transport Corporation of India Ltd. ("TCIL" or "the Company") is a public Company domiciled in India and incorporated under the provision of the Companies Act, 1956. The Company is India''s leading end to end integrated supply chain and logistics solutions provider (LSP) and a pioneer in the sphere of cargo transportation in India. Leveraging on its extensive infrastructure, strong foundation and skilled manpower, TCIL offers seamless multimodal transportation solutions. An ISO9001:2008 certified Company, TCIL is listed with premier stock exchange, namely, NSE and BSE.
These notes provide the list of the significant accounting policies adopted in the preparation of these standalone financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
a) Compliance with Ind AS
The standalone financial statements of the Company have been prepared in accordance with the Indian Accounting Standards ("Ind AS") as notified under section 133 of the Companies Act, 2013 read with prescribed rules therein. The Company has uniformly applied the accounting policies during the periods presented.
The standalone financial statements for the year ended 31st March 2023 were authorized and approved by the Board of Directors on 18th May 2023.
b) Historical cost convention
The financial statements have been prepared on a historical cost basis, except for the following:
⢠Certain financial assets and liabilities (including derivative instruments) and contingent consideration that are measured at fair value or amortized cost;
⢠Assets held for sale - measured at lower of carrying amount and fair value less cost to sell;
⢠Defined benefit plans - plan assets measured at fair value; and
⢠Share-based payments - measured at fair value of options at the grant date.
c) Current / Non - Current Classification
Any asset or liability is satisfied as current if it satisfies any of the following conditions:
⢠Asset / Liability is expected to be realized / settled in the Company''s normal operating cycle
⢠Asset is intended for sale or consumption
⢠Asset / Liability is held primarily for the purpose of trading
⢠Asset is a cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date
⢠I n case of a Liability, the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date
For the purpose of this classification, the Company has ascertained its normal operating cycle as twelve months, which is based on the nature of business and time between acquisition of assets and their realization in cash and cash equivalents. .
\j7 USE OF SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Company''s accounting policies, reporting amounts of assets, liabilities, income and expense and disclosures made. Although these estimates are based on management''s best knowledge of current events and actions, actual result may differ from those estimates.
The critical accounting estimates and assumptions used and areas involving a high degree of judgements are described below:
3.1. USE OF ESTIMATION AND ASSUMPTION
I n the process of applying the Company''s accounting policies, management had made the following estimation and assumptions that have the significant effect on the amounts recognized in the financial statements. The estimates and assumptions used in accompanying financial statements are based upon management''s evaluation of the relevant facts and circumstances as on the date of the financial statements, reviewed on an ongoing basis. Any revision to accounting estimates is recognized prospectively in current and future periods.
a) Property, Plant and Equipment & Intangible Assets
Key estimates related to long-lived assets (property, plant and equipment and intangible assets) include useful lives, recoverability of carrying values and the existence of any retirement obligations. As a result of future decisions, such estimates could be significantly modified. The useful lives as mentioned in Note No. 4.1 and Note No. 4.2 is applied as per Schedule II of Companies Act, 2013 and estimated based upon our historical experience, technical estimation and industry information. These estimates include an assumption regarding
periodic maintenance and an appropriate level of annual capital expenditures to maintain the assets.
b) Employee Benefits - Measurement of Defined Benefit Obligation (DBO)
Management assesses post-employment and other employee benefit obligations using the projected unit credit method based on actuarial assumptions which represent management''s best estimates of the variables (such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases) that will determine the ultimate cost of providing post-employment and other employee benefits. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
The Company recognizes tax liabilities based upon self-assessment as per the tax laws. When the final tax outcome of these matters is different from the amounts that were initially recognized, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
3.2. CRITICAL JUDGEMENTS MADE IN APPLYING ACCOUNTING POLICIES
a) Revenue
The Company recognizes revenue from contracts with customers based on a five-step model as per Ind AS 115 (Refer Note No. 4.19) which involves judgements such as identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables. The management exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time It considers indicators such as how customer consumes benefits as services are rendered or who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product or service, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc.
Revenue from freight services is recognized over time using percentage-of-completion method. The management uses judgement to estimate the services provided as on reporting date as a proportion of total services provided which is used to determine the degree of the completion of the performance obligation.
b) Recognition of Deferred Tax Assets
The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilized. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.
c) Evaluation of Indicators for Impairment of Assets
The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
d) Expected Credit Losses
Expected credit losses of the Company are based on an evaluation of the collectability of receivables. A considerable amount of judgement is required in assessing the ultimate realization of these receivables, including their current credit worthiness, past collection history of each customer and ongoing dealings with them. If the financial conditions of the counterparties with which the Company contracted were to deteriorate, resulting in an impairment of their ability to make payments, additional expected credit loss may be required.
e) Useful Life of Depreciable/Amortizable Assets
Management reviews its estimate of the useful lives of depreciable/amortizable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain software, customer relationships, IT equipment and other plant and equipment.
Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and nonfinancial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
g) Provisions
At each reporting date basis the management judgement, changes in facts and legal aspects, the Company assess the requirement of the provisions. However, the actual future outcome may be different from this judgement.
h) Leases
The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Company has several lease contracts that include extension and termination options. The Company applies judgement in evaluating whether it is reasonably certain or not to exercise the option to renew or terminate the lease. That considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Company reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate.
3.3. RECENT PRONOUNCEMENTS
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 31st March 2023, MCA notifies the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from 1st April 2023 as below:
Ind AS 1 - Presentation of Financial Statements
The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements. The Company does not expect this amendment to have any significant impact in its financial statements.
Ind AS 12 - Income Tax
The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company is evaluating the impact, if any, in its financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The Company does not expect this amendment to have any significant impact in its financial statements.
Ind AS 107 - Financial Instruments: Disclosures and Ind AS 34 - Interim Financial Reporting:
These amendments are consequent to the amendments in Ind AS 1 related to change from ''significant accounting policies'' to ''material accounting policy information. The Company does not expect this amendment to have any significant impact on its financial statements
The Company has not early adopted any amendments that have been notified but are not yet effective.
|~4T SIGNIFICANT ACCOUNTING POLICIES
4.1 PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION Initial Recognition
All items of property, plant and equipment are initially measured at cost. The cost of an item of plant and equipment is recognized as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
Cost includes its purchase price (after deducting trade discounts and rebates), import duties & non-refundable purchase taxes, any costs directly attributable to bringing the asset to the location & condition necessary for it to be capable of operating in the manner intended by management, borrowing costs on qualifying assets and asset retirement costs. The activities necessary to prepare an asset for its intended use or sale extend to more than just physical construction of the asset. It may also include technical (DPR, environmental, planning, Land acquisition and geological study) and administrative work such as obtaining approvals before the commencement of physical construction.
The cost of replacing a part of an item of property, plant and equipment is capitalized if it is probable that the future economic benefits of the part will flow to the Company and that its cost can be measured reliably. The carrying amount of the replaced part is derecognized.
Costs of day to day repairs and maintenance costs are recognized into the statement of profit and loss account as incurred.
Subsequent measurement
Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.
In respect of additions / deletions to the fixed assets / leasehold improvements, depreciation is charged from the date the asset is ready to use / up to the date of deletion.
De-recognition
An item of plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de recognition of the asset is recognized in the profit or loss in the year the asset is derecognized. Capital Work in Progress and Capital Advances Cost of asset not ready for intended use and assets under installation or under construction as at the Balance Sheet date are shown as Capital Work in Progress. Advances given towards acquisition of fixed assets outstanding at each Balance Sheet date are disclosed as Other Non-Current Asset in accordance with Schedule III to the Companies Act, 2013.
4.2 INTANGIBLE ASSETS & AMORTIZATION Initial Recognition
Intangible assets acquired separately are initially measured at cost. Intangible assets are recognized if, it is probable that the future economic benefits that are
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
The residual values, estimated useful lives and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.
Depreciation is provided on Straight Line Method, as per the provisions of Schedule II of the Companies Act, 2013 or based on useful life estimated on the technical assessment. Asset class wise useful lives are as under:
|
Type of Assets |
Useful Life |
|
Building |
60 years |
|
Leasehold Improvements |
Lease Term |
|
Ships |
As per technical |
|
assessment |
|
|
Motor Trucks |
6 years |
|
Vehicles |
8-10 years |
|
Plant and Machinery |
15 years |
|
Wind Power Plant |
22 years |
|
Computers |
3 years |
|
Containers |
15 years |
|
Furniture and Fixtures |
10 years |
|
Office Equipments |
5 years |
|
Electrical Equipments |
10 years |
|
Railway Wagons |
15 years |
attributable to the asset will flow to the Company and the cost of the asset can be measured reliably.
Cost of separately acquired intangible asset includes its purchase price (after deducting trade discounts and rebates), import duties & non-refundable purchase taxes, any costs directly attributable to preparing the asset for its intended use.
Intangible assets acquired in a business combination are recognized at fair value at the acquisition date. Subsequently, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any.
Subsequent measurement and amortization Intangible assets are stated at cost of acquisition less accumulated amortization and accumulated impairment losses, if any. Subsequent expenditure related to an item of intangible assets are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.
The carrying values of intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual values, estimated useful lives and amortization method are reviewed at each financial year-end, and adjusted prospectively, if appropriate. The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible assets are amortized on a straight-line basis over the period of their estimated useful lives. Estimated useful lives by major class of finite-life intangible assets are as follows:
|
Intangible |
Method of |
Estimated |
|
Assets |
Amortization |
Useful life |
|
Computer |
on straight-line |
Over a period of |
|
Software |
basis |
3 to 10 years |
|
Railway Operating |
on straight-line basis |
20 years based on validity of |
|
License |
license |
The amortization expense is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset. Indefinite-life intangible assets comprises of those assets for which there is no foreseeable limit to the period over which they are expected to generate net cash inflows. These are considered to have an indefinite life, given the strength and durability of the Company and the level of marketing support.
For indefinite life intangible assets, the assessment of indefinite life is reviewed annually to determine whether it continues, if not, it is impaired or changed prospectively based on revised estimates.
An item of Intangible Assets is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de recognition of the asset is recognized in the profit or loss in the year the asset is derecognized.
Inventories are valued at lower of cost and net realizable value. Cost of inventory includes cost of purchase and other costs incurred in bringing them to their present location and condition. Net Realizable Value in respect of consumables is the estimated current procurement price in the ordinary course of the business.
4.4 IMPAIRMENT OF NON - FINANCIAL ASSETS
At each reporting date, the Company assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Company makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets, in which case, the recoverable amount is determined for the cashgenerating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses of continuing operations, including impairment on inventories, are recognized in the statement of Profit and Loss, except for properties previously revalued with the revaluation surplus taken to Other Comprehensive Income ("OQ"). For such properties, the impairment is recognized in OCI up to the amount of any previous revaluation surplus.
After impairment, depreciation or amortization is provided on the revised carrying amount of the asset over its remaining useful life.
The impairment assessment for all assets is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognized impairment loss is reversed only if there has been a
change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit or loss.
Financial assets comprise of investments in equity and debt securities, mutual funds, loans, trade receivables, cash and cash equivalents and other financial assets. Initial recognition
All financial assets except investments in subsidiaries, associates and jointly controlled entities are recognized initially at fair value. However, trade receivables that do not contain a significant financing component are measured at transaction price. Purchases or sales of financial asset that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the assets.
Subsequent Measurement
a) Financial assets measured at amortized cost: Financial assets held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding are measured at amortized cost using effective interest rate (EIR) method. The EIR amortization is recognized as finance income in the Statement of Profit and Loss.
The Company while applying above criteria has classified the following at amortized cost:
a. Loans
b. Trade Receivable
c. Cash and Cash Equivalents
d. Other Financial Assets
b) Financial assets at fair value through other comprehensive income (FVTOCI):
Financial assets held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, selling the financial assets and the contractual terms of
the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding are measured at FVTOCI. Fair Value movements in financial assets at FVTOCI are recognized in other comprehensive income. Equity instruments held for trading are classified at fair value through profit or loss (FVTPL). For other equity instruments the Company classifies the same either at FVTOCI or FVTPL on instrument to instrument basis. The classification is made on initial recognition and is irrevocable. Fair value changes on equity investments at FVTOCI, excluding dividends are recognized in other comprehensive income (OCI).
c) Financial assets at fair value through profit or loss (FVTPL)
Financial asset are measured at fair value through profit or loss if it does not meet the criteria for classification as measured at amortized cost or at fair value through other comprehensive income. All fair value changes are recognized in the statement of profit and loss.
d) Investment in subsidiaries, joint ventures & associates are carried at cost in the standalone financial statements. However, a provision for diminution in value is made to recognize a decline other than temporary in value of the investments.
