Accounting Policies of Transrail Lighting Ltd. Company

Mar 31, 2025

2. MATERIAL ACCOUNTING POLICY INFORMATION

A. Revenue Recognition

The Company derives revenues primarily from
Engineering, Procurement and Construction business.

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.

Revenue from operations, where the performance
obligations are satisfied over time and where there is
no uncertainty as to measurement or collectability of
consideration, is recognized as per the percentage-of-
completion method. The Company determines the
percentage-of-completion on the basis of direct
measurements of the value of the goods or services
transferred to the customer to date relative to the
remaining goods or services promised under the
contract. When there is uncertainty as to measurement
or ultimate collectability, revenue recognition is
postponed until such uncertainty is resolved.

Revenue from the sale of distinct manufactured / traded
material is recognised upfront at the point in time
when the control over the material is transferred to the
customer.

Revenue from rendering of services is recognized in the
accounting period when the service is rendered and the
right to receive the revenue is established.

Revenues in excess of invoicing are classified as
contract assets while invoicing in excess of revenues are
classified as contract liabilities (which can be referred
as Advances from Customers).

Advance payments received from customers for which
no services are rendered are also presented under
''Advance from Customers''.

In arrangements for supply and erection contracts
performed over a period of time, the Company has
applied the guidance in Ind AS 115, Revenue from
contract with customer, by applying the revenue
recognition criteria for each distinct performance
obligation. Although there may be separate contracts
with customers for supply of parts and erection of
towers, it is accounted for as a single contract as they
are bid and negotiated as a package with a single

commercial objective and the consideration for one
contract depends on the price and performance of the
other contract. The goods and services promised are a
single performance obligation.

The Company presents revenues net of indirect taxes in
its Statement of Profit and Loss.

Interest Income

Interest income is recorded using the effective interest
rate (EIR). EIR is the rate that exactly discounts the
estimated future cash payments or receipts over the
expected life of the financial instrument or a shorter
period, where appropriate, to the gross carrying amount
of the financial asset or to the amortized cost of a
financial liability. When calculating the effective interest
rate, the Company estimates the expected cash flows
by considering all the contractual terms of the financial
instrument (for example, prepayment, extension, call
and similar options) but does not consider the expected
credit losses. Interest income is included in other
income in the Statement of Profit and Loss.

Export Benefits

Duty drawback claims are recognized based on the
entitlement under relevant scheme / laws.

Other Revenues

All other revenues are recognized on accrual basis.

B. Property, Plant and Equipment (PPE)

The Property, Plant and Equipment are stated at cost
less accumulated depreciation and impairment, if any.

The Company depreciates the assets on straight line
method in accordance with the useful life prescribed in
Schedule II of the Act except for i) Second hand plant
& machineries are depreciated over the period of 5 to
10 years based on technical evaluation of the same &
ii) Erection tools and tackles which are depreciated
over the period of 2 and 5 years based on the technical
evaluation of the same. The management believes that
these estimated useful lives are realistic and reflect fair
approximation of the period over which the assets are
likely to be used.

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.

The residual values and useful lives of property plant
and equipment are reviewed at each financial year end
and adjusted prospectively if appropriate.

Non-Current Assets Held for Sale

A Non-Current Asset is classified as held for sale if its
carrying amount will be recovered principally through
sale rather than through its continuing use, is available
for immediate sale in its present condition, subject only
to terms that are usual and customary for sale, it is
highly probable that sale will take place within next 1
year and sale will not be abandoned.

C. Intangible Assets

I ntangible assets acquired separately are measured
on initial recognition at cost. The cost of intangible
assets acquired in a business combination is their
fair value at the date of acquisition. Following initial
recognition, intangible assets are carried at cost
less any accumulated amortization and accumulated
impairment losses. Internally generated intangibles,
excluding capitalized development costs, are not
capitalized and the related expenditure is reflected in
profit or loss in the period in which the expenditure is
incurred.

I ntangible assets consist of rights and licenses which
are amortised over the useful life on a straight line
basis.

D. Leases

The Company assesses at contract inception whether a
contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified
asset for a year of time in exchange for consideration.
The Company, as a lessee, recognizes a right-of-use
asset and a lease liability for its lease arrangements, if
the contract conveys the right to control the use of an
identified asset.

The contract conveys the right to control the use of an
identified asset, if it involves the use of an identified
asset and the Company has substantially all of the
economic benefits from use of the asset and has right
to direct the use of the identified asset. The cost of the

right-of-use asset shall comprise of the amount of the
initial measurement of the lease liability adjusted for any
lease payments made at or before the commencement
date plus any initial direct costs incurred. The right-of-
use assets is subsequently measured at cost less any
accumulated depreciation, accumulated impairment
losses, if any and adjusted for any re-measurement
of the lease liability. The right-of-use assets is
depreciated using the straight-line method from the
commencement date over the shorter of lease term or
useful life of right-of-use asset.