Impairment
Financial assets are tested for impairment based on the
expected credit losses in accordance with Ind AS 109
on the following financial assets:
a) Trade Receivables
An impairment analysis is performed at each reporting date. The expected credit losses over life time of the asset are estimated by adopting the simplified approach using a provision matrix on its portfolio of trade receivables, which is based on historical loss rates reflecting current condition and forecasts of future economic conditions. In this approach assets are grouped on the basis of similar credit characteristics such as customer segment, past due status and other factors which are relevant to estimate the expected cash loss from these assets.
b) Other financial assets
Other financial assets are tested for impairment based on significant change in credit risk since initial recognition and impairment is measured based on probability of default over the life time when there is significant increase in credit risk.
A financial asset is derecognized only when:
⢠The Company has transferred the rights to receive cash flows from the financial asset, or
⢠The contractual right to receive cash flows from financial asset is expired, or
⢠Retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset and transferred substantially all risks and rewards of ownership of the financial asset, in such cases the financial asset is derecognized. Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is also derecognized if the Company has not retained control of the financial asset.
Cash and cash equivalents comprises cash at bank (including deposits with banks with original maturity of three months or less) and cash in hand and short-term investments with an original maturity of three months or less. Deposits with banks are subsequently measured at amortized cost and short term investments are measured at fair value through statement of profit & loss account.
4.7 NON-CURRENT ASSETS HELD FOR SALE
Non-current assets or disposal groups comprising of assets and liabilities are classified as ''held for sale'' when all the following criteria are met:
(i) decision has been made to sell,
(ii) the assets are available for immediate sale in its present condition,
(iii) the assets are being actively marketed and
(iv) sale has been agreed or is expected to be concluded within 12 months of the Balance Sheet date.
Subsequently, such non-current assets and disposal groups classified as ''held for sale'' are measured at the lower of its carrying value and fair value less costs to sell. Non-current assets held for sale are no longer depreciated or amortized.
Equity Shares are classified as equity.
4.9 FINANCIAL LIABILITIES Initial Recognition
Financial liabilities are recognized when, and only when, the Company becomes a party to the
contractual provisions of the financial instrument. The Company determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognized initially at fair value plus any directly attributable transaction costs, such as loan processing fees and issue expenses.
Subsequent Measurement - at amortized cost
After initial recognition, financial liabilities are subsequently measured at amortized cost using the effective interest rate (EIR) method. Gains and losses are recognized in profit or loss when the liabilities are de recognized, and through the amortization process. De-recognition
A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in profit or loss.
Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. Capitalization of borrowing cost is suspended in the period during which the active development is delayed due to other than temporary interruption. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest, exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost and other costs that an entity incurs in connection with the borrowing of funds.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
Employee benefits are charged to the Statement of Profit and Loss for the year.
Retirement benefits in the form of Provident Fund are defined contribution scheme and such contributions are recognized, when the contributions to the respective funds are due. There are no other obligation other than the contribution payable to the respective funds.
Gratuity liability is defined benefit obligation and is provided for on the basis of actuarial valuation on projected unit credit method made at the end of each financial year. Re measurement in case of defined benefit plans gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income and they are included in the statement of changes in equity.
Compensated absences are provided for on the basis of actuarial valuation on projected unit credit method made at the end of each financial year. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognized in statement of profit or loss.
The amount of Non-current and Current portions of employee benefits is classified as per the actuarial valuation at the end of each financial year.
4.12 SHARE BASED PAYMENTS - EMPLOYEE STOCK OPTION SCHEME
The Company has formulated an Employees Stock Option Scheme which provides that subject to continued employment with the Company or the Group, employees of the Company and its Subsidiary are granted an option to acquire equity shares of the Company that may be exercised within a specified period. The fair value of options granted under Employee Stock Option Plan is recognized as a deferred employee''s stock option compensation with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options. The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.
Income tax expense is comprised of current and deferred taxes. Current and deferred tax is recognized in net income except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income. Current income tax relating to items recognized outside profit and loss is recognized outside profit and loss (either in other comprehensive income or in equity). Current income taxes for the current period, including any adjustments to tax payable in respect of previous years, are recognized and measured at the amount expected to be recovered from or payable to the taxation authorities based on the tax rates that are enacted or substantively enacted by the end of the reporting period.
Deferred income tax assets and liabilities are recognized for temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base using the tax rates that are expected to apply in the period in which the deferred tax asset or liability is expected to settle, based on the laws that have been enacted or substantively enacted by the end of reporting period. Deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable income nor the accounting income. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable income will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and reduced accordingly to the extent that it is no longer probable that they can be utilized Deferred tax assets and liabilities are offset when there is legally enforceable right of offset current tax assets and liabilities when the deferred tax balances relate to the same taxation authority. Current tax asset and liabilities are offset where the entity has legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. Deferred Tax relating to items recognized outside profit or loss is recognized outside profit and loss (either in other comprehensive income or in equity).
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Company as a lessee
The Company assesses whether a contract is or contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease, and
(iii) the Company has the right to direct the use of the asset
The Company''s lease assets consists of the following:
|
Asset Description |
Useful life |
|
Leasehold Land |
As per Lease period |
|
Leasehold Building |
Lower of Lease period or useful life |
At date of commencement of leases, the Company recognizes a right of use asset (ROU) and a corresponding lease liability for all the lease arrangements, except for those with a term of twelve month or less (short term leases) and leases of low value assets. For these leases, the Company recognizes lease payments as an operating expense on straight line basis over the lease term.
ROU assets are initially measured at cost that comprises of the initial amount of lease liability adjusted for any lease payments made at or prior to the date of commencement, initial direct costs and lease incentives (if any).
Lease Liability is initially measured at the present value of future lease payments that are not paid at that date. The lease payments shall be discounted using the interest rate implicit in the lease or, if not readily determinable, incremental borrowing rate. Subsequent Measurement ROU assets are subsequently measured at cost less accumulated depreciation and impairment loss, if any. ROU is depreciated from the date of commencement on a straight line basis over the shorter of lease term or useful life of the underlying asset.
Lease Liability is subsequently measured by increasing the carrying amount to reflect interest and reducing the carrying amount to reflect the lease payments made.
The carrying amount of lease liability is remeasured to reflect any reassessment or lease modification such as change in lease term.
ROU asset and lease liability are separately presented in the balance sheet and lease payments have been classified as financing cash flows.
Company as a lessor
Leases for which the Company is a lessor is classified as finance or operating lease. Leases in which the
Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Lease income from operating leases is recognized in statement of profit and loss on a straight line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period.
Provisions are reviewed and adjusted, when required, to reflect the current best estimate at the end of each reporting period.
The Company recognizes decommissioning provisions in the period in which a legal or constructive obligation is incurred. A corresponding decommissioning cost is added to the carrying amount of the associated property, plant and equipment, and it is depreciated over the estimated useful life of the asset.
4.16 CONTINGENT LIABILITIES Contingent liability is disclosed in case of:
⢠A present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation;
⢠A present obligation arising from past events, when no reliable estimate is possible;
⢠A possible obligation arising from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company where the probability of outflow of resources is not remote.
Contingent assets are not recognized but disclosed in the financial statements when an inflow of economic benefits is probable.
Company follows the hierarchy mentioned underneath for determining fair values of its financial instruments:
⢠Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities;
⢠Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly (prices) or indirectly (derived from prices); and
⢠Level 3 - Inputs for the asset or liability that are not based on observable market data.
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting dates. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm''s length basis. The fair value for these instruments is determined using Level 1 inputs. The fair value of financial instruments that are not traded in an active market (for example, over the counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is fair valued using level 2 inputs.
If one or more of the significant inputs is not based on observable market data, the instrument is fair valued using Level 3 inputs. Specific valuation techniques used to value financial instruments include:
⢠Quoted market prices or dealer quotes for similar instruments
⢠The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves
⢠The fair value of forward foreign exchange contracts is determined using forward exchange rates at the reporting dates, with the resulting value discounted back to present value
⢠Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.
The Company derives revenues primarily from business of freight, logistic services (comprising of supply chain management warehousing and allied services) and sale of power.
The Company recognizes revenue from contracts with customers based on a five-step model, such as to, identifying the contracts with a customer, identifying the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation at a point in time or over time. The Company satisfies a performance obligation and recognizes revenue over time, if one of the following criteria is met:
⢠The customer simultaneously receives and consumes the benefits provided by the Company performance as the Company performs; or
⢠The Company''s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
⢠The Company''s performance does not create an asset with an alternative use to the Company and the entity 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 recognized at the point in time at which the performance obligation is satisfied.
Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services.
⢠Freight Services - Freight income and associated expenses are recognized over time using the percentage of completion method (POCM). The stage of completion is assessed with reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. Generally, the contracts are fixed price, thus the associated cost can be reliably measured.
⢠Logistics Services - Under Logistics Services, the principal service is related to the customer contracts for warehousing activities. Based on the customer contracts logistic income is recognized at the point in time when the services are rendered, the amount of revenue can be reliably measured and, in all probability, the economic benefit from the transaction will flow to the Company.
⢠Sale of Power - Income from the sale of power is recognized at the point in time and measured based on the rates in accordance with the provision of the Power Purchase Agreement (PPAs) entered into by the Company and procurer(s) of power.
4.20 OTHER INCOME Interest Income
For all debt instruments measured either at amortized cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument
or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
Interest income on fixed deposits is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.
Dividend income
Dividend income is recognized at the time when right to receive the payment is established, which is generally when the shareholders approve the dividend.
Sale of Renewable Energy Certificates and Carbon Credits
Income from sale of renewable energy certificate and carbon credit is recognized at the time when right to receive payment is established, which is generally when the certificates and credits are transferred.
4.21 FOREIGN CURRENCY TRANSACTIONS Functional and presentation Currency
The Financial statements are presented in Indian Rupee (?) which is also the functional and presentation currency of the Company. Transaction and Balances
Transactions in foreign currencies are translated to the functional currency of the Company, at exchange rates in effect at the transaction date. At each reporting date monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate in effect at the date of the financial statement. The translation for other non-monetary assets and liabilities are not updated from historical exchange rates unless they are carried at fair value.
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are
expensed. When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset.
Basic earnings per share are calculated by dividing the profit attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares.
Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into account, the after income tax effect of interest and other financing costs associated with dilutive potential equity shares and the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
Operating segments are identified and reported in a manner consistent with the internal financial reporting provided to the chief operating decision makers, responsible for allocating resources and assessing performance of the operating segments.
4.25 EVENTS AFTER REPORTING DATE:
Where events occurring after the Balance Sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the Financial Statements. Non Adjusting events after the Balance Sheet date which are material size or nature are disclosed separately in the Financial Statements.
Mar 31, 2022
J CORPORATE INFORMATION
Transport Corporation of India Ltd. (''TCIL'' or ''the Company'') is a public Company domiciled in India and incorporated under the provision of the Companies Act, 1956. The Company is India''s leading end to end integrated supply chain and logistics solutions provider (LSP) and a pioneer in the sphere of cargo transportation in India. Leveraging on its extensive infrastructure, strong foundation and skilled manpower, TCIL offers seamless multimodal transportation solutions. An ISO9001:2008 certified Company, TCIL is listed with premier stock exchange, namely, NSE and BSE.
These notes provide the list of the significant accounting policies adopted in the preparation of these standalone financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
a) Compliance with Ind AS
The standalone financial statements of the Company have been prepared in accordance with the Indian Accounting Standards ("Ind AS") as notified under section 133 of the Companies Act, 2013 read with prescribed rules therein. The Company has uniformly applied the accounting policies during the periods presented.
The standalone financial statements for the year ended 31st March, 2022 were authorized and approved by the Board of Directors on 28th May 2022.
b) Historical cost convention
The financial statements have been prepared on a historical cost basis, except for the following:
⢠Certain financial assets and liabilities (including derivative instruments) and contingent consideration that are measured at fair value or amortized cost;
⢠Assets held for sale - measured at fair value less cost to sell;
⢠Defined benefit plans - plan assets measured at fair value; and
⢠Share-based payments - measured at fair value of options at the grant date.
c) Current / Non - Current Classification
Any asset or liability is satisfied as current if it satisfies any of the following conditions:
⢠Asset / Liability is expected to be realized / settled in the Company''s normal operating cycle
⢠Asset is intended for sale or consumption
⢠Asset / Liability is held primarily for the purpose of trading
⢠Asset is a cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date
⢠In case of a Liability, the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date
For the purpose of this classification, the Company has ascertained its normal operating cycle as twelve months, which is based on the nature of business and time between acquisition of assets and their realization in cash and cash equivalents.
JM USE OF SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates, assumptions concerning the future and judgments are made in the preparation of the financial statements. They affect the application of the Company''s accounting policies, reporting amounts of assets, liabilities, income and expense and disclosures made. Although these estimates are based on management''s best knowledge of current events and actions, actual result may differ from those estimates.