The Company measures the lease liability at the present
value of the lease payments that are not paid at the
commencement date of the lease. The lease payments
are discounted using the interest rate implicit in the
lease, if that rate can be readily determined. If that
rate cannot be readily determined, the Company uses
incremental borrowing rate.

For short-term and low value leases, the Company
recognizes the lease payments as an operating expense
on a straight-line basis over the lease term.

E. Financial Instruments
Initial Recognition

The Company recognizes financial assets and financial
liabilities when it becomes a party to the contractual
provision of the instrument. All financial assets
and liabilities are recognized at fair value on initial
recognition, except for trade receivables which are
recorded at transaction price. 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.

Subsequent Measurement

For purposes of subsequent measurement, financial
assets are classified in four categories:

a) Financial instruments at amortised cost

b) Financial instruments at fair value through other
comprehensive income (FVTOCI)

c) Financial instruments, derivatives and equity
instruments at fair value through profit or loss
(FVTPL)

Financial Assets at Amortised Cost

A financial instrument is measured at the amortized
cost if both the following conditions are met:

a) The asset is held within a business model whose
objective is to hold assets for collecting contractual
cash flows, and

b) Contractual terms of the asset give rise on
specified dates to cash flows that are solely
payments of principal and interest (SPPI) on the
principal amount outstanding.

This category is the most relevant to the Company.
After initial measurement, such financial assets are
subsequently measured at amortized cost using the
effective interest rate (EIR) method. Amortized cost
is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortization is included
in finance income in the Statement of Profit or Loss.
The losses arising from impairment are recognized in
the Statement of Profit or Loss.

Financial Assets at FVTOCI

A financial asset is classified as at the FVTOCI if both of
the following criteria are met:

a) The objective of the business model is achieved
both by collecting contractual cash flows and
selling the financial assets, and

b) The asset''s contractual cash flows represent SPPI.

Debt instruments included within the FVTOCI category
are measured initially as well as at each reporting date
at fair value. Fair value movements are recognized in
the other comprehensive income (OCI). However, the
Company recognizes interest income, impairment
losses & reversals and foreign exchange gain or loss
in the Statement of Profit & Loss. On de-recognition of
the asset, cumulative gain or loss previously recognized
in OCI is reclassified from the equity to Statement of
Profit & Loss. Interest earned whilst holding FVTOCI
debt instrument is reported as interest income using
the EIR method.

Financial Asset at FVTPL

Any financial asset which does not meet the criteria
for categorization as at amortized cost or as FVTOCI, is
classified as at FVTPL.

De-recognition

A financial asset is derecognized 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 and the transfer qualifies
for de-recognition under Ind AS 109.

F. Financial Liabilities

Initial Recognition and Measurement

Financial liabilities are classified, at initial recognition,
as financial liabilities at fair value through profit or
loss, loans and borrowings, payables, or as derivatives
designated as hedging instruments in an effective
hedge, as appropriate. All financial liabilities are
recognized initially at fair value and, in the case of loans
and borrowings and payables, net of directly attributable
transaction costs. The Company''s financial liabilities
include trade and other payables, loans and borrowings
including bank overdrafts, financial guarantee contracts
and derivative financial instruments.

Subsequent Measurement

The measurement of financial liabilities depends on
their classification, as described below:

Financial Liabilities at Fair Value Through Profit or
Loss

Financial liabilities at fair value through profit or loss
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair
value through profit or loss. Financial liabilities are
classified as held for trading if they are incurred for the
purpose of repurchasing in the near term. This category
also includes derivative financial instruments entered
into by the Company that are not designated as hedging
instruments in hedge relationships as defined by Ind AS
109.

Gains or losses on liabilities held for trading are
recognized in the Statement of Profit & Loss.
Financial liabilities designated upon initial recognition
at fair value through profit or loss are designated as such
at the initial date of recognition, and only if the criteria
in Ind AS 109 are satisfied. For liabilities designated as
FVTPL, fair value gains/ losses attributable to changes in
own credit risk is recognized in OCI. These gains/losses
are not subsequently transferred to the Statement of
Profit & Loss. However, the Company may transfer

the cumulative gain or loss within equity. AH other
changes in fair value of such liability are recognized in
the Statement of Profit or Loss. The Company has not
designated any financial liability as at fair value through
the Statement of Profit & Loss.

Loans and borrowings

This is the category most relevant to the Company.
After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortized
cost using the EIR method. Gains and losses are
recognized in profit or loss when the liabilities are
derecognized as well as through the EIR amortization
process. Amortized cost is calculated by taking into
account any discount or premium on acquisition and
fees or costs that are an integral part of the EIR.
The EIR amortization is included as finance costs in the
Statement of Profit and Loss.

Hedge accounting

The Company designates certain hedging instruments,
which include derivatives, embedded derivatives and
non-derivatives in respect of foreign currency risk,
commodity price risk as cash flow hedges. Hedges of
foreign exchange risk and commodity price risk for
highly probable forecast transactions are accounted
for as cash flow hedges. Hedges of the fair value of
recognized assets or liabilities or a firm commitment
are accounted for as fair value hedges.