The critical accounting estimates and assumptions used and areas involving a high degree of judgments are described below:
3.1. Use of estimation and assumption
In the process of applying the Company''s accounting policies, management had made the following estimation and assumptions that have the significant effect on the amounts recognized in the financial statements. The estimates and assumptions used in accompanying financial statements are based upon management''s evaluation of the relevant facts and circumstances as on the date of the financial statements, reviewed on an ongoing basis. Any revision to accounting estimates is recognized prospectively in current and future periods.
A) PROPERTY, PLANT AND EQUIPMENT & INTANGIBLE ASSETS
Key estimates related to long-lived assets (property, plant and equipment and intangible assets) include useful lives, recoverability of carrying values and the existence of any retirement obligations. As a result of future decisions, such estimates could be significantly modified. The useful lives as mentioned in Note
4.1 and Note 4.2 is applied as per Schedule II of Companies Act, 2013 and estimated based upon our historical experience, technical estimation and industry information. These estimates include an assumption regarding periodic maintenance and an appropriate level of annual capital expenditures to maintain the assets.
B) EMPLOYEE BENEFITS - MEASUREMENT OF DEFINED BENEFIT OBLIGATION (DBO)
Management assesses post-employment and other employee benefit obligations using the projected unit credit method based on actuarial assumptions which represent management''s best estimates of the variables (such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases) that will determine the ultimate cost of providing post-employment and other employee benefits. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
The Company recognizes tax liabilities based upon self-assessment as per the tax laws. When the final tax outcome of these matters is different from the amounts that were initially recognized, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
3.2. Critical judgments made in applying accounting
policies
The Company recognizes revenue from contracts with customers based on a five-step model as per Ind AS 115 (Refer Note 4.19) which involves judgements such as identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables. The management exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time It considers indicators such as how customer consumes benefits as services are rendered or who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product or service, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc. Revenue from freight services is recognized over time using percentage-of-completion method. The management uses judgement to estimate the services provided as on reporting date as a proportion of total services provided which is used to determine the degree of the completion of the performance obligation.
B) RECOGNITION OF DEFERRED TAX ASSETS The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilized. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.
C) RECOGNITION OF DEFERRED TAX
LIABILITIES ON UNDISTRIBUTED PROFITS The extent to which the Company can control the timing of reversal of deferred tax liability on undistributed profits of its subsidiaries requires judgement.
D) EVALUATION OF INDICATORS FORIMPAIRMENT OF ASSETS
The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Expected credit losses of the Company are based on an evaluation of the collectability of receivables. A considerable amount of judgment is required in assessing the ultimate realization of these receivables, including their current credit worthiness, past collection history of each customer and ongoing dealings with them. If the financial conditions of the counterparties with which the Company contracted were to deteriorate, resulting in an impairment of their ability to make payments, additional expected credit loss may be required.
F) USEFUL LIFE OF DEPRECIABLE/ AMORTIZABLE ASSETS
Management reviews its estimate of the useful lives of depreciable/amortizable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain software, customer relationships, IT equipment and other plant and equipment.
Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
At each reporting date basis the management judgement, changes in facts and legal aspects, the Company assess the requirement of the provisions. However, the actual future outcome may be different from this judgement.
The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Company has several lease contracts that include extension and termination options. The Company applies judgement in evaluating whether it is reasonably certain or not to exercise the option to renew or terminate the lease. That considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Company reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate.
J) UNCERTAINTIES RESULTING FROM GLOBAL PANDEMIC COVID-19
The Company has considered internal and external sources of information including credit reports, economics forecasts and industry report up to the date of approval of the financial statements in determining the impacts on various elements of its financial statements. The Company has applied due prudence in applying judgements, estimates and assumptions including performance of sensitivity analysis based on the current estimates in assessing the recoverability of trade receivable including unbilled receivables, investments, right of use assets and other financial assets for the possible impact on the financial statements.
3.3. Recent pronouncements
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 23rd March, 2022, MCA notified the Companies (Indian Accounting Standards) Amendment Rules, 2022, applicable from 1st April, 2022 as below:
Ind AS 103 - Business Combination
The amendments specifies that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in the Conceptual Framework for Financial Reporting under Ind AS (Conceptual Framework), issued by the ICAI at the acquisition date. These changes do not significantly change the requirements of Ind AS 103. The Company does not expect the amendment to have any significant impact on its Standalone Financial Statements.
Ind AS 16 - Property, Plant and Equipment (PPE) The amendments clarifies that excess of net sale proceeds of items produced over the cost of testing while preparing the asset for its intended use (if any), shall not be recognise in the profit or loss but deducted from the directly attributable cost considered as part of cost of an item PPE. The Company has evaluated the amendment and there is no impact in recognition of its property, plant and equipment on its Standalone Financial Statements.
Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets
The amendments specify that that the ''cost of fulfilling'' a contract comprises the ''costs that relate directly to the contract''. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The amendment is essentially a clarification and the Company does not expect the amendment to have any significant impact on its Standalone Financial Statements.
Ind AS 109 - Financial Instruments The amendment clarifies which fees an entity includes when it applies the ''10 percent'' test of Ind AS 109 in assessing whether to derecognise a financial liability or to consider as modification of existing financial liability. The Company does not expect the amendment to have any significant impact on its Standalone Financial Statements.
JiM SIGNIFICANT ACCOUNTING POLICIES
4.1 Property, Plant and Equipment and Depreciation INITIAL RECOGNITION
All items of property, plant and equipment are initially measured at cost. The cost of an item of plant and equipment is recognized as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
Cost includes its purchase price (after deducting trade discounts and rebates), import duties & non-refundable
purchase taxes, any costs directly attributable to bringing the asset to the location & condition necessary for it to be capable of operating in the manner intended by management, borrowing costs on qualifying assets and asset retirement costs.
The activities necessary to prepare an asset for its intended use or sale extend to more than just physical construction of the asset. It may also include technical (DPR, environmental, planning, Land acquisition and geological study) and administrative work such as obtaining approvals before the commencement of physical construction.
The cost of replacing a part of an item of property, plant and equipment is capitalized if it is probable that the future economic benefits of the part will flow to the Company and that its cost can be measured reliably. The carrying amount of the replaced part is derecognized. Costs of day to day repairs and maintenance costs are recognized into the statement of profit and loss account as incurred.
SUBSEQUENT MEASUREMENT
Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
The residual values, estimated useful lives and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate. DEPRECIATION
Depreciation is provided on Straight Line Method, as per the provisions of Schedule II of the Companies Act, 2013 or based on useful life estimated on the technical assessment. Asset class wise useful lives are as under:
|
Type of Assets Building Building- Leasehold Improvements |
Useful Life 60 Years Lease Term |
|
Ships |
As per technical assessment |
|
Motor Bucks |
6 Years |
|
Vehic les |
8 10 Years |
|
Plant and Machinery |
15-22 Years |
|
Computer |
3 Years |
|
Containers |
15 Years |
|
Furniture and Fixtures |
10 Years |
|
Office E quipment |
5 Years |
|
Railway Wagons |
15 Years |
In respect of additions / deletions to the fixed assets / leasehold improvements, depreciation is charged from the date the asset is ready to use / up to the date of deletion.
DE-RECOGNITION
An item of plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de recognition of the asset is recognized in the profit or loss in the year the asset is derecognized.
|
Intangible Assets |
Method of Amortization |
Estimated Useful life |
|
Computer |
on straight-line |
Over a period of |
|
Software |
basis |
3 to 10 years |
|
Railway |
on straight-line |
20 Years based |
|
Operating |
basis |
on validity of |
|
License |
license |
CAPITAL WORK IN PROGRESS AND CAPITAL ADVANCES
Cost of asset not ready for intended use and assets under installation or under construction as at the Balance Sheet date are shown as Capital Work in Progress. Advances given towards acquisition of fixed assets outstanding at each Balance Sheet date are disclosed as Other Non Current Asset in accordance with Schedule III to the Companies Act, 2013.
4.2 Intangible Assets & Amortization INITIAL RECOGNITION
Intangible assets acquired separately are initially measured at cost. Intangible assets are recognized if, it is probable that the future economic benefits that are attributable to the asset will flow to the Company and the cost of the asset can be measured reliably.
Cost of separately acquired intangible asset includes its purchase price (after deducting trade discounts and rebates), import duties & non-refundable purchase taxes, any costs directly attributable to preparing the asset for its intended use.
Intangible assets acquired in a business combination are recognized at fair value at the acquisition date. Subsequently, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any.
SUBSEQUENT MEASUREMENT AND AMORTIZATION
Intangible assets are stated at cost of acquisition less accumulated amortization and accumulated impairment losses, if any. Subsequent expenditure related to an item of intangible assets are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.
The carrying values of intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
The residual values, estimated useful lives and amortization method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.
The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible assets are amortized on a straight-line basis over the period of their estimated useful lives. Estimated useful lives by major class of finite-life intangible assets are as follows
The amortization expense is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Indefinite-life intangible assets comprises of those assets for which there is no foreseeable limit to the period over which they are expected to generate net cash inflows. These are considered to have an indefinite life, given the strength and durability of the Company and the level of marketing support.
For indefinite life intangible assets, the assessment of indefinite life is reviewed annually to determine whether it continues, if not, it is impaired or changed prospectively based on revised estimates. DE-RECOGNITION
An item of Intangible Assets is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de recognition of the asset is recognized in the profit or loss in the year the asset is derecognized.
Inventories are valued at lower of cost or net realizable value. Cost of inventory includes cost of purchase and other costs incurred in bringing them to their present location and condition. Net Realizable Value in respect of consumables is the estimated current procurement price in the ordinary course of the business.
4.4 Impairment of Non - Financial Assets
At each reporting date, the Company assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Company makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses of continuing operations, including impairment on inventories, are recognized in the statement of Profit and Loss, except for properties previously revalued with the revaluation surplus taken to Other Comprehensive Income ("OCI"). For such properties, the impairment is recognized in OCI up to the amount of any previous revaluation surplus.
After impairment, depreciation or amortization is provided on the revised carrying amount of the asset over its remaining useful life.
The impairment assessment for all assets is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit or loss.
Financial assets comprise of investments in equity and debt securities, mutual funds, loans, trade receivables, cash and cash equivalents and other financial assets. INITIAL RECOGNITION
All financial assets except investments in subsidiary, associates and jointly controlled entities are recognized initially at fair value. Purchases or sales of financial asset that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the assets.
SUBSEQUENT MEASUREMENTA) FINANCIAL ASSETS MEASURED AT AMORTIZED COST:
Financial assets held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding are measured at amortized cost using effective interest rate (EIR) method. The EIR amortization is recognized as finance income in the Statement of Profit and Loss.
The Company while applying above criteria has classified the following at amortized cost:
a. Loans
b. Trade Receivable (other than those which are designated at FVTOCI)
c. Cash and Cash Equivalents
d. Other Financial Assets
B) FINANCIAL ASSETS AT FAIR VALUETHROUGH OTHER COMPREHENSIVEINCOME (FVTOCI):
Financial assets held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, selling the financial assets and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding are measured at FVTOCI. Fair Value movements in financial assets at FVTOCI are recognized in other comprehensive income. Equity instruments held for trading are classified at fair value through profit or loss (FVTPL). For other equity instruments the Company classifies the same either at FVTOCI or FVTPL on instrument to instrument basis. The classification is made on initial recognition and is irrevocable. Fair value changes on equity investments at FVTOCI, excluding dividends are recognized in other comprehensive income (OCI).
C) FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)
Financial asset are measured at fair value through profit or loss if it does not meet the criteria for classification as measured at amortized cost or at fair value through other comprehensive income. All fair value changes are recognized in the statement of profit and loss.
D) Investment in subsidiaries, joint ventures & associates are carried at cost in the separate financial statements. However, a provision for diminution in value is made to recognize a decline other than temporary in value of the investments. IMPAIRMENT
Financial assets are tested for impairment based on the expected credit losses in accordance with Ind AS 109 on the following financial assets:
An impairment analysis is performed at each reporting date. The expected credit losses over life time of the asset are estimated by adopting the simplified approach using a provision matrix on its portfolio of trade receivables. which is based on historical loss rates reflecting current condition and forecasts of future economic conditions. In this approach assets are grouped on the basis of similar credit characteristics such as customer segment, past due status and other factors which are relevant to estimate the expected cash loss from these assets.