At the inception of the hedge relationship, the entity
documents the relationship between the hedging
instrument and the hedged item, along with its risk
management objectives and its strategy for undertaking
various hedge transactions. Furthermore, at the
inception of the hedge and on an ongoing basis, the
Company documents whether the hedging instrument
is highly effective in offsetting changes in fair values
or cash flows of the hedged item attributable to the
hedged risk. Note 42 sets out details of the fair values of
the derivative instruments used for hedging purposes.

Fair Value Hedges

Changes in the fair value of derivatives that are
designated and qualify as fair value hedges are recorded
in profit or loss, together with any changes in fair value
of the hedged asset or liability that are attributable to
the hedged risk. The gain or loss is recognized in profit
or loss.

Where the hedged item subsequently results in the
recognition of a non-financial asset, both the deferred
hedging gains and losses and the deferred time value of
the option contracts, if any, are included within the initial
cost of the asset. The deferred amounts are ultimately
recognised in profit or loss as the hedged item affects
profit or loss through cost of material consumed.

Cash Flow hedges that qualify for Hedge Accounting

The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash
flow hedges is recognised in other comprehensive
income and accumulated under the heading of cash
flow hedging reserve. The gain or loss relating to the
ineffective portion is recognised immediately in the
Statement of Profit and Loss.

Amounts previously recognised in other comprehensive
income and accumulated in equity relating to (effective
portion as described above) are reclassified to the
Statement of Profit and Loss in the periods when the
hedged item affects profit or loss, in the same line
as the recognised hedged item. However, when the
hedged forecast transaction results in the recognition
of a non-financial asset or a non-financial liability, such
gains and losses are transferred from equity (but not as
a reclassification adjustment) and included in the initial
measurement of the cost of the non-financial asset or
nonfinancial liability.

Hedge accounting is discontinued when the hedging
instrument expires or is sold, terminated, or when it
no longer qualifies for hedge accounting. Any gain or
loss recognised in other comprehensive income and
accumulated in equity at that time remains in equity
and is recognised when the forecast transaction is
ultimately recognised in the Statement of Profit and
Loss. When a forecast transaction is no longer expected
to occur, the gain or loss accumulated in equity is
recognised immediately in the Statement of Profit and
Loss.

De-recognition

A financial liability is derecognized when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by
another liability 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.

Fair Value Measurement

All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorized
within the fair value hierarchy, described as follows,
based on the lowest level input that is significant to the
fair value measurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active
markets for identical assets or liabilities

Level 2 — Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
directly or indirectly observable

Level 3 — Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable

For assets and liabilities that are recognized in the
financial statements on a recurring basis, the Company
determines whether transfers have occurred between
levels in the hierarchy by 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.

For the purpose of fair value disclosures, the Company
has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the
asset or liability and the level of the fair value hierarchy
as explained above.

G. Impairment

Impairment of Financial Assets

The Company recognizes the loss allowance using the
expected credit loss (ECL) model for financial assets
which are not valued through the Statement of Profit
and Loss account.

The Company follows ''simplified approach'' for
recognition of impairment loss allowance on
trade receivables or contract revenue receivables.
The application of simplified approach does not
require the Company to track changes in credit risk.
Rather, it recognizes impairment loss allowance based
on lifetime ECLs at each reporting date, right from its
initial recognition. For recognition of impairment loss on
other financial assets and risk exposure, the Company
determines that whether there has been a significant
increase in the credit risk since initial recognition.

If credit risk has not increased significantly, 12-month
ECL is used to provide for impairment loss.

ECL impairment loss allowance (or reversal) recognized
during the period is recognized as income/ expense in
the Statement of Profit and Loss (P&L). This amount
is reflected under the head ''other expenses'' in the
Statement of Profit and Loss.

H. Impairment of Non-Financial Assets

Assets with an indefinite useful life and goodwill are
not amortized / depreciated and are tested annually
for impairment. Assets subject to amortization /
depreciation are tested for impairment provided that
an event or change in circumstances indicates that
their carrying amount might not be recoverable.
An impairment loss is recognized in the amount by which
the asset''s carrying amount exceeds its recoverable
amount. The recoverable amount is the difference
between asset''s fair value less sale costs and value in
use. For the purposes of assessing impairment, assets
are aggregated at the lowest levels for which there are
separately identifiable cash flows (cash-generating
units).

Non-financial assets other than Goodwill for which
impairment losses have been recognized are tested at
each balance sheet date in the event that the loss has
reversed.

The Company on an annual basis, tests Goodwill for
impairment, and if any impairment indicators are
identified tests other non-financial assets, in accordance
with the accounting policy. The recoverable amounts of
cash-generating units have been determined based
on value-in-use calculations. These calculations
require the use of estimates and sensitivity analysis is
performed on the most relevant variables included in
the estimates, paying particular attention to situations
in which potential impairment indicators may be
identified.