Other financial assets are tested for impairment based on significant change in credit risk since initial recognition and impairment is measured based on probability of default over the life time when there is significant increase in credit risk. DE-RECOGNITION
A financial asset is derecognized only when:
⢠The Company has transferred the rights to receive cash flows from the financial asset, or
⢠The contractual right to receive cash flows from financial asset is expired, or
⢠Retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset and transferred substantially all risks and rewards of ownership of the financial asset, in such cases the financial asset is derecognized. Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is also derecognized if the Company has not retained control of the financial asset.
Cash and cash equivalents comprises cash at bank (including deposits with banks with original maturity of three months or less) and cash in hand and short-term investments with an original maturity of three months or less. Deposits with banks are subsequently measured at amortized cost and short term investments are measured at fair value through statement of profit & loss.
4.7 Non-current Assets held for sale
Non-current assets or disposal groups comprising of assets and liabilities are classified as ''held for sale'' when all the following criteria are met:
(i) decision has been made to sell,
(ii) the assets are available for immediate sale in its present condition,
(iii) the assets are being actively marketed and
(iv) sale has been agreed or is expected to be concluded within 12 months of the Balance Sheet date.
Subsequently, such non-current assets and disposal groups classified as ''held for sale'' are measured at the lower of its carrying value and fair value less costs to sell. Non-current assets held for sale are no longer depreciated or amortized.
Equity Shares are classified as equity.
4.9 Financial Liabilities INITIAL RECOGNITION
Financial liabilities are recognized when, and only when, the Company becomes a party to the contractual provisions of the financial instrument. The Company determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognized initially at fair value plus any directly attributable transaction costs, such as loan processing fees and issue expenses.
SUBSEQUENT MEASUREMENT - AT AMORTIZED COST
After initial recognition, financial liabilities are subsequently measured at amortized cost using the effective interest rate (EIR) method. Gains and losses are recognized in profit or loss when the liabilities are de recognized, and through the amortization process.
De-recognition
A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in profit or loss.
OFFSETTING OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. Capitalization of borrowing cost is suspended in the period during which the active development is delayed due to other than temporary interruption. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest, exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost and other costs that an entity incurs in connection with the borrowing of funds.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
Employee benefits are charged to the Statement of Profit and Loss for the year.
Retirement benefits in the form of Provident Fund are defined contribution scheme and such contributions are recognized, when the contributions to the respective funds are due. There are no other obligation other than the contribution payable to the respective funds. Gratuity liability is defined benefit obligation and is provided for on the basis of actuarial valuation on projected unit credit method made at the end of each financial year. Re measurement in case of defined benefit plans gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income and they are included in the statement of changes in equity.
Compensated absences are provided for on the basis of actuarial valuation on projected unit credit method made at the end of each financial year. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognized in statement of profit or loss account.
The amount of Non-current and Current portions of employee benefits is classified as per the actuarial valuation at the end of each financial year.
4.12 Share Based Payments - Employee Stock Option Scheme
The Company has formulated an Employees Stock Option Scheme which provides that subject to continued employment with the Company or the Group, employees of the Company and its Subsidiary Company are granted an option to acquire equity shares of the Company that may be exercised within a specified period. The fair value of options granted under Employee Stock Option Plan is recognized as a deferred employee''s stock option compensation with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options. The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.
Income tax expense is comprised of current and deferred taxes. Current and deferred tax is recognized in net income except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income. Current income tax relating to items recognized outside profit and loss is recognized outside profit and loss (either in other comprehensive income or in equity). Current income taxes for the current period, including any adjustments to tax payable in respect of previous years, are recognized and measured at the amount expected to be recovered from or payable to the taxation authorities based on the tax rates that are enacted or substantively enacted by the end of the reporting period.
Deferred income tax assets and liabilities are recognized for temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base using the tax rates that are expected to apply in the period in which the deferred tax asset or liability is expected to settle, based on the laws that have been enacted or substantively enacted by the end of reporting period.
Deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable income nor the accounting income. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable income will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and reduced accordingly to the extent that it is no longer probable that they can be utilized
Deferred tax assets and liabilities are offset when there is legally enforceable right of offset current tax assets and liabilities when the deferred tax balances relate to the same taxation authority. Current tax asset and liabilities are offset where the entity has legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. Deferred Tax relating to items recognized outside profit or loss is recognized outside profit and loss (either in other comprehensive income or in equity).
Dividend Distribution Tax:
Tax on Dividends declared by the Company are recognized as an appropriation of Profit. However, with effect from 1st April, 2020, Dividend Distribution Tax is not applicable
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. COMPANY AS A LESSEE
The Company assesses whether a contract is or contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease, and
(iii) the Company has the right to direct the use of the asset
The Company''s lease assets consists of the following:
|
Asset Description |
Useful life |
|
Leasehold Land |
As per Lease period |
|
Leasehold Building |
Lower of Lease period or useful life |
At date of commencement of leases, the Company recognizes a right of use asset (ROU) and a corresponding lease liability for all the lease arrangements, except for those with a term of twelve month or less (short term leases) and leases of low value assets. For these leases, the Company recognizes lease payments as an operating expense on straight line basis over the lease term.
ROU assets are initially measured at cost that comprises of the initial amount of lease liability adjusted for any lease payments made at or prior to the date of commencement, initial direct costs and lease incentives (if any).
Lease Liability is initially measured at the present value of future lease payments that are not paid at that date. The lease payments shall be discounted using the interest rate implicit in the lease or, if not readily determinable, incremental borrowing rate.
ROU assets are subsequently measured at cost less accumulated depreciation and impairment loss, if any. ROU is depreciated from the date of commencement on a straight line basis over the shorter of lease term or useful life of the underlying asset.
Lease Liability is subsequently measured by increasing the carrying amount to reflect interest and reducing the carrying amount to reflect the lease payments made.
The carrying amount of lease liability is remeasured to reflect any reassessment or lease modification such as change in lease term.
ROU asset and lease liability are separately presented in the balance sheet and lease payments have been classified as financing cash flows.
Leases for which the Company is a lessor is classified as finance or operating lease. Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Lease income from operating leases is recognized in statement of profit and loss on a straight line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period.
Provisions are reviewed and adjusted, when required, to reflect the current best estimate at the end of each reporting period.
The Company recognizes decommissioning provisions in the period in which a legal or constructive obligation is incurred. A corresponding decommissioning cost is added to the carrying amount of the associated property, plant and equipment, and it is depreciated over the estimated useful life of the asset.
Contingent liability is disclosed in case of:
⢠A present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation;
⢠A present obligation arising from past events, when no reliable estimate is possible;
⢠A possible obligation arising from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company where the probability of outflow of resources is not remote.
Contingent assets are not recognized but disclosed in the financial statements when an inflow of economic benefits is probable.
Company follows the hierarchy mentioned underneath for determining fair values of its financial instruments:
⢠Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities;
⢠Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices); and
⢠Level 3 - Inputs for the asset or liability that are not based on observable market data.
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting dates. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm''s length basis. The fair value for these instruments is determined using Level 1 inputs
The fair value of financial instruments that are not traded in an active market (for example, over the counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is fair valued using level 2 inputs
If one or more of the significant inputs is not based on observable market data, the instrument is fair valued using Level 3 inputs. Specific valuation techniques used to value financial instruments include:
⢠Quoted market prices or dealer quotes for similar instruments
⢠The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves
⢠The fair value of forward foreign exchange contracts is determined using forward exchange rates at the reporting dates, with the resulting value discounted back to present value
⢠Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.
The Company derives revenues primarily from business of freight, logistic services (comprising of supply chain management warehousing and allied services) and sale of power.
The Company recognizes revenue from contracts with customers based on a five-step model, such as to, identifying the contracts with a customer, identifying the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation at a point in time or over time.
The Company satisfies a performance obligation and recognizes revenue over time, if one of the following criteria is met:
⢠The customer simultaneously receives and consumes the benefits provided by the Company performance as the Company performs; or
⢠The Company''s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
⢠The Company''s performance does not create an asset with an alternative use to the Company and the entity 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 recognized at the point in time at which the performance obligation is satisfied.
Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services.
⢠Freight Services - Freight income and associated expenses are recognized over time using the percentage of completion method (POCM). The stage of completion is assessed with reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. Generally, the contracts are fixed price, thus the associated cost can be reliably measured.
⢠Logistics Services - Under Logistics Services, the principal service is related to the customer contracts for warehousing activities. Based on the customer contracts logistic income is recognized at the point in time when the services are rendered, the amount of revenue can be reliably measured and in all probability, the economic benefit from the transaction will flow to the Company.
⢠Sale of Power - Income from the sale of power is recognized at the point in time and measured based on the rates in accordance with the provision of the Power Purchase Agreement (PPAs) entered into by the Company and procurer(s) of power.
4.20 Other IncomeINTEREST INCOME
For all debt instruments measured either at amortized cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the effective interest
rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
Interest income on fixed deposits is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. DIVIDEND INCOME
Dividend income is recognized at the time when right to receive the payment is established, which is generally when the shareholders approve the dividend.
4.21 Foreign currency transactions FUNCTIONAL AND PRESENTATION CURRENCY
The Financial statements are presented in Indian Rupee (?) which is also the functional and presentation currency of the Company.
Transaction and Balances
Transactions in foreign currencies are translated to the functional currency of the Company, at exchange rates in effect at the transaction date. At each reporting date monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate in effect at the date of the financial statement. The translation for other non-monetary assets and liabilities are not updated from historical exchange rates unless they are carried at fair value.
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset.
Basic earnings per share are calculated by dividing the profit attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares.
Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into account, the after income tax effect of interest and other financing costs associated with dilutive potential equity shares and the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
Operating segments are identified and reported in a manner consistent with the internal financial reporting provided to the chief operating decision makers, responsible for allocating resources and assessing performance of the operating segments.
4.25 Events after reporting date:
Where events occurring after the Balance Sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the Financial Statements. Non Adjusting events after the Balance Sheet date which are material size or nature are disclosed separately in the Financial Statements.
Mar 31, 2018
a) Basis of Preparation
The financial statements have been prepared using the significant accounting policies and measurement bases summarised below. These were used throughout all periods presented in the financial statements; unless otherwise stated.
The financial statements have been prepared on going concern basis under the historical cost basis except for the following -
- Certain financial assets and liabilities (including derivative instruments) and contingent consideration which are measured at fair value;
- Assets held for sale - measured at fair value less cost to sell;
- Defined benefit plans - plan assets measured at fair value; and
- Share based payments which are measured at fair value of the options.
b) Current Versus Non-Current Classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is classified as current when it is:
- Expected to be realised or intended to sold or consumed in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realised within twelve months after the reporting period; or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current when:
- It is expected to be settled in normal operating cycle;
- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting period; or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. Deferred tax assets and liabilities are classified as non-current assets and liabilities.
c) Foreign Currency Translation
Functional and presentation currency
The financial statements are presented in Indian Rupee (âINRâ) which is also the functional and presentation currency of the Company. Transactions and balances
Foreign currency transactions are recorded in the functional currency, by applying to the exchange rate between the functional currency and the foreign currency at the date of the transaction.
Foreign currency monetary items are converted to functional currency using the closing rate. Non-monetary items denominated in a foreign currency which are carried at historical cost are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or any other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognized in the statement of profit and loss in the year in which they arise.
d) Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government. The Company has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to credit risks.
The Company derives its income from three principal sources: Freight Services, Logistics Services and Sale of Power.
Freight Services
Freight income and associated expenses are recognised using the percentage-of-completion method. The stage of completion is assessed with reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. Generally, the contracts are Fixed-price, thus the associated costs can be reliably measured. Where necessary, single transactions are split into separately identifiable components to reflect the substance of the transaction. Conversely, two or more transactions may be considered together for revenue recognition purposes, where the commercial effect cannot be understood without reference to the series of transactions as a whole.
Logistics Services
Under Logistics services, the principal service is related to customer contracts for warehousing activities. Based on the customer contracts logistics income is recognised when services are rendered, the amount of revenue can be reliably measured, and in all probability, the economic benefits from the transaction will flow to the company. Where necessary, single transactions are split into separately identifiable components to reflect the substance of the transaction. Conversely, two or more transactions may be considered together for revenue recognition purposes, where the commercial effect cannot be understood without reference to the series of transactions as a whole.
Sale of Power
Income from sale of power is recognized on transfer of significant risks and rewards of ownership to the buyer which is when delivered, and measured on an accrual basis based on the rates in accordance with the provisions of the Power Purchase Agreements (PPAs) entered into by the Company with the procurer/s of power.
Other Incomes
Lease Income
Rental income arising from operating leases on property, plant and equipment is accounted for on a straight-line basis except where scheduled increase in rent compensates the Company with expected inflationary costs, over the lease terms and is included in other income in the statement of profit or loss.
Interest Income
For all debt instruments measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
Interest income on fixed deposits is recognised on a time proportion basis taking into account the amount outstanding and the applicable interest rate.
Dividend income
Dividend income is recognised at the time when right to receive the payment is established, which is generally when the shareholders approve the dividend.
e) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is necessary to complete and prepare the asset for its intended use or sale. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Capitalisation of borrowing costs is suspended in the period during which the active development is delayed due to, other than temporary, interruption. All other borrowing costs are charged to the Statement of Profit and Loss as incurred. Borrowing cost includes interest cost, exchange difference arising from foreign borrowings to the extent they are regarded as an adjustment to the interest cost and other costs that company incurs in connection with borrowing of funds.
f) Property, Plant and Equipment
Recognition and initial measurement
Properties plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. Costs incurred after the asset is put to use are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company. All other repair and maintenance costs are recognised in statement of profit or loss as incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.
Subsequent measurement (depreciation and useful lives)
Depreciation on property, plant and equipment is provided on the straight-line method using the rates arrived on the basis of the useful life which coincides with the useful life prescribed under Schedule II of the Companies Act, 2013. Estimated useful life of ship is based on technical assessment.
The residual values, useful lives and method of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.
De-recognition
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.
g) Intangible Assets
Recognition and initial measurement
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Subsequent measurement (amortisation)
The Company has capitalised computer software in the nature of software licenses as intangible assets and the cost of software is amortized over the license period or three years, being their expected useful economic life
h) Leased Assets Group as a Lessee
Finance leases
Finance leases, which effectively transfer to the lessee substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalised.
If there is no reasonable certainty that the Company will obtain the ownership by the end of lease term, capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Operating leases
Assets acquired on leases where a significant portion of risk and rewards of ownership are retained by the lessor are classified as operating leases. Lease rental are charged to statement of profit and loss on straight-line basis except where scheduled increase in rent compensate the lessor for expected inflationary costs.
For leases of land and buildings, the minimum lease payments are first allocated to each component based on the relative fair values of the respective lease interest. If the minimum lease payments cannot be allocated reliably between the two components, entire lease is classified as a finance lease, unless it is clear that both elements are operating leases, in which case the entire lease is classified as an operating lease. Each component is then evaluated separately for possible treatment as a finance lease, taking into consideration the fact that land normally has an indefinite economic life.
Group as a Lessor
Finance leases
Leases which effectively transfer to the lessee substantially all the risks and benefits incidental to ownership of the leased item are classified and accounted for as finance lease. Lease income is recognised in the statement of profit and loss on a straight line basis over the lease term. Costs, including depreciation are recognised as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs etc. are recognised immediately in the statement of profit and loss. Contingent rents are recognised as revenue in the period in which they are earned.
Operating leases
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. The respective leased assets are included in the balance sheet based on their nature. Rental income is recognized on straight-line basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
Leasehold land
Leasehold land that normally has a finite economic life and title which is not expected to pass to the lessee by the end of the lease term is treated as an operating lease. The payment made on entering into or acquiring a leasehold land is accounted for as leasehold land use rights (referred to as prepaid lease payments in the INDAS 17 âleasesâ) and is amortised over the lease terms in accordance with the pattern of benefits provided.
i) Impairment of Non-Financial Assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash-generating unitâs (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Companyâs CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year. To estimate cash flow projections beyond periods covered by the most recent budgets/forecasts, the Company extrapolates cash flow projections in the budget using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. In any case, this growth rate does not exceed the long-term average growth rate for the market in which the asset is used.
Impairment losses of continuing operations, including impairment on inventories, are recognised in the statement of Profit and Loss, except for properties previously revalued with the revaluation surplus taken to OCI. For such properties, the impairment is recognised in OCI up to the amount of any previous revaluation surplus.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
The impairment assessment for all assets is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the assetâs or CGUâs recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the assetâs recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss.
j) Government Grants
Grants and subsidies from the government are recognized at their fair value when there is reasonable assurance that the Company will comply with the conditions attached to them and the grant/subsidy will be received.
When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate.
Government grants relating to purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight line basis over the expected lives of the related assets and presented within other income.
k) Financial Instruments Financial Assets
Initial recognition and measurement
All financial assets are recognised initially at fair value and transaction cost that is attributable to the acquisition of the financial asset is also adjusted.
Subsequent measurement
i. Financial Instruments At Amortised Cost - the financial instrument is measured at the amortised cost if both the following conditions are met:
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. The effective interest rate amortisation is recognised as finance income in the statement of profit and loss.
ii. Equity Investments - All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are generally classified as at fair value through profit and loss (FVTPL). For all other equity instruments, the Company decides to classify the same either as at fair value through other comprehensive income (FVTOCI) or fair value through profit and loss (FVTPL). The Company makes such election on an instrument by instrument basis. The classification is made on initial recognition and is irrevocable.
iii. Mutual Funds - All mutual funds in scope of Ind-AS 109 are measured at fair value through profit and loss (FVTPL).
iv. Investment in subsidiaries, Associates and Joint ventures are carried at cost in the separate financial statements.
De-recognition of financial assets
A financial asset is primarily de-recognised when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset or retains the contractual right to receive the cash flows of a financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Financial Liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value and transaction cost that is attributable to the acquisition of the financial liabilities is also adjusted.
Subsequent measurement
Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss. This category generally applies to borrowings.
De-recognition of financial liabilities
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Financial Guarantee Contracts
Financial guarantee contracts are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified party fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of expected loss allowance determined as per impairment requirements of Ind-AS 109 and the amount recognised less cumulative amortisation.
Offsetting of Financial Instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
l) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is Unobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period or each case.
For the purpose of fair value disclosures, Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarizes accounting policy for fair value. Other fair value related disclosures are given in the relevant notes. o Disclosures for valuation methods, significant estimates and assumptions o Quantitative disclosures of fair value measurement hierarchy o Investment in unquoted equity shares o Financial instruments
m) Impairment of Financial Assets
In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets:
Trade receivables
The Company applies approach permitted by Ind AS 109 Financial Instruments at each reporting date, which requires expected lifetime losses to be recognised from initial recognition of receivables. As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables. At every reporting date, the historical observed default rates are updated.
Other financial assets
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.
n) Inventories
Inventories are valued at the lower of cost and net realisable value. Cost of inventories include cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
o) Income Taxes
Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity.
Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income-tax Act and in the overseas branches/companies as per the respective tax laws. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Current tax are measured at the tax rates that apply in the year based on tax rates that have been enacted or substantively enacted at the reporting date.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets are recognized to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilized against future taxable income. Current tax are measured at the tax rates that are apply in the year based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
This is assessed based on the forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity).
p) Cash and Cash Equivalents
Cash and cash equivalents comprise cash in hand, demand deposits with banks/corporations and short-term highly liquid investments (original maturity less than 3 months) that are readily convertible into known amount of cash and are subject to an insignificant risk of change in value. Deposits with a banks are measured at amortised cost.
q) Post-Employment, Long Term and Short Term Employee Benefits Defined Contribution Plans
Provident Fund
Certain entities of the group make contribution to statutory provident fund trust setup in accordance with the Employeesâ Provident Funds and Miscellaneous Provisions Act, 1952. In terms of the Guidance on Ind AS - 19, the provident fund trust set up is treated as a defined benefit plan since the Company has to meet the interest shortfall, if any. Accordingly, the contribution paid or payable and the interest shortfall, if any, is recognised as an expense in the period in which services are rendered by the employee.
Certain other entities of the Company make contribution to the statutory provident fund in accordance with the Employees Provident Fund and Miscellaneous Provision Act, 1952 which is a defined contribution plan and contribution paid or payable is recognised as an expense in the period in which the services are rendered.
Defined Benefit Plans
Gratuity
Gratuity is a post-employment benefit and is in the nature of a defined benefit plan. The liability recognised in the financial statement in respect of gratuity is the present value of the defined benefit obligation at the reporting date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. The defined benefit/obligation is calculated at or near the reporting date by an independent actuary using the projected unit credit method.
Actuarial gains and losses arising from past experience and changes in actuarial assumptions are credited or charged to the statement of OCI in the year in which such gains or losses are determined.
Compensated absences
Liability in respect of compensated absences becoming due or expected to be availed within one year from the balance sheet date is recognised on the basis of undiscounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees. Liability in respect of compensated absences becoming due or expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method.
Actuarial gains and losses arising from past experience and changes in actuarial assumptions are charged to statement of profit and loss in the year in which such gains or losses are determined.
Short-term employee benefits
Expense in respect of other short term benefits is recognised on the basis of the amount paid or payable for the period during which services are rendered by the employee.
r) Share Based Payments
Employee stock option plan
The fair value of options granted under Employee Stock Option Plan is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
s) Non-Current Assets and Liabilities Classified as Held for Sale and Discontinued Operations
Non-current assets classified as held for sale are presented separately and measured at the lower of their carrying amounts immediately prior to their classification as held for sale and their fair value less costs to sell. However, some held for sale assets such as financial assets or deferred tax assets, continue to be measured in accordance with the Companyâs relevant accounting policy for those assets. Once classified as held for sale, the assets are not subject to depreciation or amortisation.
Any profit or loss arising from the sale or re-measurement of discontinued operations is presented as part of a single line item, profit or loss from discontinued operations.
t) Provisions, Contingent Assets and Contingent Liabilities
Provisions are recognized only when there is a present obligation, as a result of past events, and when a reliable estimate of the amount of obligation can be made at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. Provisions are discounted to their present values, where the time value of money is material.
Contingent liability is disclosed for:
- Possible obligations which will be confirmed only by future events not wholly within the control of the Company or
- Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are neither recognized nor disclosed. However, when realization of income is virtually certain, related asset is recognized.
u) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue and excluding treasury shares.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
v) Recent Accounting Pronouncements
Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from 1st April 2018. The Company is evaluating the requirement of the amendment and the impact on the financial Statements. The effect on adoption of Ind AS 21 is expected to be insignificantâ
Ind AS 115
In March 2018, the Ministry of Corporate Affairs has notified the Companies (Indian Accounting Standards) Amended Rules, 2018 (âamended rulesâ). As per the amended rules, Ind AS 115 âRevenue from contracts with customersâ supersedes Ind AS 11, âConstruction contractsâ and Ind AS 18, âRevenueâ and is applicable for all accounting periods commencing on or after 1st April 2018. Ind AS 115 introduces a new framework of five step model for the analysis of revenue transactions. The model specifies that revenue should be recognised when (or as) an entity transfer control of goods or services to a customer at the amount to which the entity expects to be entitled. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers. The new revenue standard is applicable to the Company from 1st April 2018. The standard permits two possible methods of transition:
- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch -up approach) The Company is evaluating the requirement of the amendment and the impact on the financial statements. The effect on adoption of Ind AS 115 is expected to be insignificantâ
w) Significant Management Judgement in Applying Accounting Policies and Estimation Uncertainty
The preparation of the Companyâs financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the related disclosures.
Significant management judgements
The following are significant management judgements in applying the accounting policies of the Company that have the most significant effect on the financial statements.
Revenue - The Company recognises revenue using the stage of completion method. This requires forecasts to be made of the outcomes of long-term construction and service contracts, which require assessments and judgements to be made on changes in work scopes, claims and incentive payments to the extent they are probable and they are capable of being reliably measured.
Recognition of deferred Tax Assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilized. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions (see note 30).
Recognition of Deferred Tax Liability on Undistributed Profits - The extent to which the Company can control the timing of reversal of deferred tax liability on undistributed profits of its subsidiaries requires judgement.
Evaluation of Indicators for Impairment of Assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Classification of Leases - The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lesseeâs option to purchase and estimated certainty of exercise of such option, proportion of lease term to the assetâs economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.
Recoverability of Receivables - At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables and advances.
Useful Lives of Depreciable/Amortisable assets - Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain software, customer relationships, IT equipment and other plant and equipment.
Defined Benefit Obligation (DBO) - Managementâs estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Fair Value Measurements - Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an armâs length transaction at the reporting date.
Provisions - At each balance sheet date basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding warranties and guarantees. However, the actual future outcome may be different from this judgement.
Mar 31, 2017
1. Corporate Information
Transport Corporation of India Ltd. (''TCIL'' or ''the Company'') is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Transport Corporation of India is India''s leading end to end integrated supply chain and logistics solutions provider(LSP) and a pioneer in the sphere of cargo transportation in India. Leveraging on its extensive infrastructure, strong foundation and skilled manpower, TCIL offers seamless multimodal transportation solutions. An ISO 9001:2008 certified company, TCIL is listed with premier stock exchanges, namely, NSE and BSE.
General Information and Statement of Compliance with Ind AS
The standalone financial statements of the Company have been prepared in accordance with the Indian Accounting Standards as notified under Section 133 of the Companies Act 2013 read with the Companies (Indian Accounting Standards) Rules 2015 (by Ministry of Corporate Affairs (''MCA'')). The Company has uniformly applied the accounting policies during the periods presented.
For all periods up to and including the year ended 31st March 2016, the Company has prepared its financial statements in accordance with accounting standards notified under the Section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP). The standalone financial statements for the year ended 31 March 2017 are the first which the Company has prepared in accordance with Ind AS (see note 45 for explanation for transition to Ind AS). For the purpose of comparatives, standalone financial statements for the year ended 31st March 2016 are also prepared under Ind AS.
The standalone financial statements for the year ended 31st March 2017 were authorized and approved for issue by the Board of Directors on 16st May 2017.
2. Standards issued but not yet Made Effective and have not been Adopted Early by the Company
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, ''Statement of cash flows'' and Ind AS 102, ''Share-based payment'' These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, Statement of cash flows, and IFRS 2, Share-based payment, respectively. The amendments are applicable to the Company from 1st April 2017.
Amendment to Ind AS 7:
The amendments to Ind AS 7 inter-alia 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 non-cash 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 disclosure requirement. The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
Amendment to Ind AS 102:
The amendments to Ind AS 102 inter-alia provide specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.
It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and non-vesting conditions are reflected in the ''fair values'', but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction,
the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that includes a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement. The Company is evaluating the requirements of the amendment and the impact on the financial statements is being evaluated.
3. Summary of Significant Accounting Policies
a) Basis of Preparation
The financial statements have been prepared using the significant accounting policies and measurement bases summarized below. These were used throughout all periods presented in the financial statements, except where the Company has applied certain accounting policies and exemptions upon transition to Ind AS.
The financial statements have been prepared on going concern basis under the historical cost basis except for the following -
- Certain financial assets and liabilities which are measured at fair value;
- Assets held for sale - measured at fair value less cost to sell;
- Defined benefit plans - plan assets measured at fair value; and
- Share bases payments which are measured at fair value of the options
b) Current versus Non-Current Classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is classified as current when it is:
- Expected to be realized or intended to sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realized within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is classified as current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. Deferred tax assets and liabilities are classified as non-current assets and liabilities.
c) Foreign Currency Translation
Functional and presentation currency
The financial statements are presented in Indian Rupee (''INR'') which is also the functional and presentation currency of the Company.
Transactions and balances
Foreign currency transactions are recorded in the functional currency, by applying to the exchange rate between the functional currency and the foreign currency at the date of the transaction.
Foreign currency monetary items are converted to functional currency using the closing rate. Non-monetary items denominated in a foreign currency which are carried at historical cost are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or any other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognized in the statement of profit and loss in the year in which they arise.
d) Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government. The Company has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to credit risks.
The Company derives its income from three principal sources: Freight Services, Logistics Services and Sale of Power.
Freight Services
Freight income and associated expenses are recognized using the percentage-of-completion method. The stage of completion is assessed with reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. Generally, the contracts are Fixed-price, thus the associated costs can be reliably measured. Where necessary, single transactions are split into separately identifiable components to reflect the substance of the transaction. Conversely, two or more transactions may be considered together for revenue recognition purposes, where the commercial effect cannot be understood without reference to the series of transactions as a whole.
Logistics Services
Under Logistics services, the principal service is related to customer contracts for warehousing activities. Based on the customer contracts logistics income is recognized when services are rendered, the amount of revenue can be reliably measured, and in all probability, the economic benefits from the transaction will flow to the company. Where necessary, single transactions are split into separately identifiable components to reflect the substance of the transaction. Conversely, two or more transactions may be considered together for revenue recognition purposes, where the commercial effect cannot be understood without reference to the series of transactions as a whole.
Sale of Power
Income from sale of power is recognized on transfer of significant risks and rewards of ownership to the buyer which is when delivered, and measured on an accrual basis based on the rates in accordance with the provisions of the Power Purchase Agreements (PPAs) entered into by the Company with the procurer/s of power.
Other Incomes
Lease Income
Rental income arising from operating leases on property, plant and equipment is accounted for on a straight-line basis except where scheduled increase in rent compensates the Company with expected inflationary costs, over the lease terms and is included in other income in the statement of profit or loss.
Interest Income
For all debt instruments measured either at amortized cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
Interest income on fixed deposits is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.
Dividend Income
Dividend income is recognized at the time when right to receive the payment is established, which is generally when the shareholders approve the dividend.
e) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is necessary to complete and prepare the asset for its intended use or sale. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Capitalization of borrowing costs is suspended in the period during which the active development is delayed due to, other than temporary, interruption. All other borrowing costs are charged to the Statement of Profit and Loss as incurred.
f) Property, Plant and Equipment
Recognition and initial Measurement
Properties plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. Costs incurred after the asset is put to use are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company. All other repair and maintenance costs are recognized in statement of profit or loss as incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.
Subsequent Measurement (Depreciation and Useful lives)
Depreciation on property, plant and equipment is provided on the straight-line method using the rates arrived on the basis of the useful life which coincides with the useful life prescribed under Schedule II of the Companies Act, 2013. The identified components are depreciated over their useful lives; the remaining asset is depreciated over the life of the principal asset.
The residual values, useful lives and method of depreciation of are reviewed at each financial year end and adjusted prospectively, if appropriate.
De-recognition
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognized as at 1 April 2015 measured as per the provisions of Previous GAAP and use that carrying value as the deemed cost of property, plant and equipment.
g) Intangible Assets
Recognition and initial measurement
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Subsequent Measurement (Amortization)
The Company has capitalized computer software in the nature of software licenses as intangible assets and the cost of software is amortized over the license period or three years, being their expected useful economic life
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all its intangible assets recognized as at 1 April 2015 measured as per the provisions of Previous GAAP and use that carrying value as the deemed cost of intangible assets.
h) Leased Assets Group as a Lessee
Finance Leases
Finance leases, which effectively transfer to the lessee substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalized.
I f there is no reasonable certainty that the Company will obtain the ownership by the end of lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Operating Leases
Assets acquired on leases where a significant portion of risk and rewards of ownership are retained by the less or are classified as operating leases. Lease rental are charged to statement of profit and loss on straight-line basis except where scheduled increase in rent compensate the less or for expected inflationary costs.
For leases of land and buildings, the minimum lease payments are first allocated to each component based on the relative fair values of the respective lease interest. If the minimum lease payments cannot be allocated reliably between the two components, entire lease is classified as a finance lease, unless it is clear that both elements are operating leases, in which case the entire lease is classified as an operating lease. Each component is then evaluated separately for possible treatment as a finance lease, taking into consideration the fact that land normally has an indefinite economic life.
Group as a Less or
Finance Leases
Leases which effectively transfer to the lessee substantially all the risks and benefits incidental to ownership of the leased item are classified and accounted for as finance lease. Lease income is recognized in the statement of profit and loss on a straight line basis over the lease term. Costs, including depreciation are recognized as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs etc. are recognized immediately in the statement of profit and loss. Contingent rents are recognized as revenue in the period in which they are earned.
Operating Leases
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. The respective leased assets are included in the balance sheet based on their nature. Rental income is recognized on straight-line basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
i) Impairment of Non-Financial Assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating units (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year. To estimate cash flow projections beyond periods covered by the most recent budgets/forecasts, the Company extrapolates cash flow projections in the budget using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. In any case, this growth rate does not exceed the long-term average growth rate for the market in which the asset is used.
Impairment losses of continuing operations, including impairment on inventories, are recognized in the statement of Profit and Loss, except for properties previously revalued with the revaluation surplus taken to OCI. For such properties, the impairment is recognized in OCI up to the amount of any previous revaluation surplus.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
The impairment assessment for all assets is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit or loss.
j) Government Grants
Grants and subsidies from the government are recognized at their fair value when there is reasonable assurance that the Company will comply with the conditions attached to them and the grant/subsidy will be received.
When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate.
Government grants relating to purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight line basis over the expected lives of the related assets and presented within other income.
k) Financial Instruments Financial Assets
Initial Recognition and Measurement
All financial assets are recognized initially at fair value and transaction cost that is attributable to the acquisition of the financial asset is also adjusted.
Subsequent Measurement
i. Financial Instruments at Amortized Cost - the financial instrument is measured at the amortized cost if both the following conditions are met:
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method.
ii. Equity Investments - All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are generally classified as at fair value through profit and loss (FVTPL). For all other equity instruments, the Company decides to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit and loss (FVTPL). The Company makes such election on an instrument by instrument basis. The classification is made on initial recognition and is irrevocable.
iii. Mutual funds - All mutual funds in scope of Ind-AS 109 are measured at fair value through profit and loss (FVTPL).
De-Recognition of Financial Assets
A financial asset is primarily de-recognized when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Financial Liabilities
Initial Recognition and Measurement
All financial liabilities are recognized initially at fair value and transaction cost that is attributable to the acquisition of the financial liabilities is also adjusted. These liabilities are classified as amortized cost.
Subsequent Measurement
These liabilities include are borrowings and deposits. Subsequent to initial recognition, these liabilities are measured at amortized cost using the effective interest method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss. This category generally applies to borrowings.
De-Recognition of Financial Liabilities
A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
Financial Guarantee Contracts
Financial guarantee contracts are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified party fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of expected loss allowance determined as per impairment requirements of Ind-AS 109 and the amount recognized less cumulative amortization.
Offsetting of Financial Instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
l) Fair Value Measurement
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
- I n the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is Unobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period or each case.
For the purpose of fair value disclosures, Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarizes accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
- Disclosures for valuation methods, significant estimates and assumptions
- Quantitative disclosures of fair value measurement hierarchy
- Investment in unquoted equity shares
- Financial instruments
m) Impairment of Financial Assets
In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets:
Trade Receivables
The Company applies approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of receivables. As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables. At every reporting date, the historical observed default rates are updated.
Other Financial Assets
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.
n) Inventories
Inventories are valued at the lower of cost and net realizable value. Cost of inventories include cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
o) Income Taxes
Tax expense recognized in profit or loss comprises the sum of deferred tax and current tax not recognized in other comprehensive income or directly in equity.
Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income-tax Act and in the overseas branches/companies as per the respective tax laws. Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets are recognized to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilized against future taxable income.
This is assessed based on the forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity).
p) Cash and Cash Equivalents
Cash and cash equivalents comprise cash in hand, demand deposits with banks/corporations and short-term highly liquid investments (original maturity less than 3 months) that are readily convertible into known amount of cash and are subject to an insignificant risk of change in value.
q) Post-Employment, Long Term and Short Term Employee Benefits Defined Contribution Plans
Provident Fund
Certain entities of the group make contribution to statutory provident fund trust setup in accordance with the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952. In terms of the Guidance on Ind AS - 19, the provident fund trust set up is treated as a defined benefit plan since the Company has to meet the interest shortfall, if any. Accordingly, the contribution paid or payable and the interest shortfall, if any, is recognized as an expense in the period in which services are rendered by the employee.
Certain other entities of the Company make contribution to the statutory provident fund in accordance with the Employees Provident Fund and Miscellaneous Provision Act, 1952 which is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which the services are rendered.
Defined Benefit Plans
Gratuity
Gratuity is a post-employment benefit and is in the nature of a defined benefit plan. The liability recognized in the financial statement in respect of gratuity is the present value of the defined benefit obligation at the reporting date less the fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past service costs. The defined benefit/obligation is calculated at or near the reporting date by an independent actuary using the projected unit credit method.
Actuarial gains and losses arising from past experience and changes in actuarial assumptions are credited or charged to the statement of OCI in the year in which such gains or losses are determined.
Compensated Absences
Liability in respect of compensated absences becoming due or expected to be availed within one year from the balance sheet date is recognized on the basis of undiscounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees. Liability in respect of compensated absences becoming due or expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method.
Actuarial gains and losses arising from past experience and changes in actuarial assumptions are charged to statement of profit and loss in the year in which such gains or losses are determined.
Short-Term Employee Benefits
Expense in respect of other short term benefits is recognized on the basis of the amount paid or payable for the period during which services are rendered by the employee.
r) Share Based Payments
Employee Stock Option Plan
The fair value of options granted under Employee Stock Option Plan is recognized as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options. The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognizes the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
Transition to Ind AS
On transition to Ind AS, the Company has elected to not consider the charge related to employee stock options for which the vesting period is already over.
s) Non-Current Assets and Liabilities Classified as held for Sale and Discontinued Operations
Non-current assets classified as held for sale are presented separately and measured at the lower of their carrying amounts immediately prior to their classification as held for sale and their fair value less costs to sell. However, some held for sale assets such as financial assets or deferred tax assets, continue to be measured in accordance with the Company''s relevant accounting policy for those assets. Once classified as held for sale, the assets are not subject to depreciation or amortization.
Any profit or loss arising from the sale or re-measurement of discontinued operations is presented as part of a single line item, profit or loss from discontinued operations.
t) Provisions, Contingent Assets and Contingent Liabilities
Provisions are recognized only when there is a present obligation, as a result of past events, and when a reliable estimate of the amount of obligation can be made at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. Provisions are discounted to their present values, where the time value of money is material.
Contingent liability is disclosed for:
- Possible obligations which will be confirmed only by future events not wholly within the control of the Company or
- Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are neither recognized nor disclosed. However, when realization of income is virtually certain, related asset is recognized.
u) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
v) Significant Management Judgment in Applying Accounting Policies and Estimation Uncertainty
The preparation of the Company''s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the related disclosures.
Significant Management Judgments
The following are significant management judgments in applying the accounting policies of the Company that have the most significant effect on the financial statements.
Revenue - The Company recognizes revenue using the stage of completion method. This requires forecasts to be made of the outcomes of long-term construction and service contracts, which require assessments and judgments to be made on changes in work scopes, claims and incentive payments to the extent they are probable and they are capable of being reliably measured.
Recognition of Deferred Tax Assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilized. In addition, significant judgment is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions (see note17).
Recognition of Deferred Tax Liability on Undistributed Profits -
The extent to which the Company can control the timing of reversal of deferred tax liability on undistributed profits of its subsidiaries requires judgment.
Evaluation of Indicators for Impairment of Assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Classification of Leases - The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee''s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset''s economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.
Recoverability of Receivables - At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables and advances.
Useful Lives of Depreciable/Amortizable Assets - Management reviews its estimate of the useful lives of depreciable/amortizable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain software, customer relationships, IT equipment and other plant and equipment.
Defined Benefit Obligation (DBO) - Management''s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Fair Value Measurements - Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
Provisions - At each balance sheet date basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding warranties and guarantees. However, the actual future outcome may be different from this judgment.
a) Credit Risk Management
The finance function of the Company assesses and manages credit risk based on internal credit rating system. Internal credit rating is performed for each class of financial instruments with different characteristics. The Company assigns the following credit ratings to each class of financial assets based on the assumptions, inputs and factors specific to the class of financial assets.
The risk parameters are same for all financial assets for all period presented. The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an on-going basis throughout each reporting period. In general, it is presumed that credit risk has significantly increased since initial recognition if the payments are more than (xx days past due) . A default on a financial asset is when the counterparty fails to make contractual payments when they fall due. This definition of default is determined by considering the business environment in which entity operates and other macro-economic factors.
b) Credit Risk Exposure
Provision for expected credit losses
The Company provides for expected credit loss based on lifetime expected credit loss mechanism for trade receivables-
B) Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the business, the Company maintains flexibility in funding by maintaining availability under committed facilities. Management monitors rolling forecasts of the Company''s liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates. In addition, the Company''s liquidity management policy involves considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
Maturities of Financial Liabilities
The tables below analyze the Company''s financial liabilities into relevant maturity Companying based on their contractual maturities for all financial liabilities and the amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant
C) Price Risk Exposure
The Company''s exposure price risk arises from investments held and classified in the balance sheet either as fair value through other comprehensive income or at fair value through profit or loss. To manage the price risk arising from investments in equity securities, the Company diversifies its portfolio of assets.
Sensitivity
Below is the sensitivity of profit or loss and equity changes in fair value of investments in equity
* Holding all other variables constant
Mar 31, 2016
1) Recognition of Income and Expenditure
(a) Income and expenditure are recognized on accrual basis in
accordance with the applicable accounting standards and provision is
made for all known losses and liabilities.
(b) Freight income is accounted when goods are delivered by the company
to customers, except in case of the Seaways Division where freight
income is accounted when the ship sails out of the port.
(c) Freight expenses are accounted when hired vehicles deliver goods to
the Company at destination.
(d) Having regard to the size of operations and the nature and
complexities of the Company''s business, freight received/paid in
advance is accounted as income/expense on payment.
(e) Year-end liability in respect of claims for loss and damages is
provided as calculated by claims recovery agents except in case of the
Seaways Division where such liability is provided as calculated by the
Company''s claim department.
2) Gratuity and Leave Encashment
A provision for gratuity and leave encashment liability to employees is
made on the basis of actuarial valuation. Gratuity liability is paid to
the approved Gratuity Fund.
3) Depreciation
The Company depreciates its fixed assets over the useful life in the
manner prescribed in Schedule II of the Company Act 2013. Depreciation
on additions to assets or on sales/ discardment of assets, is
calculated prorata from/ to the date of addition/deduction of
individual assets.
4) Fixed Assets
(a) Fixed Assets are stated at cost and/or at revaluation.
(b) Depreciation on the amount added to Fixed Assets on revaluation is
adjusted by transfer of equivalent amount from capital reserve created
on revaluation of fixed assets to Profit and Loss Account
5) Investment
(a) Investments that are readily realizable and intended to be held for
not more than a year are classified as current investments. All other
investments are classified as long term investments.
(b) Current investments are carried at lower of cost and fair value
determined on an individual investment basis. Long term nvestments are
carried at cost. However, provision for diminution in value is made to
recognize a decline other than temporary in the value of the
investments.
6) Inventories
Inventories are valued of lower of cost and net realisable value.
7) Foreign Exchange Transactions:
(a) Initial recognition
All transactions in foreign currency are recorded at the rate of
exchange prevailing on the dates when the relevant transactions take
place.
(b) Measurement of foreign currency monetary items at the balance sheet
date
Monetary items in foreign currency at the year end are converted in
Indian Currency at the year end rates. In terms of the amendments to
Accounting Standard 11 on The Effects of Changes in Foreign Exchange
Rates, exchange differences relating to long-term monetary items are
dealt with in the following manner:
(i) Exchange differences relating to long-term monetary items, arising
during the year, in so far as they relate to the acquisition of a
depreciable capital asset are added to/ deducted from the cost of the
asset and depreciated over the balance life of the asset.
(ii) In other cases such differences are accumulated in a "Foreign
Currency Monetary Item Translation Difference Account" and amortised
over the balance life of the long-term monetary item.
(c) Treatment of exchange differences
Any income or expense on account of exchange difference either on
settlement or translation is recognised in the Statement of Profit and
Loss.
(d) In respect of Forward Exchange contracts entered into to hedge
foreign currency risks, the difference between the forward rate and
exchange rate at the inception of the contract is recognised as income
or expense over the life of the contract.
8) Taxation
Provision for tax is made for both current and deferred taxes.
Provision for current income tax is made on the current tax rates based
on assessable income. Provision for current income tax on income from
shipping activities is made on the basis of deemed tonnage income of
the Company.
The company, except for its Seaways division, provides for deferred tax
based on the tax effect of timing differences resulting from the
recognition of items in the accounts and in estimating its current tax
provision. The effect on deferred taxes of a change in tax rate is
recognized in the year in which the change is effected
9) Impairment of Assets
The company assesses at each Balance Sheet date whether there is any
indication that any asset may be impaired and if such indication
exists, the carrying value of such asset is reduced to its recoverable
amount and a provision is made for such impairment loss in the
Statement of Profit and Loss.
Mar 31, 2015
1 Recognition of Income and Expenditure
(a) Income and expenditure are recognized on accrual basis in
accordance with the applicable accounting standards and provision is
made for all known losses and liabilities.
(b) Freight income is accounted when goods are delivered by the Company
to customers, except in case of the Seaways Division where freight
income is accounted when the ship sails out of the port.
(c) Freight expenses are accounted when hired vehicles deliver goods to
the Company at destination.
(d) Having regard to the size of operations and the nature and
complexities of the Company''s business, freight received/paid in
advance is accounted as income/expense on payment.
(e) Year-end liability in respect of claims for loss and damages is
provided as calculated by claims recovery agents except in case of the
Seaways Division where such liability is provided as calculated by the
Company''s claim department.
2 Gratuity and Leave Encashment
A provision for gratuity and leave encashment liability to employees is
made on the basis of actuarial valuation. Gratuity liability is paid to
the approved Gratuity Fund.
3 Depreciation
Effective 1st April 2014, the Company depreciates its fixed assets over
the useful life in the manner prescribed in Schedule II of the Company
Act 2013, as against the earlier practice of depreciating at the rates
prescribed in Schedule XIV of the Companies Act, 1956. Depreciation on
additions to assets or on sales/ discardment of assets, is calculated
prorata from/ to the date of addition/deduction of individual assets.
4 Fixed Assets
Fixed Assets are stated at cost and/or at revaluation.
5 Investment
(a) Investments that are readily realizable and intended to be held for
not more than a year are classified as current investments. All other
investments are classified as long term investments.
(b) Current investments are carried at lower of cost and fair value
determined on an individual investment basis. Long term investments are
carried at cost. However, provision for diminution in value is made to
recognize a decline other than temporary in the value of the
investments.
6 Inventories
Inventories are valued of lower of cost and net realisable value.
7 Foreign Exchange Transactions:
(a) Initial recognition
All transactions in foreign currency are recorded at the rate of
exchange prevailing on the dates when the relevant transactions take
place.
(b) Measurement of foreign currency monetary items at the balance sheet
date
Monetary items in foreign currency at the year end are converted in
Indian Currency at the year end rates. In terms of the amendments to
Accounting Standard 11 on The Effects of Changes in Foreign Exchange
Rates, exchange differences relating to long-term monetary items are
dealt with in the following manner:
(i) Exchange differences relating to long-term monetary items, arising
during the year, in so far as they relate to the acquisition of a
depreciable capital asset are added to/ deducted from the cost of the
asset and depreciated over the balance life of the asset.
(ii) In other cases such differences are accumulated in a "Foreign
Currency Monetary Item Translation Difference Account" and amortised
over the balance life of the long-term monetary item.
(c) Treatment of exchange difference:
Any income or expense on account of exchange difference either on
settlement or translation is recognised in the
Statement of Profit and Loss.
(d) In respect of Forward Exchange contracts entered into to hedge
foreign currency risks, the difference between the forward rate and
exchange rate at the inception of the contract is recognised as income
or expense over the life of the contract.
8 Taxation
Provision for tax is made for both current and deferred taxes.
Provision for current income tax is made on the current tax rates based
on assessable income. Provision for current income tax on income from
shipping activities is made on the basis of deemed tonnage income of
the Company.
The Company, except for its Seaways division, provides for deferred tax
based on the tax effect of timing differences resulting from the
recognition of items in the accounts and in estimating its current tax
provision. The effect on deferred taxes of a change in tax rate is
recognized in the year in which the change is effected.
9 Impairment of Assets
The Company assesses at each Balance Sheet date whether there is any
indication that any asset may be impaired and if such indication
exists, the carrying value of such asset is reduced to its recoverable
amount and a provision is made for such impairment loss in the
Statement of Profit and Loss.
Mar 31, 2013
1. Recognition of Income and Expenditure
(a) Income and expenditure are recognized on accrual basis in
accordance with the applicable accounting standards and provision is
made for all known losses and liabilities.
(b) Freight income is accounted when goods are delivered by the company
to customers, except in case of the Seaways Division where freight
income is accounted when the ship sails out of the port.
(c) Freight expenses are accounted when hired vehicles deliver goods to
the Company at destination.
(d) Having regard to the size of operations and the nature and
complexities of the Company''s business, freight received/paid in
advance is accounted as income/expense on payment.
(e) Year-end liability in respect of claims for loss and damages is
provided as calculated by claims recovery agents except in case of the
Seaways Division where such liability is provided as calculated by the
Company''s claim department.
2. Gratuity and Leave Encashment
A provision for gratuity and leave encashment liability to employees is
made on the basis of actuarial valuation. Gratuity liability is paid to
the approved Gratuity Fund.
3. Depreciation
Depreciation is provided on straight-line method at rates specified in
schedule XIV to the Companies Act, 1956 except for pallets and bins
included under plant and machinery, the cost whereof are amortized over
a period of five years from the date of purchase.
Depreciation on additions/ deductions is calculated pro-rata from / to
the month of addition / deduction. Individual assets whose actual cost
does not exceed Rs. 5,000, except pallets and bins, are fully
depreciated in the year of purchase.
4. Fixed Assets
(a) Fixed Assets are stated at cost and/or at revaluation
(b) Depreciation on the amount added to Fixed Assets on revaluation is
adjusted by transfer of equivalent amount from capital reserve created
on revaluation of fixed assets to Profit and Loss Account
5. Investment
(a) Investments that are readily realizable and intended to be held for
not more than a year are classified as current investments. All other
investments are classified as long term investments.
(b) Current investments are carried at lower of cost and fair value
determined on an individual investment basis. Long term investments are
carried at cost. However, provision for diminution in value is made to
recognize a decline other than temporary in the value of the
investments.
6. Inventories
Inventories are valued of lower of cost and net realisable value
7. Foreign Exchange Transactions:
(a) Initial recognition
All transactions in foreign currency are recorded at the rate of
exchange prevailing on the dates when the relevant transactions take
place.
(b) Measurement of foreign currency monetary items at the balance sheet
date
Monetary items in foreign currency at the year end are converted in
Indian Currency at the year end rates. In terms of the amendments to
Accounting Standard 11 on The Effects of Changes in Foreign Exchange
Rates, exchange differences relating to long-term monetary items are
dealt with in the following manner:
(i) Exchange differences relating to long-term monetary items, arising
during the year, in so far as they relate to the acquisition of a
depreciable capital asset are added to/ deducted from the cost of the
asset and depreciated over the balance life of the asset.
(ii) In other cases such differences are accumulated in a "Foreign
Currency Monetary Item Translation Difference Account" and amortised
over the balance life of the long-term monetary item.
(c) Treatment of exchange differences
Any income or expense on account of exchange difference either on
settlement or translation is recognised in the profit and loss account
(d) In respect of Forward Exchange contracts entered into to hedge
foreign currency risks, the difference between the forward rate and
exchange rate at the inception of the contract is recognised as income
or expense over the life of the contract.
8. Taxation
Provision for tax is made for both current and deferred taxes.
Provision for current income tax is made on the current tax rates based
on assessable income. Provision for current income tax on income from
shipping activities is made on the basis of deemed tonnage income of
the Company.
The company, except for its Seaways division, provides for deferred tax
based on the tax effect of timing differences resulting from the
recognition of items in the accounts and in estimating its current tax
provision. The effect on deferred taxes of a change in tax rate is
recognized in the year in which the change is effected.
9. Impairment of Assets
The company assesses at each Balance Sheet date whether there is any
indication that any asset may be impaired and if such indication
exists, the carrying value of such asset is reduced to its recoverable
amount and a provision is made for such impairment loss in the profit
and loss account.
Mar 31, 2012
1. Recognition of Income and Expenditure
(a) Income and expenditure are recognized on accrual basis in
accordance with the applicable accounting standards and provision is
made for all known losses and liabilities.
(b) Freight income is accounted when goods are delivered by the company
to customers, except in case of the Seaways Division where freight
income is accounted when the ship sails out of the port.
(c) Freight expenses are accounted when hired vehicles deliver goods to
the Company at destination.
(d) Having regard to the size of operations and the nature and
complexities of the Company's business, freight received/paid in
advance is accounted as income/expense on payment.
(e) Year-end liability in respect of claims for loss and damages is
provided as calculated by claims recovery agents except in case of the
Seaways Division where such liability is provided as calculated by the
Company's claim department
2. Gratuity and Leave Encashment
A provision for gratuity and leave encashment liability to employees is
made on the basis of actuarial valuation. Gratuity liability is paid to
the approved Gratuity Fund.
3. Depreciation
Depreciation is provided on straight-line method at rates specified in
schedule XIV to the Companies Act, 1956 except for pallets and bins
included under plant and machinery, the cost whereof are amortized over
a period of five years from the date of purchase. Depreciation on
additions/ deductions is calculated pro-rata from / to the month of
addition / deduction. Individual assets whose actual cost does not
exceed Rs. 5,000, except pallets and bins, are fully depreciated in the
year of purchase.
4. Fixed Assets
(a) Fixed assets are stated at cost and/or at revaluation.
(b) Depreciation on the amount added to Fixed Assets on revaluation is
adjusted by transfer of equivalent amount from capital reserve created
on revaluation of fixed assets to Profit and Loss Account.
5. Investment
(a) Investments that are readily realizable and intended to be held for
not more than a year are classified as current investments. All other
investments are classified as long-term investments.
(b) Current investments are carried at lower of cost and fair value
determined on an individual investment basis. Long-term investments are
carried at cost. However, provision for diminution in value is made to
recognize a decline other than temporary in the value of the
investments.
6. Inventories
Inventories are valued of lower of cost and net realizable value
7. Foreign Exchange Transactions
(a) Initial recognition
All transactions in foreign currency are recorded at the rate of
exchange prevailing on the dates when the relevant transactions take
place.
(b) Measurement of foreign currency monetary items at the balance sheet
date
Monetary items in foreign currency at the year end are converted in
Indian Currency at the year end rates. In terms of the amendments to
Accounting Standard 11 on The Effects of Changes in Foreign Exchange
Rates, exchange differences relating to long-term monetary items are
dealt with in the following manner:
(i) Exchange differences relating to long-term monetary items, arising
during the year, in so far as they relate to the acquisition of a
depreciable capital asset are added to/ deducted from the cost of the
asset and depreciated over the balance life of the asset.
(ii) In other cases such differences are accumulated in a "Foreign
Currency Monetary Item Translation Difference Account" and amortized
over the balance life of the long- term monetary item.
(c) Treatment of exchange differences
Any income or expense on account of exchange difference either on
settlement or translation is recognized in the profit and loss account
(d) In respect of Forward Exchange contracts entered into to hedge
foreign currency risks, the difference between the forward rate and
exchange rate at the inception of the contract is recognized as income
or expense over the life of the contract.
8. Taxation
Provision for tax is made for both current and deferred taxes.
Provision for current income tax is made on the current tax rates based
on assessable income. Provision for current income tax on income from
shipping activities is made on the basis of deemed tonnage income of
the Company.
The company, except for its Seaways division, provides for deferred tax
based on the tax effect of timing differences resulting from the
recognition of items in the accounts and in estimating its current tax
provision. The effect on deferred taxes of a change in tax rate is
recognized in the year in which the change is effected
9. Impairment of Assets
The company assesses at each Balance Sheet date whether there is any
indication that any asset may be impaired and if such indication
exists, the carrying value of such asset is reduced to its recoverable
amount and a provision is made for such impairment loss in the profit
and loss account.
Mar 31, 2011
1. Recognition of Income and Expenditure:
a. Income and expenditure are generally recognized on accrual basis in
accordance with the applicable accounting standards and provision is
made for all known losses and liabilities.
b. Freight income is accounted when goods are delivered by the company
to customers, except in case of the Seaways Division where Freight
income is accounted when the ship sails out of the port.
c. Freight expenses are accounted when hired vehicles deliver goods to
the Company at destination.
d. Having regard to the size of operations and the nature and
complexities of the Companys business, freight received/paid in
advance is accounted as income/expense on payment.
e. Year-end liability in respect of claims for loss and damages is
provided as calculated by claims recovery agents except in case of the
Seaways Division where such liability is provided as calculated by the
Companys claim department.
2. Gratuity:
A provision for gratuity liability to employees is made on the basis of
actuarial valuation and paid to the approved Gratuity Fund.
3. Depreciation:
Depreciation is provided on straight-line method at rates specified in
schedule XIV to the Companies Act, 1956 except for pallets and bins
included under plant and machinery, the cost whereof are amortised over
a period of five years from the date of purchase. Depreciation on
additions/ deductions is calculated pro-rata from / to the month of
addition / deduction. Individual assets whose actual cost does not
exceed Rs. 5,000, except pallets and bins, are fully depreciated in the
year of purchase.
4. Fixed Assets:
a) Fixed Assets are stated at cost and/or at revaluation.
b) Depreciation on the amount added to Fixed Assets on revaluation is
adjusted by transfer of equivalent amount from capital reserve created
on revaluation of fixed assets to Profit and Loss Account.
5. Investments Investments are stated at cost.
6. Inventories:
Inventories are valued at lower of cost and net realisable value.
7. Foreign Exchange Transactions:
a) All transactions in foreign currency are recorded at the rate of
exchange prevailing on the dates when the relevant transactions take
place.
b) Monetary items in foreign currency at the year end are converted in
Indian Currency at the year end rates. In terms of the amendments to
Accounting Standard 11 on The Effects of Changes in Foreign Exchange
Rates, exchange differences relating to long-term monetary items are
dealt with in the following manner:
i. Exchange differences relating to long-term monetary items, arising
during the year, in so far as they relate to the acquisition of a
depreciable capital asset are added to/ deducted from the cost of the
asset and depreciated over the balance life of the asset.
ii. In other cases such differences are accumulated in a "Foreign
Currency Monetary Item Translation Difference Accountà and amortised
over the balance life of the long-term monetary item, not beyond 31st
March 2011.
c) Any income or expense on account of exchange difference either on
settlement or translation is recognised in the profit and loss account
d) In respect of Forward Exchange contracts entered into to hedge
foreign currency risks, the difference between the forward rate and
exchange rate at the inception of the contract is recognised as income
or expense over the life of the contract.
8. Taxation:
Provision for tax is made for both current and deferred taxes.
Provision for current income tax is made on the current tax rates based
on assessable income. Provision for current income tax on income from
shipping activities is made on the basis of deemed tonnage income of
the Company.
The company, except for its Seaways division, provides for deferred tax
based on the tax effect of timing differences resulting from the
recognition of items in the accounts and in estimating its current tax
provision. The effect on deferred taxes of a change in tax rate is
recognized in the year in which the change is effected.
9. Impairment of Assets:
The company assesses at each Balance Sheet date whether there is any
indication that any asset may be impaired and if such indication
exists, the carrying value of such asset is reduced to its recoverable
amount and a provision is made for such impairment loss in the profit
and loss account.
Mar 31, 2010
1. Recognition of Income and Expenditure:
a. Income and expenditure are generally recognized on accrual basis in
accordance with the applicable accounting standards and provision is
made for all known losses and liabilities.
b. Freight income is accounted when goods are delivered by the company
to customers, except in case of the Seaways Division where freight
income is accounted when the ship sails out of the port.
c. Freight expenses are accounted when hired vehicles delivergoods to
the Company at destination.
d. Having regard to the size of operations and the nature and
complexities of the Companys business, freight received/paid in
advance is accounted as income/expense on payment.
e. Year-end liability in respect of claims for loss and damages is
provided as calculated by claims recovery agents except in case of the
Seaways Division where such liability is provided as calculated by the
Companys claim department.
2. Gratuity:
A provision for gratuity liability to employees is made on the basis of
actuarial valuation and paid to the approved Gratuity Fund.
3. Depreciation:
Depreciation is provided on straight-line method at rates specified in
schedule XIV to the Companies Act, 1956 except for pallets and bins
included under plant and machinery, the cost whereof are amortized over
a period of five years from the date of purchase. Depreciation on
additions/ deductions is calculated pro-rata from / to the month of
addition / deduction. Individual assets whose actual cost does not
exceed Rs. 5,000, except pallets and bins.are fully depreciated in the
year of purchase.
4. FixedAssets:
a) FixedAssets are stated at cost and/or at revaluation.
b) Depreciation on the amount added to Fixed Assets on revaluation is
adjusted by transfer of equivalent amount from capital reserve created
on revaluation of fixed assets to Profit and Loss Account.
5. Investments
Investments are stated at cost.
6. Inventories:
Inventories are valued at lower of cost and net realisable value. 7.
Foreign ExchangeTransactions:
a) All transactions in foreign currency are recorded at the rate of
exchange prevailing on the dates when the relevant transactions take
place.
b) Monetary items in foreign currency at the year end are converted in
Indian Currency at the year end rates. In terms of the amendments to
Accounting Standard I I onThe Effects of Changes in Foreign Exchange
Rates, exchange differences relating to long-term monetary items are
dealt with in the following manner:
i. Exchange differences relating to long-term monetary items, arising
during the year, in so far as they relate to the acquisition of a
depreciable capital asset are added to/ deducted from the cost of the
asset and depreciated over the balance life of the asset.
ii. In other cases such differences are accumulated in a "Foreign
Currency Monetary Item Translation Difference Account" and amortised
over the balance life of the long-term monetary item, not beyond 31 st
March 201 I.
c) Any income or expense on account of exchange difference either on
settlement or translation is recognised in the profit and loss account
d) In respect of Forward Exchange contracts entered into to hedge
foreign currency risks, the difference between the forward rate and
exchange rate at the inception of the contract is recognised as income
or expense over the life of the contract.
7. Taxation:
Provision for tax is made for both current and deferred taxes.
Provision for current income tax is made on the current tax rates based
on assessable income. Provision for current income tax on income from
shipping activities is made on the basis of deemed tonnage income of
the Company.
The company, except for its Seaways division, provides for deferred tax
based on the tax effect of timing differences resulting from the
recognition of items in the accounts and in estimating its current tax
provision. The effect on deferred taxes of a change in tax rate is
recognized in the year in which the change is effected.
8. Impairment of Assets:
The company assesses at each Balance Sheet date whether there is any
indication that any asset may be impaired and if such indication
exists, the carrying value of such asset is reduced to its recoverable
amount and a provision is made for such impairment loss in the profit
and loss account.
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